Financial Literacy,Socialization,and Constraints: A Moderated Mediation Model of Financial Well-Being in Pakistani Households

Abstract

This study investigates the financial well-being of Pakistani households by examining how financial literacy, socialization, and financial constraints shape financial behavior and, in turn,overall well-being. Drawing on consumer socialization, behavioral life-cycle, and stress-coping perspectives, a moderated-mediation model was tested using household survey data. Partial least squares analysis revealed that financial literacy,financial socialization, and financial constraints each exert a significant positive influence on financial behavior, which subsequently enhances financial well-being. Financial stress also demonstrates a direct positive effect on well-being,but its interaction with financial behavior is not significant, indicating that stress does not alter the behavior-well-being pathway. These findings highlight the pivotal role of household financial behavior as the mechanism linking knowledge, social influences, and resource limitations to financial well-being in Pakistan. The results underscore the need for policies and educational initiatives that strengthen financial skills and resilience to improve household welfare in emerging economies.