LAUSR

This study explored the relationships between subjective and objective financial knowledge with cash and credit behavior. A nationally representative sample of American consumers over the age of 18 were surveyed online in 2012 about four financial behaviors: (1) maintenance of an emergency account, (2) prompt payment of credit card balances, (3) checking credit reports, and (4) avoiding checking account overdrafts. The results of logistic regressions indicated that higher levels of both objective and subjective knowledge were significant indicators of positive financial behavior and avoidance of negative behavior. However, a “false-positive” condition of high subjective knowledge and low objective knowledge demonstrated questionable cash and credit behavior linked to overconfidence. This suggests that financial counselors and financial therapists could provide assistance in helping consumers improve their subjective and objective knowledge to reinforce positive cash and credit behavior, which should improve consumer decision making.