From Financial Vulnerability to Financial Capability: How Can Decision Making Be Improved? A Case Study

Degree Name

MA in Sustainable Development


A significant number of Americans are financially vulnerable, meaning they do not have enough savings to cover basic expenses for three months in the event of an emergency. Money worries plague many Americans and continue to be one of the highest sources of stress.

It is crucial for people who are financially vulnerable to learn how to build their financial capability. Four aspects comprise financial capability: Knowledge, access, action, and influences. This research focuses on the aspect of influences: factors that contribute to beliefs, attitudes, and behaviors as well as external and internal supports and barriers. Using a holistic approach known as the biopsychosocial model, this paper reveals what an individual can do to improve their financial capability, specifically financial decision making.

The results from this study showed that emotions are the primary influence when making financial decisions. Though emotions are not meant to be controlled, per se, being overly swayed by emotions can be detrimental when it comes to making financial decisions in our best interest. Mindfulness, a simple and yet powerful tool, improves rational decision making, reduces anxiety, and provides other benefits. Could practicing mindfulness help people who are financially vulnerable?

Keywords: Financial Capability, Financial Vulnerability, Financial Education, Financial Coaching, Financial Therapy, Poverty

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