Financial Literacy and Financial Well-Being in Rural Households in Ghana: The Role of Financial Information Consumption

Abstract

While financial literacy is crucial in improving the population’s financial well-being, its effectiveness can be enhanced by exposure to financial information. This paper investigates the nexus between financial literacy, financial information consumption, and financial well-being in rural Ghana, framed within the perspectives of prospect theory and resource dependency theory. The study employed cross-sectional data from a survey of 663 rural households using simple random and cluster sampling with reflective-reflective constructs. The data were analysed using partial least squares structural equation modelling. The findings reveal that financial literacy and financial information consumption significantly enhance financial well-being among rural households in Ghana. Financial literacy also promotes financial information consumption. Notably, financial literacy’s impact on financial well-being is stronger when mediated by the consumption of financial information. These findings underscore the importance of improving financial literacy and information access to uplift financial well-being in rural areas. Moreover, the study highlights that financial literacy education is crucial as it plays a mediating role; recipients of financial education experience a more substantial impact. Such findings emphasise the importance of acquiring financial knowledge and effectively processing financial information to achieve financial prosperity, particularly in rural areas. These findings should motivate individuals, especially those in rural areas, to process financial information successfully rather than merely acquiring financial knowledge to attain financial prosperity.