Financial Decision Making during Midlife Crisis among Citizens of Mangalore through the lens of Behaviour Finance

Abstract

Midlife crisis is a period often marked by emotional and psychological changes, usually between the ages of 40 and 60 years, where individuals may re-evaluate their achievements, future goals, and personal identity. These experiences, combined with responsibilities such as raising children, paying loans, and preparing for retirement, can strongly influence financial behaviour. Since financial decisions made in midlife play a key role in shaping retirement security and long-term well-being, understanding this link has become increasingly important.

This study focuses on people in Mangalore, aged 40-60 years, to explore how midlife crisis intensity affects financial decision-making. Primary data was collected using a structured questionnaire, and responses were analysed through statistical tools and structural equation modeling. The study examined three psychological factors emotional instability, psychological stress, and midlife crisis intensity and tested their influence on financial decision-making, as well as the mediating role of financial decisions in building financial resilience.

The findings show that psychological stress has a more significant impact on financial behaviour compared to emotional instability or midlife crisis intensity. While midlife crisis does not always lead to poor financial choices, it often encourages individuals to reassess their spending and saving habits. Results further confirm that financial decisions strongly improve financial resilience, aligning with earlier research that highlights the role of budgeting, saving, and disciplined planning in financial stability.

By focusing on the cultural and social setting of Mangalore, this research contributes to behavioral finance literature with a regional perspective. The insights are valuable for financial advisors, policymakers, and individuals, as they emphasize the importance of integrating emotional well-being with financial planning to strengthen resilience during midlife transitions.