Financial Literacy and Mental Health Risk among Youth: A Conceptual Perspective

Abstract

Mental health issues among youth have become a significant global concern, with psychological problems such as anxiety, stress, and depression widely observed in both developed and developing countries. In Malaysia, the prevalence of these challenges is intensified by financial pressures, particularly job insecurity, debt and rising living costs. This paper investigates the impact of financial literacy on youth mental health, analyzing the influence of financial, psychological, and religious factors on the relationship between these two critical variables. Using a desk research methodology, the study synthesizes existing literature to explore theoretical perspectives that explain the pathways linking financial knowledge to mental well-being. Findings indicate that financial literacy matters for protecting mental health, as it equips individuals with the financial knowledge and skills to make wise financial decision, reduce financial stress, and promote a sense of control and resilience during financial difficulties. This paper highlights few gaps in the literature to be addressed by future research, particularly regarding youth populations, cultural and socioeconomic contexts, and the methodological limitations. To address these gaps, a conceptual framework is developed that include the roles of moderating variables (financial factors, risk factors, protective factors, religion) and mediating variable (financial self-efficacy) in the relationship between financial literacy and mental health.