Financial well-being

The main purpose of this study is to explore various dimensions of financial well-being of individuals and households as retail investors during scenario like pandemic and economic downturns. This study uses structural equation modelling framework to develop the financial well-being index of retail investors. The index was developed using exploratory factor analysis on the first sample (475 respondents), and tested and validated using confirmatory factor analysis on the second sample (964 respondents) as the formative indicators of financial well-being. The results of exploratory factor analysis on seventeen distinct statements yielded four-factor construct of financial well-being: (a) Absorb financial shocks (AFS), (b) Meet financial goals of (MFG), (c) Financial freedom of choice (FFC), and (d) Control over finances (COF). The formative construct of financial well-being was then validated using the confirmatory factor analysis in variance based Structural Equational Modelling approach. This study provides a good source to understand the dimensions of financial well-being as a formative index. This index is good overview for the researchers and practitioners to understand how individual investor behave during turbulence time in the economy as well as in their personal lives based upon their financial independence and control over finances.