Economic Predictors of the Subjective Experience of Financial Stress.

The subjective experience of financial stress has profound implications for well-being, health, cognitive performance, and decision-making. In a sample of Dutch households (N = 1,114), we studied the association of five economic factors - income, saving, debts, income volatility, and employment - with a four-factor measure of financial stress: 1) an appraisal of insufficient financial resources, 2) an appraisal of lack of control over one's financial situation, 3) financial worries and rumination, and 4) a short-term focus. This enabled us to examine the economic factors' relative contributions to predicting55Throughout this article, by "prediction" we mean the statistical process of estimating the value of one variable based on the values of other variables (Hernán et al., 2019). We do not imply causal relationships. financial stress. We found that the combination of economic factors predicted financial stress better than income alone. Particularly, buffer savings had a large contribution to predicting financial stress. The number of debts had a smaller relative contribution to predicting financial stress, whereas we did not find support for debt amount as a predictor of financial stress. Employment was negatively associated with financial stress, but only for households with the lowest incomes. We found no support for income volatility predicting financial stress. These results imply that research and policy on financial stress should have a broader scope than income alone and should take a more integrative approach to households' financial situation, considering savings, number of debts, and unemployment.