The role of financial risk-taking attitude in personal finances and consumer satisfaction: evidence from Australia

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Abstract
Purpose: Financial risk-taking attitude (FRT) plays an important role in consumers' financial decisions, thereby determining consumer well-being. Motivated by the recent research on consumer well-being, this paper explores the relationships between financial literacy, a propensity to plan (PTP), FRT, financial satisfaction and life satisfaction. Design/methodology/approach: The authors use the Household, Income and Labour Dynamics in Australia (HILDA) survey to achieve the purpose of this paper. Furthermore, the authors use the variance-based partial least square structural equation modeling (PLS-SEM), also known as the PLS path modeling approach to test our proposed hypotheses empirically. Findings: The study finds a strong partial mediation of FRT between financial literacy and financial satisfaction. Moreover, the analyses reveal that a high PTP combined with a high FRT results in achieving high financial satisfaction, which leads to improved life satisfaction. Practical implications: The findings show the importance of creating financial plans in accordance with risk tolerance. While increasing financial literacy is relevant, the research suggests that tools that help consumers plan and invest in appropriate risky investments will lead to better outcomes. Originality/value: Though scholarly acumen of consumer well-being is rapidly developing, little remains known regarding the collective roles of financial literacy, PTP and FRT. The study addresses this gap by showing that financial literacy, risk-taking attitudes and planning propensities are all interconnected and necessary ingredients to improve financial and life satisfaction.

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