Financial Ratios and Financial Satisfaction: Exploring Associations Between Objective and Subjective Measures of Financial Well-Being Among Older Americans

This study explores the relationship between objective measures and perceptions of financial well-being for older Americans. Financial well-being is measured objectively using three financial ratios including the liquidity ratio, the debt-to-asset ratio, and the investment ratio. Individuals' p...

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Bibliographic Details
Published in:Financial counseling and planning 2019-11, Vol.30 (2), p.231-243
Main Authors: Tenney, Jacob A, Kalenkoski, Charlene M
Format: Article
Language:English
Subjects:
Acid test ratios
Attitude Measures
Attitudes
Behavior
Behavioral Sciences
Counseling
Debt (Financial)
Financial analysis
Financial Audits
Financial counseling
Financial planners
Financial statements
General Counseling
Human Capital
Hypotheses
Investment
Liquid assets
Liquidity
Literature reviews
Marriage and Family Counselling
Money Management
Older Adults
Perceptions
Retirement
Satisfaction
Textbooks
Well Being
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Summary:This study explores the relationship between objective measures and perceptions of financial well-being for older Americans. Financial well-being is measured objectively using three financial ratios including the liquidity ratio, the debt-to-asset ratio, and the investment ratio. Individuals' perceptions of their financial well-being are measured by a question in the Health and Retirement Study that asks respondents how satisfied they are with their present financial condition. An ordered probit model is used to examine the relationship between the perceptions of financial well-being and the three financial ratios. The findings in this analysis suggest that there is a positive relationship between the investment ratio and perceptions of financial well-being. There is also a small but statistically significant improvement in the perception of financial well-being with increases in the liquidity ratio. For large categorical differences, the positive relationship also holds for the debt-to-asset ratio.
ISSN:1052-3073
1947-7910
DOI:10.1891/1052-3073.30.2.231