Purpose : Despite a rise in women’s participation in the workforce in many countries, there remained a concern about their financial independence and financial decision-making. Low financial literacy (FL), high dependence, and poor financial management were often linked to this. Hence, it is important to evaluate the factors that shape financial management behaviors (FMB) for women in India.

Design/Methodology/Approach : For this study, a reflective model with five constructs as latent variables was used. Partial least squares structural equation modeling (PLS-SEM) was applied to estimate the direct and indirect effects. After empirical verification, FL was taken as a higher-order construct (HOC) that combines both financial knowledge and awareness. The responses of 391 working women were analyzed to draw meaningful conclusions.

Findings : The study found that FL as an HOC positively influenced both financial self-efficacy (FSE) and FMB. Risk tolerance and demographic factors thought to be important determinants of FMB turned out to be insignificant. FSE turned out to be an important mediator between FL and FMB.

Practical Implications : The results of this study stressed that FL required the support from FSE to be more effective in determining financial management behavior. This finding had an important policy implication: those dealing with empowering women must spend more time in strengthening FSE through practical training, targeted financial education, and capability-enhancing programs.

Originality/Value : The study highlighted that FL is a HOC and confidence in an individual’s ability, represented by FSE, mediates the relationship between FL and FMB. The size effect of this relationship is also big and hence this must be given more importance in policy formulation.

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