This study extends the Capability Approach to the financial domain by examining financial optimism as a psychological pathway to life satisfaction. Using primary data collected in late 2021, the analysis explored how individual capabilities, external conditions, and financial functionings contribute to financial optimism and, ultimately, life satisfaction. Findings show that both internal and external factors are significantly related to financial behaviors, which in turn foster financial optimism. Financial optimism emerged as a key factor, linking proactive budgeting, maintaining a saving–debt buffer, and engagement with financial products to higher life satisfaction. The results highlight the importance of considering not only financial skills, behaviors, and external resources but also psychological dimensions. Policies and educational initiatives should integrate support from external financial systems with capability development while also fostering individuals’ confidence and optimism, thereby promoting resilience and long-term well-being.

Accepted Oral Presentation