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Published: February 2011
Study sees “financial self-efficacy’ as vital component of financial success
Financial self-efficacy is a psychological concept that can be an important predictor of successful performance in individual financial empowerment.
Does financial capability, defined as having financial knowledge and access to high quality financial products, lead to financial success and upward economic mobility?
Not by themselves, according to a new study by the EARN Research Institute. In a survey conducted by EARN, a California non-profit organization, financial self-efficacy emerged as the pivotal predictor of fewer financial problems for all participants. EARN explains that financial self-efficacy is a psychological concept that has been shown to be one of the best predictors of successful performance across many areas of human endeavor. In this concept, increased knowledge about managing money drives a justifiable self-confidence about handling money, which in turn leads to more successful financial outcomes.
Click here for a PDF of the study, which may be of interest to practitioners and policy advocates working to promote economic prosperity for low-income families. The study suggests that the current discourse on financial capability is incomplete without including financial self-efficacy.
EARN, a leading provider of microsavings programs, works to give low-income workers the power to create economic prosperity for generations to come. Since 2001, EARN has served tens of thousands of low-wage families with innovative financial products including matched savings accounts, checking accounts for the unbanked, micro-loans and money management coaching.
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