HPS 121: Psychology Individual And Social Development

Running head: PSCHOLOGY 1
HPS 121: Psychology Individual And Social Development
Student’s name
University affiliation
Author’s note

PSCHOLOGY 2
HPS 121 Psychology Individual And Social Development
Introduction
This paper aims to discuss the correlation that exits between financial and subjective
well-being. To develop a concrete research, an investigation on how subjective well-being is
affected by some of the income determinants. Mainly, the research centers on how people are
coping with their present income and borrowing constrains and how it impacts to their subjective
well-being. From the results, it is evident that the variables used determine the extent at which
subjective well-being affects income and vice-versa. Moreover, they imply that the extent at
which income contributes to meeting the desired consumption needs and ease to borrow. There is
also an in depth research about how different humans have different ways to satisfy their lives in
terms of borrowing constraints and income adequacy.
Key terms: gender, subjective well-being, income, life satisfaction, economy.
Financial Well-Being
Recently, there has been an increased discussion about how humans in regards to age and
gender are spending their income. The recent financial turbulence has been the cause of all this
discussion while the economy tries to recover slowly. As such, there have been numerous
articles, which discuss about the saving and healthy spending habits by citizens of different
nations. In recent years, there has been a reduced rate in saving for numerous households in the
industrialized countries. For instance, in the Eurozone, saving rates have dropped from 8.5
percent, which was recorder in 199 to 6.5 percent in 2017 (Brüggen et al., 2017). Despite being
numerous explanations towards this, increased demand consumption and stable labor market are
the leading causes. The two phenomena’s have led to great private spending, which have
implied that savings costs have tremendously reduced. Traditional saving accounts have also

PSCHOLOGY 3
proved to be useless since there is a low record of base interests, which is a less attractive
investment.
To this financial threats, young adults aged 20 and 30 are the most affected. Generation Y
(people born between mid-1990s and early 1980s) started working while the economic turndown
was taking place (Brüggen et al., 2017). During the recovery process of the economy, the most
affected group is the young generation. Additionally, student debts are on the rise, which is
another cause. According to recent studies, individuals aged between 35 and under are focused
on paying student loans. This limits their consumption significantly. As such, they are unable to
save for their retirement adequately.
It is paradoxical that numerous individuals in the Y generation lack retirement plans but
are worried how they will get bankrupt during that period. This shows that the issue of financial
well-being is important to every revolutionized country in the universe. However, financial well-
being is not limited to industrialized countries. In developing countries, it changes the meaning
to a large number of people who struggle to make their ends meet.
Financial well-being can be defined and categorized into three. First, it is defined as the
subjective and objective concept, which enables an individual to assess their current income
situation. For instance, the students financial well-being has been considered as an objective
measure, this relates to the level of debt (Brüggen et al., 2017). On the other hand, their financial
satisfaction has been linked to the subjective measure. Secondly, financial well being has been
defined as an inclusion of financial indicators and income as objective without regarding the
subjective variables. Here, the studies articulated that household’s ability to upsurge and manage
liquidity could determine financial well-being. On the other hand, financial ratios, information