Resilience isn’t the fix: What really drives financial well-being

Financial well-being has become a growing concern for young adults facing rising living costs, student debt and economic uncertainty. Universities and policymakers have responded with expanded financial literacy programs, yet questions remain about what truly improves long term financial outcomes.

In Financial Capabilities and Financial Well-Being: The Mediating Role of Financial Resilience, published in the Journal of Risk and Financial Management, the author presents new evidence that financial capability, not resilience, is the primary force driving improved financial well-being among university students.

Financial capability emerges as the core driver of well-being

The study is based on a quantitative cross-sectional design using data from 365 university students in Veracruz, Mexico. The research applies exploratory factor analysis, confirmatory factor analysis, and structural equation modeling to test how multiple financial constructs interact. The statistical framework allows the author to assess both direct and indirect effects among variables.

At the core of the framework lies financial capability, understood as a construct made up of multiple dimensions. Rather than reducing capability to simple literacy, the study integrates knowledge, behavior, attitudes, education exposure and advisory engagement into a broader capability framework. This distinction is central to the paper's contribution.

The results show that financial literacy, financial education, financial attitudes, financial advice, and financial knowledge behavior all have significant positive effects on financial capability. Among these, financial advice stands out as the strongest predictor. Students who reported receiving guidance or advice demonstrated markedly stronger financial capability than those relying solely on knowledge or classroom education.

Financial stress, on the other hand, exerts a negative effect on financial capability. Higher stress levels weaken individuals' ability to manage finances effectively. This finding reinforces concerns that economic anxiety can undermine decision making and reduce the practical benefits of financial knowledge.

Most critically, financial capability itself has a strong and statistically significant positive effect on financial well being. Students with higher capability scores report better perceived financial stability, greater confidence in managing money, and improved satisfaction with their financial situation. The model demonstrates that capability functions as the central mechanism translating knowledge and attitudes into tangible well being outcomes.

This distinction matters for policymakers. Many financial literacy campaigns focus narrowly on knowledge acquisition. García-Santillán's findings suggest that knowledge alone is insufficient. Without behavioral reinforcement and advisory support, literacy may not translate into meaningful capability or well being.

Financial resilience fails to mediate the relationship

The research examines whether financial resilience mediates the relationship between financial capability and financial well-being. Resilience is often defined as the ability to withstand economic shocks, recover from setbacks and maintain stability during hardship. Policymakers frequently frame resilience as the ultimate goal of financial education programs.

However, the findings challenge that assumption. Although financial resilience is positively associated with financial well being, the mediation analysis shows that it does not significantly transmit the effect of financial capability onto well being. In other words, financial capability improves well being directly rather than indirectly through resilience.

The author uses bootstrap procedures within the structural equation modeling framework to test the indirect effect. The statistical results indicate that the mediating pathway is not significant. This suggests that resilience plays a complementary role but does not function as a bridge between capability and well being.

The implications are significant. If resilience is not a mediating mechanism, then strategies aimed primarily at building resilience may not deliver the expected improvements in well being unless they also strengthen underlying capability. The study positions resilience as a contextual buffer rather than a structural driver.

This finding refines theoretical understanding in the field of behavioral finance and financial education. The literature has often conflated capability and resilience or treated resilience as the natural outcome of capability. García-Santillán distinguishes the constructs clearly. Capability reflects knowledge application, behavioral competence and informed decision making. Resilience reflects endurance in the face of financial shocks. While related, they operate differently within the model.

The absence of mediation does not mean resilience lacks value. Instead, it suggests that well being is more immediately linked to day-to-day financial competence than to shock absorption capacity. Students who know how to budget, manage credit and seek advice experience improved well being regardless of their measured resilience levels.

Role of advice, attitudes and stress in shaping financial outcomes

The study provides detailed insights into the factors that build financial capability. Financial advice emerges as the strongest determinant. This highlights the importance of interpersonal guidance, mentorship and structured advisory services in financial development.

The result signals a potential gap in traditional educational models. Classroom-based financial education may raise awareness, but direct advice appears more effective in building actionable capability. Personalized guidance may help students translate theoretical knowledge into practical decisions about saving, borrowing and spending.

Financial attitudes also play a major role. Positive attitudes toward planning, budgeting and responsible spending strengthen capability. This supports behavioral finance research showing that cognitive orientation and mindset influence financial outcomes.

Financial knowledge behavior, defined as the practical application of financial understanding, further reinforces capability. The study underscores that knowledge must be enacted to produce measurable well being effects.

Financial stress operates as a countervailing force. Elevated stress levels undermine capability, suggesting that psychological pressures can disrupt rational decision-making. This finding aligns with research indicating that financial strain impairs cognitive bandwidth and increases the likelihood of suboptimal choices.

Together, these dynamics reveal a layered model. Education provides foundational knowledge. Attitudes shape orientation. Advice translates information into action. Behavioral practice reinforces competence. Reduced stress supports clearer decision making. All these elements converge into financial capability, which then directly improves well being.

The study's sample is limited to university students in Veracruz, Mexico, and the cross-sectional design restricts causal inference. The author acknowledges that broader samples and longitudinal designs would strengthen generalizability. Nonetheless, the statistical rigor of the structural equation modeling provides robust internal validation within the studied population.

Future research may examine whether the absence of mediation holds across different age groups, income levels or cultural contexts. It may also explore whether resilience plays a moderating rather than mediating role, strengthening or weakening the impact of capability under certain economic conditions.