This study examines the relationships among social comparison, financial anxiety and financial satisfaction. It explores the mediating role of financial anxiety in the relationship between perceived relative financial disadvantage, specifically the feeling of being financially worse off than peers and satisfaction with one's financial life. This study also investigates whether objective financial knowledge moderates the effects of social comparison on self-perceived financial anxiety and financial satisfaction, recognizing that individuals with different levels of financial knowledge may interpret and emotionally respond to unfavorable financial comparisons in distinct ways.
The analysis in this study drew on data from the first available wave of the financial planning longitudinal study (FPLS), using a sample of 4,027 working and retired Americans aged 25 to 65 who identified as primary or joint financial decision-makers in their households. Structural equation modeling with full information maximum likelihood estimation was employed to test the proposed moderated mediation model.
Perceived financial disadvantage compared to peers was positively associated with financial anxiety directly and negatively associated with financial satisfaction, both directly and indirectly through elevated anxiety. Objective financial knowledge moderated these relationships by weakening the positive association between perceived disadvantage and financial anxiety, while strengthening the negative association between perceived disadvantage and financial satisfaction.
This study draws on social comparison theory and conservation of resources theory to develop its conceptual framework. It represents an early effort to examine how upward financial comparisons influence financial anxiety and satisfaction among decision-makers in moderate-to high-income American households. The dual role of objective financial knowledge as a moderator in the relationships between social comparison and both financial anxiety and satisfaction is explored in greater depth. The findings offer important implications for financial professionals, highlighting that social comparison tendencies may be an overlooked source of financial anxiety and a potential barrier to financial satisfaction.
