“Pathways” to Financial Well-Being: The Role of Perceptions of Economic Mobility, Trait Hope, and Financial Capability for Minority and Low-Income Consumers

Lack of economic mobility is an intractable problem in which people are trapped in a vicious intergenerational cycle of struggle that disproportionately affects people from historically marginalized communities (HMCs) such as Black or African American and Hispanic or Latino households. Perceived financial well-being (FWB) has been linked with proactive behaviors and financial decision-making that can help people build a bridge to higher levels of mobility, financial satisfaction, and life satisfaction. However, finding factors that positively affect FWB has proven elusive for people from HMCs. Our contributions to addressing this gap are: (1) examining the role of perceived economic mobility (PEM), a new factor in the FWB literature; (2) incorporating the psychosocial variable trait hope, the first time a positive psychological resource variable is introduced into this domain; (3) understanding the importance of financial capability (FC); and (4) obtaining a large sample of primary data from households in poor neighborhoods headed by racial or ethnic minorities. Based on structural equation modeling, PEM has a positive influence on FWB, which is mediated by FC. Moreover, trait hope moderates the relationship between PEM and FC. Importantly, PEM and trait hope can be shaped by public-policy interventions, suggesting avenues for enhancing perceived FWB among people in HMCs.