Examining the Relationship Among Socio-Economic Status, Financial Wellbeing, and Financial Literacy: An SEM Model

The main aim of the study is to know the impact of socio-economic status on financial wellbeing. After the literature review, it was found that financial literacy plays a moderating and mediating role between socio-economic status and financial wellbeing. To check the impact, SEM was used. The path coefficients analysis revealed a significant mediating effect between financial literacy and financial wellbeing; a significant large effect between socio-economic status and financial literacy, and a significant small-to-medium effect between socio-economic status and financial wellbeing. Financial literacy plays a crucial role as a mediating factor, enhancing the positive relationship between socio-economic status and financial outcomes. The SEM model indicated that individuals with elevated socio-economic status tend to have enhanced financial literacy. Thus, proper financial knowledge, financial behaviour, and financial attitude are essential for sound decision-making and achieving better financial wellbeing. The partially mediated relationship demonstrated the complexity of financial literacy, serving as both a result of structural conditions and a protective element that enhances financial outcomes among various socio-economic groups. Improving financial literacy could help diminish disparities in financial wellbeing and promote more inclusive economic growth. The analysis reveals that financial literacy serves primarily as a conduit for transforming structural advantages into improved financial wellbeing, rather than simply modifying the intensity of the relationship between socioeconomic status and financial wellbeing. The findings indicate that improving financial literacy, particularly for socio-economically disadvantaged groups, could help diminish disparities in financial wellbeing and promote more inclusive economic growth.

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