More Than Making Ends Meet: Defining Financial Anxiety and Establishing Its Relations to Financial Literacy

Abstract

Many Canadian adults are not financially literate, negatively impacting individual financial well- being and societal economic stability. Lower levels of financial literacy have been linked to both increased math anxiety and financial anxiety. However, previous research has oversimplified these relations by treating financial literacy as a singular construct rather than as a multifaceted one comprised of financial knowledge, confidence, attitudes, and behaviour. Additionally, inconsistencies in how financial anxiety is conceptually and operationally defined have complicated our understanding of its relation to financial literacy. Such issues of content validity hinder our ability to form collective knowledge on the relations between these constructs. This dissertation refines the conceptual and operational understanding of financial anxiety and examines how it relates to the four subconstructs of financial literacy. The results of Study 1 demonstrated negative relations between financial anxiety and most subconstructs of financial literacy, suggesting it is more important in our understanding of financial literacy than previously thought. In Study 2, a scoping review revealed significant overlap between the conceptual and operational definitions of financial anxiety and financial stress. To address this limitation, in Study 3, I developed a novel measure of financial anxiety called the Financial Anxiety Feelings and Engagement Scale (FAFES). This measure, validated across two samples, demonstrated excellent model fit and test-retest reliability. In Study 4, I replicated the findings from Study 1 using the FAFES, providing further evidence to suggest that higher levels of financial anxiety are related to lower levels of financial literacy. By refining the conceptualization and measurement of financial anxiety, this dissertation offers a clear direction for the development of financial education strategies aimed at reducing financial anxiety. This targeted approach could potentially enhance the efficacy of such interventions across Canada.