Financial Management Behavior Scale: A Re-Conceptualization for Emerging Markets

Understanding financial management behavior (FMB) is critical for improving individual well-being. Guided by the psychological and cultural dimensions of economic behavior, this study adapts and validates a simple yet comprehensive FMB scale in the context of a developing economy. Specifically, the study adapts and validates the Financial Management Behavior Scale developed by Dew and Xiao (2011) for the Indian context. Using a sequential exploratory design, the qualitative phase culturally contextualizes and refines the scale items, while the quantitative phase reassesses the factor structure and establishes reliability, structural validity, and criterion validity. Data were collected using purposive maximum-variation sampling to ensure socio-demographic heterogeneity appropriate for scale validation. The scale comprises two distinct factors based on temporal and cultural orientations of human behavior: short-term and long-term FMB. The scale captures an exhaustive range of behavioral domains, including cash management, credit/debt management, comparison shopping/thrift, savings, retirement planning, emergency funds, and insurance/risk management, within a simplified two-factor structure. This simplified two-factor structure provides a context-sensitive yet empirically robust tool for advancing FMB research and informing FMB interventions in India and similar emerging economies.