The impact of financial literacy on financial well-being: a systematic literature review

Background: The harsh reality of financial difficulty can be concerning, requiring an opportunity to break free from these limitations at the earliest chance. Existing studies on the influence of financial literacy on financial well-being have, however, often been fragmented. This systematic literature review was, therefore, necessary to enhance understanding of financial literacy as a means of achieving financial well-being and to carefully examine the extant literature to unravel the key themes and future research agenda of the impact of financial literacy on financial well-being. Method: Following the PRISMA guidelines, we searched the Scopus database from inception to August 16, 2024, and included articles with the keywords financial literacy, financial education, financial outcome, financial well-being, economic outcome, economic well-being in their titles, abstracts, or keywords. After applying various inclusion and exclusion criteria, 35 articles were included in the final review. The synthesis was performed narratively. Descriptive and thematic analyses were conducted to answer the research questions. Findings: Numerous studies have consistently found financial literacy to influence financial well-being significantly. Other variables, such as financial behavior, pronounced behavioral elements such as non-impulsive future-oriented behavior and impulsiveness, and financial socialization, were discovered to have a significant influence on financial well-being. The following themes were developed in answer to the research questions: financial literacy and its determinants; the influence of financial literacy on financial well-being; the impact of financial socialization on financial well-being; the interplay of financial literacy, psychology, and behavioral economics; digital financial literacy in contemporary contexts, and emerging trends. The study made some future research recommendations. Implications: Future research can build on this work to improve our understanding and contribute to significant advancements in the financial well-being of diverse groups of people.