> ## Content Index > Fetch the complete content index at: https://www.theweekendinvestor.sg/llms.txt > Use this file to discover other available public pages before exploring further. # Financially Literate, but bad with money? - URL: https://www.theweekendinvestor.sg/advisor-journal-club-002/ - Published: 2026-10-30T03:33:35.000Z - Updated: 2026-10-30T07:51:59.000Z - Author: dylonpoh Advisor Journal Club 002 20 October 2026 | Behavioural Finance · Financial Mindfulness · Financial Well-Being **Paper:** *Financial Mindfulness: A Scale* (Garbinsky, Blanchard & Kim, 2024) --- ### The Question We often assume that people who are financially literate should naturally be good at managing their money. But is that necessarily true? Someone may understand how investments work, earn a good income and know the importance of saving. Yet, that same person may have very little savings, avoid looking at their bank statements or feel constantly anxious about money. Perhaps knowing how to manage money is not the same as being able to manage our own financial circumstances. This brings me to an interesting concept: **financial mindfulness**. --- ### What the Research Found The authors define financial mindfulness as being aware of one's current financial state while possessing an acceptance of that state. They identified two components: 1. **Financial Awareness:** The tendency to possess or obtain accurate knowledge of one's present financial state. 2. **Financial Acceptance:** The ability to manage emotions that arise when engaging in financial matters. The distinction is important because financial literacy is not the same as financial awareness. You may understand what a stock or bond is, know how to construct an investment portfolio and even be professionally trained in finance. But that does not necessarily mean you know how much you are spending, saving or accumulating. And even if you are financially aware, are you able to accept what you discover? The researchers developed an eight-item scale to measure financial mindfulness and examined its relationship with financial behaviours and outcomes. One interesting finding was that financial acceptance was significantly associated with higher credit scores, while financial awareness alone was not, after controlling for other variables. The study also found that financial mindfulness was associated with a lower susceptibility to sunk-cost bias. The authors suggest that financial mindfulness may precede financial well-being. However, the findings do not establish causation. We cannot conclude that improving financial mindfulness will necessarily lead to better financial outcomes. Nevertheless, the relationship is worth exploring. --- ### My Learning & Reflections My biggest takeaway is that **being financially literate, financially aware and financially accepting are three different things.** Consider a high-income earner who earns $20,000 a month but saves very little. The first question is whether this person is aware of how little they are saving. The second is whether they can confront that reality without becoming defensive, overwhelmed or avoiding the subject altogether. Knowing is one thing. Being emotionally prepared to deal with what you know is another. What I find particularly interesting is that financial acceptance is not necessarily a problem faced only by people who are financially struggling. It can also apply to wealthy individuals. Imagine someone who grew up in a humble household, studied hard, became a successful professional and accumulated substantial wealth. Objectively, this person may have more than enough resources to live comfortably. But emotionally, do they actually feel financially secure? Have they accepted that their circumstances are no longer the same as when they were growing up? **Do people with resources actually accept that they are rich?** And what about someone who inherits substantial wealth? They may suddenly find themselves responsible for assets they did not accumulate. Are they emotionally prepared to make decisions about that wealth? Do they accept the responsibilities that come with ownership? These are not questions directly answered by the study, but they are interesting extensions of financial acceptance into wealth planning. --- ### What This Means for Financial Advice This study makes me think about the purpose of my regular financial reviews. I like to think of updating a client's balance sheet as being similar to taking a blood sample during a medical examination. It is a relatively simple exercise that provides useful information about someone's financial condition. But taking a blood sample does not automatically improve someone's health. Likewise, updating a balance sheet does not automatically improve someone's financial well-being. It only tells us where we stand. In financial planning, we spend considerable effort helping clients become financially aware. We consolidate their assets, track cash flow, review investment portfolios and project retirement outcomes. But if financial acceptance matters, **shouldn't we also be helping clients process what these numbers mean to them?** For example, a retirement projection may show that a client has accumulated enough to retire comfortably. From a technical perspective, the planning exercise may be complete. But what if the client still feels insecure about retiring? What if they are uncomfortable drawing down their investments despite having sufficient resources? Perhaps the next conversation should not just be about improving investment returns, but understanding why the client finds it difficult to accept their financial position. Similarly, for beneficiaries of substantial wealth, financial planning may need to extend beyond investment education into developing the confidence and emotional readiness to manage inherited assets. These are areas where financial advice could potentially add value beyond the technical aspects of financial planning. ### Application to My Practice I see an opportunity to incorporate financial acceptance into my progression meetings. Rather than stopping at reviewing a client's balance sheet and financial goals, I could introduce questions such as: - How do you actually feel about your current financial position? - Has your perception of financial security changed as your wealth has grown? - What would it take for you to feel that you have enough? These conversations may reveal concerns that financial numbers alone cannot capture. Of course, the study does not establish that regular financial reviews or guided conversations improve financial acceptance. That remains a hypothesis worth testing. But it does make me reconsider what an ongoing financial advisory relationship should accomplish. **Financial awareness tells us where we stand. Financial acceptance determines how we respond emotionally to that reality.** Perhaps good financial planning should address both. ###