Financial satisfaction is a key element of our overall well-being. It’s not just about having a certain amount of money, but also about how effectively we manage our finances and how satisfied we feel with our financial situation. At the core of financial satisfaction lies our financial behavior—how we save, invest, spend, and manage debt. In a recent study by Dr. Khaira Amalia Fachrudin, Muhammad Faidhil Iman (Universitas Sumatera Utara, Indonesia), and Kashan Pirzada (Universiti Utara Malaysia, Malaysia), the role of financial behavior was revealed as a crucial mediator between socioeconomic characteristics, the neurotic personality trait, and financial satisfaction. These findings provide valuable insights into how financial behavior can either support or hinder one's journey toward financial satisfaction, depending on various personal and socioeconomic factors.

Financial satisfaction is achieved through effective financial management. People who are satisfied with their finances are typically in good financial standing, meaning they not only manage their income and expenses well but also feel confident in their financial decision-making. “However, financial satisfaction is not a uniform concept. Various socioeconomic factors such as age, income, education, marital status, and even personality traits shape how individuals perceive and experience their financial situation,” explained Dr. Khaira Amalia.

The study revealed that as individuals age, their financial satisfaction tends to increase, possibly due to greater experience in managing finances and higher income stability. Income itself is a strong predictor of financial satisfaction, as those with higher earnings generally feel more secure in their financial decisions. Interestingly, marital status produced mixed results; for some, marriage brings financial stability, while for others, marriage can present financial challenges depending on how finances are managed within the relationship.

However, financial satisfaction is not solely linked to socioeconomic characteristics—it is also deeply connected to personality traits, particularly neuroticism. Neuroticism, one of the "Big Five" personality traits, often manifests in the form of anxiety, mood swings, and emotional instability. Individuals with high neuroticism scores are more likely to experience negative financial outcomes, primarily because their emotional instability can lead to poor financial decision-making. This trait makes them vulnerable to impulsive spending, debt accumulation, and a reluctance to invest for the long term. As a result, individuals with neurotic tendencies may find themselves in a cycle of financial dissatisfaction, where their behavior exacerbates their stress and unhappiness with their financial situation.

Dr. Khaira Amalia emphasized that financial behavior plays a crucial mediating role. The study highlights that while socioeconomic characteristics and the neurotic personality trait can influence financial satisfaction, the key determinant of how these factors play out lies in how individuals manage their financial behavior. Those who exhibit positive financial behaviors—whether through disciplined saving, wise investing, or responsible spending—tend to achieve greater financial satisfaction, regardless of their income level or personality type.

Financial behavior is defined as the way people manage their savings, investments, spending, and debt. One’s financial behavior can work to their advantage or detriment, depending on how well they manage various aspects of their financial life. For instance, those who consistently save for the future, avoid excessive debt, and invest wisely are more likely to feel satisfied with their financial situation. On the other hand, impulsive spenders, those who accumulate high levels of debt without a repayment plan, and those who avoid investing are likely to experience financial dissatisfaction.

The research was conducted using data from 600 participants in Indonesia. By collecting data through structured questionnaires, the researchers were able to analyze how socioeconomic characteristics and the neurotic personality trait affect financial satisfaction through the lens of financial behavior. “The analysis was conducted using partial least squares structural equation modeling (PLS-SEM), an advanced method that allows researchers to assess how multiple variables interact with one another,” explained Dr. Khaira Amalia.

The results clearly showed that financial behavior acts as a significant mediator. For example, the study found that individuals with high neuroticism scores—those more prone to anxiety and mood swings—are more likely to engage in negative financial behaviors. They may be more prone to impulsive shopping or avoiding good investment opportunities, which results in lower financial satisfaction. These individuals often find themselves in financial difficulties, not because of their income or education level, but because their behavior leads them toward poor financial decisions. Neurotic individuals are more likely to engage in behaviors such as compulsive buying or avoiding short-term investments, both of which can lead to financial instability and dissatisfaction.

Dr. Khaira Amalia concluded that even if someone has personality traits that make them prone to making poor financial decisions, they can still strive to improve their financial behavior to achieve better financial outcomes. For those with neurotic personalities, the study suggests that seeking help when making financial decisions can significantly improve their financial behavior. Whether through financial advisors or support from family and friends, neurotic individuals can benefit from external guidance to help them manage their finances more effectively.

The findings of this study also have broader implications for policymakers and financial educators. Financial behavior can be shaped through targeted interventions, such as financial literacy programs that focus on helping people develop positive financial habits. This is particularly relevant for individuals with neurotic personality traits, who may need extra support in managing their emotions and impulses when making financial decisions. By focusing on improving financial behavior, individuals and organizations can enhance financial well-being on a larger scale.

This study stands out not only for providing empirical evidence on the importance of financial behavior but also for highlighting the potential for change. Financial satisfaction is not entirely determined by factors such as age, income, or personality traits. Instead, it is a dynamic outcome that can be influenced by how we choose to manage our finances.

“This is an empowering message for those who may feel trapped by their circumstances—whether due to low income or a neurotic personality. By making intentional changes to their financial behavior, individuals can take control of their financial satisfaction and work toward a more secure financial future,” concluded Dr. Khaira Amalia.