Understanding Financial Literacy and Financial Well-Being Among Young Malaysians

INTRODUCTION

In today’s fast-paced environment, where financial considerations permeate nearly every aspect of life, attaining financial security through effective financial planning has become essential. Many individuals are juggling multiple financial goals, such as saving for vacations, funding education, preparing for retirement, and building wealth. The successful achievement of these goals necessitates at least a foundational level of financial literacy. Every country recognizes the importance of financial literacy for its populace. Consequently, various programs and initiatives have been introduced to heighten the financial literacy of all segments of society. However, these efforts have yielded only limited results globally, with most countries reporting average to low levels of financial literacy among their populations (Lusardi & Streeter, 2023; Marini et al., 2024; Muñoz-Céspedes et al., 2024; Prempeh et al., 2024; Sconti, 2024). A similar situation is evident in Malaysia, with the government expressing concern about the persistently low levels of financial literacy among its citizens (Varatharaja, 2024). This deficiency continues to impede progress toward achieving financial well-being for the Malaysian population. Various research agencies in Malaysia had uncovered this concerning deficiency in financial literacy among Malaysians. The 2021 survey by the Federation of Investment Managers Malaysia (FIMM) reveals that 80% of non-investors lack knowledge about unit trust schemes, and over 90% are unfamiliar with private retirement schemes, highlighting significant financial literacy survey challenges in the country. Similarly, the 2022 Youth Capital Market Survey by Securities Commission Malaysia (SC), indicates that many young individuals express uncertainty regarding investment decisions and demonstrate a lack of awareness about fundamental financial concepts. A substantial portion of their income, ranging from 60% to 75%, is allocated to daily expenses, leaving only 5% to 10% for savings and investments, which reflects low financial stability. Additionally, the Ringgit Plus Malaysian Financial Literacy Survey 2023 (RinggitPlus, 2023) reports that 51% of Malaysian adults have yet to engage in investing, with 51% of Gen Z spending all or more than their monthly earnings. The 2023 report by the Financial Industry Collective Outreach (FICO) highlights substantial financial literacy challenges among Malaysian youths. Specifically, it reveals that 71.7% of individuals aged 16 to 19 display inadequate saving and spending behaviors. Alarmingly, 4.2% of this demographic group demonstrates a complete absence of positive financial habits. This indicates that the transition to financial preparedness in adulthood would be particularly difficult for this segment. Additional evidence from a more recent survey data by the Financial Education Network (FEN) points out that 84% of Malaysians do not maintain fixed monthly savings, and 69% prefer spending over saving, ultimately leaving them unprepared for financial emergencies (Baderol Sham, 2024). These findings collectively point to a critical need for heightened financial literacy initiatives in Malaysia, despite the concerted efforts that have already been made. Individuals with strong financial well-being typically exhibit disciplined spending, effective debt repayment, availability of emergency savings, higher income, and a solid understanding of financial markets and products (Prakash & Hawaldar, 2024). This positive mindset increases overall well-being, emphasizing the interconnectedness between financial and overall well-being (Ghazali et al., 2023), leading to greater life fulfillment and satisfaction. In a world marked by economic and financial uncertainties, young adults are particularly affected. Those aged 20 to 30 are especially vulnerable to a range of financial threats that can significantly impact their financial well-being (Brüggen et al., 2017). This demographic group faces unique challenges as they transition towards greater financial independence, including managing budgets, securing stable employment, and making long-term financial decisions. As a result, the financial well-being of young adults has emerged as a critical area of research (She et al., 2023). Understanding the specific factors influencing this age group is essential for developing strategies that foster financial resilience and overall well-being, ultimately empowering young adults to achieve greater financial stability as they navigate the complexities of adulthood. In today’s modern world, where the allure of materialism - amplified by social media - frequently exerts more detrimental influence than a beneficial one, the importance of financial literacy becomes increasingly apparent. This environment encourages individuals, especially the younger generation, to overspend in their pursuit of relevance and connection. As a result, many find themselves collecting debt while trying to keep up with rapidly changing trends and societal expectations. This reliance on debt not only adds to their financial burdens but can also lead to a cycle of overspending and repayment challenges. Such debt accumulation can seriously jeopardize their financial security, making it impossible for them to invest in opportunities that could improve their financial well-being or to save for the future. According to the Malaysian Department of Insolvency (2024), from January to September 2024, the total number of bankruptcies among young adults aged 44 and below reached 2,531 out of 4,611 cases, accounting for approximately 54.9% of the total. Personal loans emerged as the primary contributing factor to these bankruptcies. This statistic is particularly alarming, as it highlights a rising trend of financial distress within this demographic group. Apart from luxurious lifestyles, education loans also contribute significantly to the substantial financial burden faced by young adults. As a matter of fact, education loans are among the primary contributors to this strain which continue to rise globally (Blake, 2024; Osborne, 2024). Education undeniably serves as a key factor in transforming lives, especially for those from underprivileged backgrounds. With the annual increase in educational costs, this situation imposes an even greater burden on young people. Consequently, some choose not to pursue their education, while others who wish to continue have no alternative but to rely on loans to finance their studies until graduation. This dependence on loans leads to their mounting debts even before entering the workforce. The recent statistics regarding young adults’ debt in Malaysia point out a critical issue within the financial landscape, whereby those under 30 have accumulated a total debt burden of approximately RM1.9 billion as reported by Agensi Kaunseling dan Pengurusan Kredit (AKPK, 2024). Notably, education loans represent a significant concern, constituting the second-largest category of debt among this demographic in the country (Khazanah Research Institute, 2024). Additionally, the alarming figure of 430,000 borrowers defaulting on education loans, with a total outstanding debt of RM6 billion according to Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN), reflects the pressing need for effective financial education and support systems (Khairi, 2024). These figures not only illustrate the current state of financial well-being among Malaysian emerging adults but also emphasize the urgency of addressing the systemic factors contributing to their debt accumulation. Without timely intervention, this situation threatens to undermine the financial stability and future prospects of a generation already grappling with substantial economic pressures. The purpose of this study is to examine the state of financial literacy among young Malaysians. As previously mentioned, although the topic of financial literacy has been discussed for several decades, as the world move towards the end of 2024, the overall level of financial literacy - despite showing some improvement - has increased only marginally, if at all. This situation is particularly concerning for young people, as financial literacy empowers them to lead lives characterized by security and confidence, equips them to navigate challenges effectively, and build a solid foundation for their futures, ultimately facilitating their achievement of financial well-being. Conversely, in the absence of financial literacy, individuals are at a heightened risk of falling into debt, missing investment opportunities, and struggling to save for the future.

Financial literacy goes beyond simply knowing how to save or invest; it encompasses the understanding of the complexities of financial management for long-term stability, a concept that many average individuals find challenging to grasp. According to the Organization for Economic Co-operation and Development (OECD, 2013), financial literacy entails a combination of awareness, knowledge, skills, attitudes, and behaviors that enable individuals to make informed financial decisions. However, much of the existing research predominantly focused on knowledge, skills, attitudes, and behaviors (Astuti et al., 2022; Dube & Asthana, 2023; Haupt, 2021; Loza et al., 2024; Yong et al., 2018), often overlooking the critical role of awareness (Tang, 2024). Low financial awareness, especially among young people, can hamper the acquisition of essential financial knowledge and skills, resulting in passive participation in educational programs and thus reducing their effectiveness. To address this gap, this study incorporates financial awareness, an underexplored aspect, into the existing framework that includes financial knowledge, attitudes, and behaviors. By doing so, this study aims to assess the aspects of financial literacy and financial well-being of young adults in Malaysia more comprehensively.

LITERATURE REVIEW Financial Well-Being Financial well-being has been the focus of research for several decades, attracting considerable attention across various disciplines, including consumer behavior. It is a complex concept that researchers are attempting to understand, but consensus on its definition, measurement, and influencing factors remains elusive (Brüggen et al., 2017), often confined to specific study contexts. The Consumer Financial Protection Bureau (2015) characterizes financial well-being as a sense of security and freedom regarding one’s current and future financial circumstances, enabling individuals to enjoy life by aligning their financial situation with their values. This state is marked by contentment with one’s financial situation and the belief that it effectively supports the fulfillment of current needs and future aspirations (Aubrey et al., 2022). Additionally, financial well-being is described as the perception of maintaining both current and desired living standards, complemented by a sense of financial freedom (Brüggen et al., 2017). It also includes the ability to sustain one’s current lifestyle while achieving desired future living standards, ensuring the capacity to cover necessary expenses and obligations, and facilitating the pursuit of future aspirations and desires (Riitsalu et al., 2024). Overall, financial well-being reflects a sense of security and assurance derived from a stable financial situation, both at present and in the future. Numerous studies in the past have explored financial well-being, focusing on various predictors, with financial literacy being a prominent factor. However, the relationship between financial literacy and financial well-being has produced inconsistent results. While several studies indicate that financial literacy positively influences financial well-being (Abdullah et al., 2019; Bai, 2023; Philippas & Avdoulas, 2021), other research, such as that by Faturohman et al. (2024) and Utkarsh et al. (2020), suggests that financial literacy is not a significant predictor. These discrepancies highlight that understanding of financial literacy and financial well-being remains a topic of ongoing discussion and investigation.

Financial Literacy

Money is a significant source of stress for many individuals, affecting their overall well-being and quality of life. While it may be tempting to rely on others or the government to navigate financial challenges, true empowerment stems from the ability to manage one’s own finances. Developing effective financial management skills, such as budgeting, saving, and investing, is crucial for handling money appropriately. By taking responsibility for their financial decisions, individuals can reduce stress and enhance their financial stability. Ultimately, fostering financial literacy is essential for promoting independence and resilience in an increasingly complex economic landscape. A consumer’s ability to maintain access to loans, particularly in stringent credit markets, depends on the financial literacy in promoting financial management such as timely bill payments and avoidance of excessive debts (Kefela, 2011). It is fundamental for individuals to make informed and responsible financial choices, thereby improving their financial stability and reducing anxiety (Taft et al., 2013). By having the necessary information, skills, attitudes, and behaviors, financial literacy enables individuals to manage their finances effectively (Jayanthi & Rau, 2019). Furthermore, it educates individuals on important financial concepts, potential risks, and decision-making processes (Susanto et al., 2022), while encouraging practices such as budgeting, saving, and investing. Collectively, these components lead to improved financial health and better navigation of complex financial situations (Bai, 2023). In this study, the OECD’s definition of financial literacy is adopted, encompassing a comprehensive understanding of financial awareness, knowledge, attitudes, and behaviors. These components work together to create a coherent framework that enables people to overcome financial obstacles, make wise choices, and eventually attain financial well-being. Financial Awareness Financial awareness is a critical component of financial literacy, offering individuals early exposure to financial matters and laying the groundwork for the development of more advanced financial knowledge. Being financially aware involves understanding various financial products and their offerings (Atkinson & Messy 2013). Carpena and Zia (2020) emphasize that financial awareness entails the understanding of essential financial planning tools and the specifics of basic financial products and services. Rather than focusing on calculations, this involves people’s understanding of fundamental financial aspects, such as the types of savings accounts and insurance or takaful available, the requirements for opening a bank account, relevant deposit insurance in their local context, the availability of mandatory retirement fund allocations, and the use of loans for productive purposes. According to Tang (2024), people who are more financially aware tend to have larger savings account balances, lower credit card delinquency rates, and larger individual retirement account savings. Therefore, enhancing financial awareness can effectively address financial ignorance by strengthening the foundation of financial literacy. Financial Knowledge Aside from financial awareness, financial knowledge is another key aspect of financial literacy. It comprises a fundamental understanding of financial concepts and terms (Huston, 2010). According to Bowen (2002) and Huang et al. (2013), financial knowledge refers to an individual’s ability to understand key financial terms and concepts necessary for daily functioning. It includes an understanding of personal financial principles, which is crucial for informed decision-making and effective financial management (Adiputra et al., 2021). In brief, financial knowledge is an important part of financial literacy and entails the understanding of fundamental ideas like budgeting, investing, saving, and debt management, as well as important terms like interest, financial charges, and return on investment. Conversely, low financial knowledge may lead to difficulties in utilizing existing financial services and products (Bhushan, 2014). Financial Attitude Financial attitude is defined as a state of mind, perspective, and evaluation regarding financial matters (Pankow, 2003). These attitudes can take on either a favorable or unfavorable stance towards financial issues, significantly influencing how individuals approach budgeting, saving, investing, and managing debt. Financial attitudes can be classified as either positive or negative (Pham et al., 2012), with positive attitudes fostering desirable outcomes and negative attitudes resulting in adverse effects. Ying and Jamal (2023) indicate that a positive financial mindset motivates individuals to save, invest, and plan for a more secure financial future. Additionally, Atmadja et al. (2021) note that a positive financial attitude embodies a proactive approach to finance, leading to well-structured financial management that aligns with personal objectives. This attitude significantly influences individual thinking, valuation, and decision-making, with a stronger attitude yielding more effective financial management strategies. By recognizing and addressing their financial attitudes, individuals can cultivate healthier financial habits and enhance their overall financial literacy. Financial Behavior Xiao (2018) defines financial behavior as any human action related to money management, with the literature emphasizing common behaviors that focus on the use of money, credit, and savings (Xiao et al., 2006). In other words, financial behavior embraces actions tied to financial decision-making and management, including the creation and adherence to an appropriate budget, timely bill payments, and consistent saving practices (Bhushan & Medury, 2014). Similar to financial attitudes, financial behavior can be categorized as either positive or negative. Atkinson and Messy (2012) highlight that those positive financial behaviors, such as effective expenditure planning and a focus on financial stability, can enhance an individual’s financial literacy. Conversely, negative financial behaviors, such as excessive reliance on credit and loans, can detract from overall financial well-being. Therefore, promoting sound financial practices ultimately contributes to a more secure financial future. HYPOTHESIS DEVELOPMENT Financial Awareness to Financial Knowledge Financial literacy programs and advocacy campaigns seek to impart financial knowledge and enhance personal finance awareness. Financial awareness entails recognizing one’s financial situation and being motivated to seek relevant knowledge. A lack of financial awareness can impede the development of essential financial knowledge, leading to passive engagement in financial education programs and thus reducing their effectiveness. Garai-Fodor (2023) and Mashiza and Sibanda (2017) identified a relationship between financial awareness and financial knowledge, suggesting that individuals with strong financial knowledge tend to have greater awareness of products and services in the financial markets. According to Ying and Jamal (2023), financial awareness provides individuals with the knowledge, skills, and confidence to manage their wealth effectively, while inadequate financial awareness can lead to misunderstandings, reflecting a low level of financial knowledge. In light of this, Murugiah et al. (2023) and Nga et al. (2010) emphasize the need for continuous reinforcement by educational institutions to foster general financial awareness among young individuals, asserting that financial awareness should be prioritized. According to Ghimire and Dahal (2024) and the World Bank (2013), assessing individuals’ awareness of financial services and products is essential for understanding their comprehension of the roles of financial service providers. Therefore, this study incorporates statements regarding awareness of various savings accounts, bank loans, and insurance/takaful to measure financial awareness. Consequently, this study’s first hypothesis is: H1: Financial awareness has a positive influence on financial knowledge. Financial Knowledge to Financial Attitudes and Financial Behaviors Financial knowledge significantly influences attitude and financial behavior (Rai et al., 2019). Individuals with financial knowledge are better equipped to evaluate the information they receive and leverage it to their advantage. Loza et al. (2024) and Yahya et al. (2019) found that financial knowledge significantly influences financial attitudes, while Sharmita and Mittal (2023) demonstrated its impact on financial behavior. Additionally, Yong et al. (2018) identified that financial knowledge affects both attitudes and behaviors. This understanding profoundly shapes individuals’ financial behavior; those with a deeper grasp of financial concepts and terms tend to make more responsible financial decisions. Furthermore, individuals with a high level of financial knowledge are more likely to develop positive attitudes such as sound opinions and make informed choices regarding investments, savings, and debt management. Accordingly, the second and the third hypotheses of this study are: H2: Financial knowledge has a positive influence on financial attitude. H3: Financial knowledge has a positive influence on financial behavior. Financial Attitudes and Financial Behaviors to Financial Well-Being Previous studies have demonstrated that both financial attitude and financial behavior significantly impact financial well-being. Bhatia and Singh (2024) emphasize the importance of a positive financial attitude in achieving financial well-being. Similarly, Sabri et al. (2023) and Xiao et al. (2009) found that individuals who engage in positive financial behaviors, such as budgeting, saving, avoiding risky financial decisions, and managing their expenses, tend to experience higher levels of financial wellbeing. Other research by Lavonda et al. (2021), Rufino et al. (2024), and Setiyani and Solichatun (2019) also supports the notion that both financial attitudes and behaviors influence financial well-being. Accordingly, the fourth and fifth hypotheses of this study are: H4: Financial attitude has a positive influence on financial well-being. H5: Financial behavior has a positive influence on financial well-being.

Conceptual Framework

Based on the literature, a framework was developed for this study, as shown in Figure 1, consisting of four factors that are expected to influence young Malaysian adults’ financial well-being.

METHODOLOGY

This study utilized a quantitative approach, employing a cross-sectional survey design facilitated by a structured set of questionnaires. Quantitative methodology is especially advantageous in social science research as it enables researchers to collect data from large samples, offering a measurable approach to understanding social phenomena, including the factors that influence consumer behavior (Mohajan, 2020). The questionnaire was created using Google Forms, with all the questions marked as required to ensure that the respondents had completed each one before submission, thus reducing the likelihood of missing data. The survey link was distributed across various social media platforms, primarily Facebook and WhatsApp. Data collection occurred over a four-week period, from December 2023 to January 2024, covering all five major regions in Malaysia. A purposive sampling method, classified as non-probability sampling, was utilized in this study to specifically target young adults aged 18 to 42 across Malaysia. This approach was selected to ensure that the sample aligned with the research objectives, focusing on a demographic group that is highly active in consumer behavior and online interactions. Purposive sampling also enabled the researchers to deliberately select participants who fit the inclusion criteria, ensuring relevance and meaningful insights (Etikan et al., 2016). A total of 197 responses were gathered, which was considered adequate for further analysis and reflective of the target population. This sample size was guided by Cohen’s (1992) recommendations regarding statistical power analysis, which plays a critical role in determining the number of observations needed to reliably detect effects in behavioral research. Cohen proposed conventional thresholds for effect sizes—small (f² = 0.02), medium (f² = 0.15), and large (f² = 0.35)— and advocated for a minimum power level of 0.80 to minimize the risk of Type II errors. In the context of a multiple regression model with four independent variables, as is the case in this study, a sample size of approximately 85 is typically adequate to detect a medium effect at the 5% significance level. Therefore, the sample of 197 exceeds this benchmark and is considered appropriate for detecting medium to large effects in line with Cohen’s guidance.

The measurement items for financial awareness, financial knowledge, financial attitude, and financial behavior in this study were sourced from Katini and Amalanathan (2022), while the items for financial well-being were adapted from Renaldo et al. (2020). All questions included alternative responses measured on a five-point Likert scale, ranging from 1 (strongly disagree) to 5 (strongly agree). Table A1 in the Appendix presents the research statements for each construct. The collected data were analyzed using partial least squares structural equation modeling (PLS-SEM) with SmartPLS 4.0. This method allows for simultaneous estimation of interdependencies within a model, providing valuable insights into the factors influencing financial well-being among young adults in Malaysia, thereby enhancing the analysis of complex relationships. The PLS-SEM analysis was conducted in two stages: the first stage evaluated the measurement model to ensure that the constructs were valid and reliable, while the second stage concentrated on structural measurement using bootstrapping to test the hypotheses.

RESULTS Respondents’ Characteristics A total of 197 individuals aged 18 to 42, categorized as young adults for this study, were reached through their social media accounts. Table 1 presents the profile of the respondents, detailing the frequency and percentage across various demographics, including gender, ethnicity, age, marital status, education, employment, income, and region of residence. The study categorized the respondents by region, detailing the states within five designated areas. The Central Region encompasses Wilayah Persekutuan (comprising Kuala Lumpur, Putrajaya, and Labuan) and Selangor. The Northern Region includes Kedah, Penang, Perak, and Perlis. The Southern Region comprises Johor, Melaka, and Negeri Sembilan. The East Coast consists of Kelantan, Pahang, and Terengganu, while East Malaysia is represented by Sabah and Sarawak. This clear classification facilitates the respondents in easily identifying and selecting their respective regions based on their state of residence.

Common Method Variance

Behavioral research surveys frequently rely on self-report measures from the same sample, which may introduce common method bias (Podsakoff et al., 2003). Harman’s single factor test was utilized to identify common method bias, a widely used technique for addressing this issue (Kock, 2020). The findings showed that a single factor accounted for 43.819% of the variance, which is below the 50% threshold recommended by Podsakoff et al. (2003). This indicates that common method bias is unlikely to be an issue in this study. Additionally, common method bias was assessed through the variance inflation factor (VIF) values of the inner model (Kock, 2017). The results indicated that the inner VIF values for financial awareness (2.373), financial knowledge (2.199), financial attitude (2.883), and financial behavior (2.031) were all below the threshold of 3.3, as established by Kock (2017). This confirms that the data for this study is not affected by common method bias. Measurement Model Assessment Reliability and Convergent Validity According to Hair et al. (2014b) it is crucial to assess the model’s reliability and convergent validity before measuring the structural model. This involves evaluating the measurement model to ensure that the factor loadings, Cronbach’s alpha, composite reliability (CR), and average variance extracted (AVE) meet the recommended thresholds. Initially, the factor loadings were examined, leading to the removal of two items, FAtt1 and FAtt3, due to having outer loadings below the suggested threshold of 0.70 (Hair et al., 2014a). The values for Cronbach’s alpha, CR, and AVE all exceeded the thresholds of 0.70 (Hair et al., 2017), 0.70 (Hair et al., 2022), and 0.50 (Hair et al., 2022), respectively, as shown in Table 2. Therefore, the model is deemed sufficiently reliable and valid.

Discriminant Validity

Discriminant validity was assessed using the heterotrait-monotrait (HTMT) criterion, with the recommended threshold set below 0.90 (Henseler et al., 2015). As shown in Table 3, all values fall below this threshold, confirming that the constructs in this study effectively capture distinct aspects of the phenomena under investigation.

FWB

Structural Model Assessment

The key criteria for evaluating the structural model in PLS-SEM include the significance of the path coefficients, the coefficient of determination (R²) value, and the effect size (f²). Table 4 presents the values for all these assessments. The R² values of 0.26, 0.13, and 0.02 are classified as substantial, moderate, and weak, respectively (Hair et al., 2017). The R² values presented in Table 4 indicate that all are substantial. In terms of f², Cohen (1988) defines values of 0.02, 0.15, and 0.35 as representing the small, medium, and large effects of the exogenous latent variable, correspondingly. As shown in

Table 4 also presents the results of the hypotheses, confirming support for all five proposed hypotheses in this study. For H1 a significant relationship is demonstrated between financial awareness and financial knowledge (β = 0.700, t = 14.853, p = 0.000); thus, H1 is strongly supported. For H2, a positive association is established between financial knowledge and financial attitude (β = 0.607, t = 11.935, p = 0.000), indicating that H2 is validated. For H3, a significant link is established between financial knowledge and financial behavior (β = 0.535, t = 8.137, p = 0.000); hence, H3 is affirmed. Finally, for H4 and H5, both financial attitudes (β = 0.207, t = 2.67, p = 0.007) and financial behaviors (β = 0.392, t = 4.22, p = 0.000) are shown to be significant predictors of financial well-being, thereby confirming H4 and lending strong empirical backing to H5.

DISCUSSION AND CONCLUSION

The aim of this study is to explore the financial insights of young Malaysians by developing a model that incorporates financial awareness, financial knowledge, financial attitude, financial behavior, and financial well-being. The findings of the present study revealed that financial knowledge is significantly influenced by financial awareness. Additionally, both financial attitude and financial behavior are shaped by the individual's level of financial knowledge. To achieve financial well-being, it is essential to enhance and improve individual financial attitudes and behaviors. These results indicate that a foundational awareness of financial concepts is crucial for achieving financial literacy. Awareness acts as the first step in fostering genuine interest in financial matters, fostering an interest in financial matters and paving the way for individuals to seek more complex financial knowledge. These findings align with that of Garai-Fodor (2023), Mashiza and Sibanda (2017), Sumaiah and Jayaprada (2019), and Ying and Jamal (2023) which highlight that robust awareness, along with familiarity and recognition of financial products and services, is crucial for effectively navigating the complexities of the financial landscape. By establishing this foundational awareness, individuals are better positioned to engage with intricate financial concepts and terms, ultimately enhancing their financial literacy and overall financial well-being.

Secondly, enhancing financial knowledge is crucial for fostering a positive financial attitude and promoting responsible financial behavior. The findings of this study support previous research (Loza et al., 2024; Sharmita & Mittal, 2023; Yahya et al., 2019; Yong et al., 2018), which demonstrate that financial knowledge significantly influences individuals’ financial attitudes and behaviors. Individuals with a deeper understanding of financial concepts and terminology are more likely to cultivate positive attitudes toward managing their finances. Furthermore, those with comprehensive financial knowledge tend to exhibit more responsible financial behaviors, such as prudent spending, effective saving, and informed investment decisions. This comprehensive financial knowledge empowers individuals to make informed choices, allowing them to navigate complex financial situations with greater confidence and competence. As a result, the interplay between financial knowledge, attitude, and behavior underscores the necessity of targeted educational initiatives aimed at enhancing financial literacy. Such efforts are vital not only for enhancing individual financial well-being but also for fostering healthier financial practices within communities, ultimately leading to improved economic outcomes on a broader scale. Thirdly, a positive financial attitude and prudent financial behavior are crucial for achieving financial well-being. The findings of this study correspond with that of previous research (Bhatia & Singh, 2024; Lavonda et al., 2021; Rufino et al., 2024; Sabri et al., 2023; Setiyani & Solichatun, 2019; Xiao et al., 2009), reinforcing the notion that favorable attitudes and sensible behaviors significantly contribute to an individual’s overall financial health. Individuals who foster a positive financial attitude can boost their motivation and commitment to financial goals, allowing them to navigate challenges more effectively. Additionally, those who engage in responsible behaviors, such as budgeting, saving, and making informed investment decisions, tend to achieve greater financial stability and resilience in the face of economic uncertainties. As such, promoting a healthy financial mindset alongside responsible financial practices is crucial for enhancing individuals’ financial well-being and ensuring sustainable economic growth within communities. This highlights the importance of educational programs that not only impart knowledge but also encourage positive attitudes and behaviors toward financial management. In summary, individuals with a solid understanding of fundamental finance and financial principles, as well as the ability to distinguish between various financial products and services, are more inclined to seek and deepen their knowledge of more complex concepts and terminology. This, in turn, fosters positive attitudes toward managing their finances and promotes responsible financial behavior, ultimately contributing to financial wellness. Implications Theoretically, this current study significantly contributes to the understanding of financial well-being by emphasizing the foundational role of financial awareness, within the financial literacy components. While previous research had examined related factors, this study posits that financial awareness serves as the bedrock upon which these other factors are built. Without a basic understanding of financial products and services, individuals may find it challenging to acquire more advanced knowledge and skills needed for effective financial decision-making. By positioning financial awareness as the cornerstone of financial literacy, the findings advocate for targeted interventions to enhance awareness, particularly among young Malaysians with low financial literacy levels. This approach aligns with educational theories that stress the importance of foundational knowledge for advanced learning. Ultimately, the study calls for a strategic focus on financial awareness to empower individuals and improve overall financial outcomes, thereby informing future research and policy initiatives in this critical area.

This study identifies key factors influencing the financial well-being of young adults in Malaysia, offering valuable insights for policymakers, government agencies, academics, and other stakeholders. The findings underscore the urgent need to enhance financial education initiatives and policies, particularly given the low levels of financial awareness among Malaysians. To improve this awareness, it is essential to revisit foundational educational practices, as the current curriculum - despite including financial education - is often too advanced for school children to grasp, and many teachers struggle to teach the subject due to their own limited knowledge. A thorough revision of the curriculum is therefore critical for fostering financial awareness. This comprehensive approach, particularly through continuous reinforcement of financial awareness, is crucial for promoting long-term financial literacy and well-being among young Malaysians. Limitations and Recommendations This study is not without its limitations. Firstly, this study relies on cross-sectional data, which constrains its exploratory nature and inhibits the confirmation of causal relationships among the variables. Moreover, there may be unobservable factors not captured in the current model which could explain some of the observed connections; reversed directional associations might also be present. Since this study is exploratory in nature, tests to assess the significance of mediation effects were not conducted. The importance of mediation should be evaluated in future research using more sophisticated analyses such as Covariance Based-SEM (CB-SEM) or Bayesian SEM or utilizing Artificial Intelligence (AI) software such as Machine Learning models, which may help uncover deeper and more complex, non-linear relationships among the variables that influence financial well-being. The integration of these advanced tools can potentially yield more robust insights and reveal latent patterns that may not be detectable through PLS-SEM alone. Even with these drawbacks, the study offers a useful starting point for further research using longitudinal designs to examine causal relationships. Secondly, Malaysia is a diverse nation, characterized by individuals from various ethnic and cultural backgrounds. While this study does not differentiate respondents based on ethnicity, future research could greatly benefit from examining these distinctions. A study of this kind might show that some groups are more financially aware than others, which would improve their financial literacy and general well-being. Gaining insight into the ways in which cultural factors impact financial awareness, knowledge, attitudes, and behaviors can help us better understand the intricacies of financial literacy in a multicultural setting. This information could help create customized financial education programs that cater to the particular requirements of every community, which would ultimately lead to more successful methods for enhancing financial well-being among Malaysia’s heterogeneous population.

ACKNOWLEDGEMENT

This research received no specific grant from any funding agency.