How Is Financial Knowledge Related to Spending Behavior? Evidence From U.S. Stimulus Payments During the COVID-19 Pandemic.

This study utilizes data from the 2021 National Financial Capability Study to explore the roles of both subjective and objective financial knowledge in shaping individuals' financial decisions regarding the utilization of stimulus payments during the COVID-19 pandemic. Employing the probit model, the study explores how financial knowledge is related to stimulus fund utilization. Specifically, the findings reveal that individuals with higher levels of subjective and objective financial knowledge are less likely to use stimulus payments for immediate spending, such as purchases and bill payments, while being more likely to use these payments toward debt repayment, saving, stock market investment, and donation. Notably, subjective financial knowledge is found to play a greater role in decisions related to the utilization of stimulus funds compared with objective financial knowledge. Additionally, this study indicates that the potential influence of financial knowledge on stimulus fund utilization varies across gender, employment, and marital status. These insights provide implications for practitioners in family financial counseling and planning practices, enabling them to better comprehend and support their clients during periods of economic disruptions and stimulus initiatives. [ABSTRACT FROM AUTHOR]