The importance of financial health as a mediator of financial stress on financial well-being in young adults

Abstract

This paper aims to examine the effect of financial stress on financial well-being with the mediation of financial health. This article also aims to see the influence of each variable, especially the importance of financial health. We use the Structural Equation Modeling (SEM) data analysis (SEM-PLS) method. The data sample is 230 young adults aged 25-30 years who live in Blitar City and Regency. The main findings of this research show that (i) there is a significant negative effect of financial stress on financial well-being, (ii) financial health has a positive effect on financial well-being, and finally, (iii) financial health mediates between financial stress and financial well-being. Financial health not only has a direct effect on financial well-being but also partially mediates financial stress. Young adults are expected to be able to manage their financial stress in everyday life. This aims to improve the individual's financial health, which will automatically improve the individual's financial well-being. It is hoped that future research can add new variables to influence financial well-being.