The study, conducted by Joel Mark P. Rodriguez of Rizal Technological University, surveyed 377 young professionals aged 21 to 35 who work in Makati City, home to the headquarters of many of the country’s largest banks, multinational corporations, and more than a thousand business process outsourcing offices. These workers face a uniquely demanding financial environment: high living costs, sophisticated digital financial products, and constant pressure to budget, borrow, invest, and plan for retirement in one of Southeast Asia’s most economically active urban centers. Yet despite their visibility in the economy, young urban professionals have been largely overlooked in financial well-being research, which has traditionally focused on students, households, or retirees.

To untangle how financial knowledge translates into financial security, Rodriguez anchored the study in Social Cognitive Theory, the influential framework developed by psychologist Albert Bandura, which holds that human outcomes emerge from the reciprocal interplay of personal factors, behavior, and environment. In this model, financial literacy serves as the cognitive resource, financial confidence functions as self-efficacy—the belief in one’s own ability to manage money successfully—and financial behavior represents the actual enactment of that capability through budgeting, saving, investing, and debt management. Financial well-being, measured with the Consumer Financial Protection Bureau’s validated scale, captures the end state: a sense of security, control over current obligations, preparedness for emergencies, and freedom of choice in the present and future.

The methodological machinery behind the study was rigorous. Participants completed a structured 28-item questionnaire with seven items for each of the four constructs, rated on five-point Likert scales. The instruments were adapted from established measures, including the Financial Management Behavior Scale and the CFPB Financial Well-Being Scale, then validated through expert review, pilot testing, and exploratory factor analysis. Data were analyzed using partial least squares structural equation modeling in WarpPLS 8.0, with parallel mediation tested through bootstrapping across 5,000 resamples—an approach that estimates both mediating pathways simultaneously so that each can be evaluated while controlling for the other.

The statistical results were striking. Financial literacy exerted a significant direct effect on financial well-being (β = 0.197, p < 0.001), confirming that knowledge matters in its own right. But its effects on the two candidate mediators were far larger: literacy predicted financial behavior with a path coefficient of 0.841 and financial confidence with 0.692, both highly significant. The model explained 70.8 percent of the variance in financial behavior, 47.9 percent in financial confidence, and 68.1 percent in financial well-being, with model fit indices—including a Tenenhaus Goodness of Fit of 0.464, well above the 0.36 benchmark—indicating a robust and reliable structure.

The pivotal finding emerged when the indirect pathways were examined. Financial confidence carried a significant indirect effect of financial literacy on financial well-being (β = 0.319, p < 0.001), and its direct effect on well-being (β = 0.779, p < 0.001) was the strongest single path in the entire model. Financial behavior, by contrast, showed only a small direct effect on well-being (β = 0.107, p = 0.018), and its indirect pathway from literacy was not statistically significant (β = 0.115, p = 0.153). In other words, knowing how to manage money builds both good habits and confidence, but it is the confidence—rather than the habits—that statistically transmits the benefit of knowledge into felt financial security.

This asymmetry makes theoretical sense within Social Cognitive Theory. Confidence operates as financial self-efficacy: it motivates people to set goals, participate in markets, persist through setbacks, and actually deploy what they know. Previous research has hinted at this, with some studies finding that subjective financial knowledge—what people believe they know—correlates more strongly with financial behavior than objective knowledge does, and that confidence can sometimes influence well-being as much as or more than literacy itself. The Makati results sharpen that picture for a high-pressure urban context, where the authors suggest that good financial behavior alone may be insufficient because the sheer density of financial challenges dilutes the payoff of disciplined habits unless they are underwritten by psychological readiness.

The study also uncovered an income gradient that complicates any one-size-fits-all approach to financial education. One-way ANOVA revealed significant differences in both financial literacy (F = 6.42, p < 0.001) and financial well-being (F = 8.15, p < 0.001) across income groups, with higher earners reporting both more knowledge and greater security. Lower-income professionals, earning below 20,000 Philippine pesos monthly, face structural obstacles to converting literacy into well-being, from limited access to financial tools to fewer opportunities to leverage what they learn. The author argues that interventions should therefore be tailored: basic budgeting and savings discipline for the lowest earners, borrowing and emergency-fund strategies for the middle brackets, and investment literacy, insurance, and wealth management for those earning above 40,000 pesos.

The practical implications extend well beyond the Philippines. If confidence is the primary conduit through which knowledge becomes well-being, then financial education programs built solely around technical content—compound interest, portfolio theory, credit scores—may be missing the psychological half of the equation. The study points toward programs that incorporate financial coaching, investment simulations, and guided planning exercises designed to build self-efficacy alongside competence. It also flags a cautionary note from the broader literature: confidence is a double-edged sword, since overconfidence breeds risky decisions and losses, while underconfidence produces missed opportunities. Effective programs must calibrate belief to actual ability, ensuring that self-efficacy grows on a foundation of genuine skill rather than inflated perception.

The research has limitations that temper its reach. The sample was drawn exclusively from Makati City using purposive sampling, so results may not generalize to other Philippine cities or to neighboring ASEAN economies with different financial cultures. Some measurement properties, particularly the convergent validity of several constructs, fell below conventional thresholds, suggesting that scale refinement is needed in future work. The author recommends extending data collection to Manila, Cebu, and countries such as Singapore and Vietnam to test whether the confidence pathway holds across different urban and economic contexts. Still, the core message stands: financial literacy is necessary but not sufficient, and for young professionals navigating demanding city economies, the transformation of knowledge into security runs through the mind as much as the wallet—through the quiet, powerful conviction that one can handle whatever money throws at them.

Subject of Research: The mediating roles of financial confidence and financial behavior in the relationship between financial literacy and financial well-being among young urban professionals

Article Title: The parallel mediation effects of financial confidence and financial behavior on the relationship between financial literacy and financial well-being: evidence from young professionals

Article References: Rodriguez, J. M. P. (2026). The parallel mediation effects of financial confidence and financial behavior on the relationship between financial literacy and financial well-being: evidence from young professionals. Frontiers in Behavioral Economics, 5, Article 1914751. https://doi.org/10.3389/frbhe.2026.1914751

Image Credits: AI Generated

DOI: 10.3389/frbhe.2026.1914751

Keywords: financial literacy, financial confidence, financial well-being, financial behavior, Social Cognitive Theory, young professionals, Makati City, PLS-SEM, mediation analysis, financial education, behavioral economics, self-efficacy