The role of financial risk-taking attitude in personal finances and consumer satisfaction: Evidence from Australia

Purpose – Financial risk-taking attitude (FRT) plays an important role in consumers' financial decisions, thereby determining consumer well-being. Motivated by the recent research on consumer well-being, this paper explores the relationships between financial literacy, a propensity to plan (PTP), a financial risk-taking attitude (FRT), financial satisfaction, and life satisfaction. Design/methodology/approach – We use the Household, Income and Labour Dynamics in Australia (HILDA) survey to achieve the purpose of this paper. Furthermore, we use the variance-based Partial Least Square Structural Equation Modelling (PLS-SEM), also known as the PLS path modelling approach to test our proposed hypotheses empirically. Findings – We find a strong partial mediation of FRT between financial literacy and financial satisfaction. Moreover, the analyses reveal that a high PTP combined with a high FRT results in achieving high financial satisfaction, which leads to improved life satisfaction. Practical implications – Our findings show the importance of creating financial plans in accordance with risk tolerance. While increasing financial literacy is relevant, our research suggests that tools that help consumers plan and invest in appropriate risky investments will lead to better outcomes. Originality/value – Though scholarly acumen of consumer well-being is rapidly developing, little remains known regarding the collective roles of financial literacy, a PTP, and FRT. We address this gap by showing that financial literacy, risk-taking attitudes, and planning propensities are all interconnected and necessary ingredients to improve financial and life satisfaction.