Negative home equity is due to declines in home values, largely driven by economic factors, and increases in mortgage debt, a decision made by individuals. Yet, empirical research assessing the individual’s role in the occurrence of negative home equity is limited. This study used the 2018 National Financial Capability Study to explore the association between financial literacy, savings, and debt at the individual level on the occurrence of negative home equity. The findings revealed that objective financial knowledge and financial security were negatively associated with the occurrence of negative home equity, while having a home equity loan, using a payday loan, having medical debt, and exceeding credit card limits were positively associated with the occurrence of negative home equity.

Financial literacy scales are often used as a diagnostic tool to assess financial knowledge levels among various populations, although few of them have undergone empirical testing. This study utilized exploratory factor analysis (EFA) with a sample of Chinese rural migrant workers to identify the underlying structure of a financial literacy scale and its psychometric properties. EFA reduced the 23 items to 5 factors that explain for 69.08% of the variance in financial literacy. Five factors are identified that are daily money management, math skills, saving and borrowing, inflation, and long-term investment. Findings suggest that practitioners who work with migrant workers or groups with lower income, lower educational levels can use this instrument to assess financial literacy levels and explore interventions that improve specific areas of financial knowledge.

This study examined attitudes about the relevance of retirement planning and affect associated with it (retirement involvement) of adults (18–65-years-old), taking racial/ethnic status into consideration. Drawing on online survey data, between-group significance testing revealed that racial/ethnic minority (REM; n = 355) and White (n = 543) participants did not differ in mean levels of retirement involvement, but the REM sample perceived retirement involvement as less relevant to their respective racial/ethnic groups. Similar four-profile solutions consisting of Low, Moderate, High, and Mixed-Reactive Retirement Involvement latent subgroups emerged for both samples in Latent Profile Analyses. Findings revealed distinct racial/ethnic variations in demographic and financial capacity predictors of profile subgroup classification. Results signaled a need for more culturally focused financial counseling and planning research and interventions.

The focus of this article is to quantitatively evaluate and compare three of the most popular defined benefit plan types based on various variable assumptions. The decision of when to retire and take a pension, or being given the option to change plans, often happens only once. This makes the evaluation and comparison critical. This paper provides a numerical analysis with a broad perspective so that employees with varying career situations and retirement plans can better evaluate their financial standing. Data sources include standard economic assumptions used in valuing pension plans, as well as a survey of employer sponsored pension plans. Recent pension plans provide more flexibility by paying out pensions as a single lump sum, however, these plans generally provide lower benefits.

Using data from the 2018 National Financial Capability Study (NFCS), this study examined the associations between financial stressors and financial behaviors, and how these associations differ by race/ethnicity. The descriptive results showed that Black and Hispanic individuals reported higher financial stressors than White and Asian/Other individuals. The regression results showed that higher financial stressors significantly increased undesirable financial behaviors and decreased desirable financial behaviors. The regression results also revealed that Black individuals engaged in significantly more undesirable financial behaviors, while Hispanic and Asian/Other individuals did not differ significantly from White individuals. Further analyses for racial/ethnic differences in the associations between financial stressors and behaviors suggest that race/ethnicity moderated the relationship between the financial stressors and financial behaviors. Specifically, Black individuals with high financial stressors engaged in fewer undesirable financial behaviors, but they also engaged in fewer desirable financial behaviors as compared to the other racial and ethnic groups. Implications for financial counselors, financial educators, and other financial professionals are discussed.

The purpose of this study was to examine the likelihood of consumers hiring a financial planner based on race and gender utilizing an experimental design. Using a sample of Black and White MTurk respondents, cumulative logistic regression was employed to determine the effects of race and gender on the likelihood to hire a financial planner. Findings suggested that, overall, consumers did not have racially biased preferences when hiring a financial planner. However, they did express a preference for hiring female planners over male planners. Financial planning firms can use these findings to strengthen their support for and recruitment of women financial planners, as well as address concerns of racial bias amongst consumers.

Although risk preferences and inheritance expectations should affect annuitization decisions, few studies have empirically tested these relations. This study bridges the gap in the prior literature by investigating potential effects that consumer risk aversion and inheritance expectations have on annuitization. Using data from the 2012 wave of the Health and Retirement Study, this study finds that consumers who are more risk averse have a higher likelihood of owning household annuity income compared to consumers who are less risk averse. Consumers with a higher inheritance expectation are more likely to have household annuity income compared to those with a lower inheritance expectation. Finally, when risk aversion is interacted with inheritance expectation, it increases the likelihood of household annuity ownership.

This study used the 2015 National Financial Capability Study to investigate the relationships among financial capability, financial education, and student loan debt outcomes. Specifically, this study examines four student loan outcomes: delinquency, stress, preparation, and satisfaction among borrowers who obtained loans for themselves. Three forms of financial capability (objective financial knowledge, subjective financial knowledge, and perceived financial capability) and two forms of financial education (formal school/workplace education and informal parental education) were used as potential predictors in the study. The Probit regression results showed that expectedly, several financial capability and financial education factors were positively associated with desirable financial outcomes such as loan calculation and loan satisfaction, and negatively associated with undesirable outcomes such as loan stress and loan delinquency. However, this study also showed several unexpected results. For example, objective financial knowledge was negatively associated with loan calculation and loan satisfaction, and subjective knowledge and formal financial education were positively associated with loan delinquency.

This article adds to the existing literature on financial risk aversion and risk taking by testing the possibility that a person’s degree of disappointment aversion, as an anticipatory emotion, may be an antecedent of risk-taking behavior. In this regard, the purpose of this article is to introduce two interrelated measures—the expectation-proclivity scale and the disappointment-aversion scale—and to establish the empirical association between expectation-proclivity and disappointment-aversion scale scores and financial risk aversion and financial risk taking. Results from this study show that disappointment aversion is positively associated with financial risk aversion, whereas establishing high outcome expectations is negatively related with financial risk aversion. Additionally, findings show that disappointment aversion and expectation proclivity are inversely related. Findings from this study provide support for what is termed in this article the disappointment dilemma hypothesis. Specifically, financial decision-makers who are averse to disappointment may be prone to allocating assets and investment dollars in ways that minimize or avoid disappointment in the short-run, but by doing so, may regret risk-avoiding behavior in the future.

The purpose of this article is to utilize decision tree (DT) analysis to examine the relationship between income level, financial satisfaction, financial confidence, financial knowledge, and several demographics with a goal of better understanding desirable financial behavior. The emphasis of this analysis is focused particularly upon better understanding the role of financial knowledge in desirable behavior outcomes. DT analysis is most useful when an analysis includes numerous variables and solving problems where the cumulative learning process is inherent. Our DT analysis of four FINRA National Financial Capability datasets (2009, 2012, 2015, and 2018) suggest that financial knowledge is a relevant variable only under specific circumstances and for respondents with relatively higher income levels. Key variables in the DT analysis included income level and financial satisfaction.