Microsoft Word Ed Horwitz Post Dissertation Fina docx

 Financial Influences  
 Financial Confidence and Skills 
 
The framework for financial literacy (Figure 4.2) identifies the subcomponents of 
financial skills and financial knowledge separately, with skills being the combination of both 
confidence and ability. Having the confidence and ability to apply relevant financial knowledge 
is necessary to increase financial literacy and ultimately the resulting behavior. The need for 
financial skills to provide effective financial management behavior has been well established 
within the historical literature (Carswell, 2009; Collins, 2007; Scott, 2010; Robb & Woodyard, 
2012).     
 
Financial confidence has been explored in several historical research studies. Recent and 
relevant examples are studies by Robb and Woodyard (2011) and Seay and Robb (2013), both 
utilizing the NCFS dataset. Best practice financial behaviors and high-cost borrowing behaviors 
were explored along with several other financial measures, including financial knowledge. Seay 
and Robb (2013) used a four-question composite measure to assess subjective financial 
knowledge consisting of both self-reported financial knowledge, financial awareness, and 
financial skills questions. The results found that subjective financial knowledge was negatively 
associated with two of the four high-cost debt borrowing behaviors tested. Similarly, Robb and 
Woodyard (2011) used the same composite measure for self-assessed financial confidence, 
combining questions for financial knowledge and skills. Their research found that financial 
confidence was positively associated with the performance of best practice behaviors.