Motivations for personal financial management: A Self-Determination Theory perspective

TLDR

Financial knowledge and sound financial decision making are widely recognized as key determinants of personal and societal prosperity, yet the role of distinct motivational qualities in shaping how people manage their money remains unexplored. The authors applied Self‑Determination Theory in two studies to examine how autonomous, controlled, and amotivated motives for understanding and managing finances relate to financial knowledge and well‑being. Participants in Study 1 (N = 516) and Study 2 (N = 534) completed detailed demographic surveys and questionnaires assessing the financial variables of interest. Across both U.S.

Abstract

Financial knowledge and sound financial decision making are now broadly recognized to be important determinants of both personal and societal prosperity, but research has yet to examine how distinct qualities of motivation may be associated with the way people manage their money. In two studies we applied the framework of Self-Determination Theory (SDT) to examine people's autonomous (volitional) and controlled (pressured) motivation for understanding and managing their finances, as well as their amotivation (lack of motivation) for doing so, and the differential associations these motives have with financial knowledge and financial well-being. American participants (Study 1, N = 516; Study 2, N = 534) completed detailed demographic surveys and questionnaires assessing the financial variables of interest. As hypothesized, SDT's motivational constructs were associated with financial outcomes over and above participants' age, gender, income, household wealth, and educational attainment. Autonomous motivation was positively associated with a host of positive financial behaviors and characteristics (e.g., saving/investing and financial self-efficacy, well-being, and self-awareness). Controlled motivation was negatively associated with financial well-being. Amotivation was positively associated with overspending and negatively associated with financial self-efficacy and well-being. These findings support the relevance of SDT's framework in this domain and suggest that interventions aimed at promoting financial knowledge and wellness may benefit by adopting evidence-supported strategies for optimizing more autonomous motivations and addressing amotivations.