Abstract
In this paper, we study how Psychological Capital (a higher-order construct of hope, self-efficacy, resilience and optimism) affects Financial Wellbeing of working-age adults in China, where Financial Behavior is the mediator. Based on cross-sectional data of 508 valid subjects recruited by Wenjuanxing online platform, we used a two-step Partial Least Squares Structural Equation Modeling (PLS-SEM) in SmartPLS 4, treating Psychological Capital as a second-order notion and weighting the population weighted by national proportions to increase representation. We found that Psychological Capital does indeed influence Financial wellbeing (β = 0.563, p < 0.001), but also indirectly affects Financial wellbeing via Financial Behavior (β = 0.081, p < 0.004), with the same mediation pathway as hypothesized. Weighted data revealed similar structure of effects with slight decrease due to the small effective sample size. The model has solid reliability and discriminant validity and good predictive performance (Stone-Geisser's Q (2)_predict > 0.10; Standardized Root Mean Square Residual (SRMR) = 0.028; Normed Fit Index (NFI) = 0.973) and a smoothness across gender, education, and age. We also find that it is consistent across gender/education and age groups. All of these results support Psychological Capital to be a potentially flexible psychological tool that can positively affect financial wellbeing directly and in a more adaptive manner. This suggests that interventions embedding resilience-building, hope-enhancing, and self-efficacy-strengthening components within financial education may help individuals cultivate more secure long-term financial outcomes. By embedding Psychological Capital within a behavioral explanation framework, we complement the model of financial well-being and provide one of the first population-weighted PLS-SEM studies on the relationships between Psychological Capital and Financial Behavior in China.