From Financial Capability to Financial Peace: The Conditional Roles of Stress,Literacy, and Psychological Resilience

Abstract

Financial wellness extends beyond objective financial resources to encompass individuals’ ability to manage financial stress and effectively leverage cognitive and psychological resources. This study investigates how financial capability contributes to Financial Peace by explicating the mediating role of financial stress and the conditional influence of financial literacy and psychological resilience. Drawing on survey data, the study employs a conditional process framework that integrates mediation and moderation to capture the complex and interdependent pathways through which financial capability translates into sustained financial well-being.

The findings indicate that financial capability enhances Financial Peace both directly and indirectly through its influence on financial stress. Importantly, financial literacy and psychological resilience emerge as critical enabling resources that condition this process. These factors strengthen the positive effects of financial capability, buffer the detrimental impact of financial stress, and enhance individuals’ capacity to convert financial skills and resources into enduring financial wellbeing. The results demonstrate that Financial Peace is not a linear outcome of financial capability alone, but a multidimensional state shaped by the interaction of financial, cognitive, and psychological factors.

This study contributes to the financial well-being and behavioral finance literature by advancing an integrated framework that jointly accounts for capability, stress processes, and personal resources. The findings offer important implications for multiple stakeholders. For individuals, they underscore the importance of combining financial skills with literacy and psychological resilience. For educators, employers, and professional institutions, the results support integrated interventions that align financial education with stress management and resilience development. For policymakers, the study provides evidence for holistic financial wellness strategies that address both economic and psychosocial dimensions, thereby fostering sustainable and inclusive financial well-being outcomes.