Testing the Financial Capability Perspective Using Financial Well-Being across Caregiver Age Groups In the United States

Background and Purpose: Continued empirical examination of financial capability among caregivers of children can inform efforts to strengthen caregiver financial well-being and, in turn, child well-being. Within Sherraden’s financial capability framework, financial well-being is shaped by both individual ability and structural opportunity. Accordingly, caregivers’ financial knowledge, financial skill, and financial inclusion – defined here as access to checking or savings accounts, health or life insurance, and retirement accounts, may each contribute to financial well-being. Guided by this framework, the present study evaluates a hypothesized model in which these three focal dimensions of financial capability are associated with caregiver financial well-being, while caregiver age group is examined as a potential moderator of these associations.

Methods: This study used publicly available, nationally representative data from the 2017 National Financial Well-Being Survey. The analytic sample included 2,148 U.S. adults who reported financially supporting children (1,113 males and 1,035 females). Multigroup structural equation modeling was employed to estimate the associations between financial knowledge, financial skill, financial inclusion, and caregivers’ latent financial well-being across two age groups: younger caregivers (below 55 years) and older caregivers (55 years and above). Measurement invariance of the latent financial well-being factor was then assessed across caregiver age groups, beginning with configural invariance and then scalar invariance, in which factor loadings and item thresholds were constrained to equality across groups. Model fit was evaluated using the comparative fit index (CFI) and Tucker-Lewis index (TLI), with values of .95 or greater indicating good fit; the root-mean-square error of approximation (RMSEA), with values between .05 and .08 indicating acceptable fit; and the standardized root-mean-square residual (SRMR), with values below .08 indicating acceptable fit. Scalar invariance was supported given the change in CFI between configural and scalar models was below .01 and the chi-square difference test was non-significant, Δχ²(38) = 53.01, p = .054. After scalar invariance was established, the measurement model was held constant across groups and structural invariance of each focal path was tested using Wald chi-square tests.

Results: Findings supported measurement invariance of the financial well-being factor, with all item loadings ranging from |0.77| to |1.30|, and structural invariance of the three focal paths across groups, indicating no evidence of moderation by caregiver age group. Financial skill showed the strongest association with financial well-being in both groups (β = 0.49 for younger caregivers; β = 0.45 for older caregivers), followed by financial inclusion (β = 0.13 for younger caregivers; β = 0.12 for older caregivers). Financial knowledge was positively associated with financial well-being among younger caregivers (β = 0.09, p < .001) but was not statistically significant among older caregivers (β = 0.03, p = .27). However, the Wald test indicated that this cross-group difference was not statistically significant, χ²(1) = 1.52, p = .22.

Conclusions and Implications: Overall, the findings support the theoretical utility of the financial capability framework across common caregiving age groups and suggest that interventions to enhance the financial well-being of child caregivers should prioritize both literacy and inclusion domains across the life course of caregivers.