BUILDING FAMILY FINANCIAL WELL-BEING: AN ANALYSIS OF THE ROLE OF SAKINAH FINANCE ON BEHAVIOUR, FINANCIAL LITERACY, AND FINANCIAL EXPERIENCE IN COASTAL AND URBAN AREAS IN INDONESIA

Purpose — This study aims to analyse the impact of financial stability on the wellbeing of Muslim families by employing the Sakinah Finance model as an analytical framework. It also seeks to compare families residing in coastal and urban areas to understand how different environmental contexts affect household financial management in Indonesia.

Design/Methodology/Approach — The research adopts a quantitative approach, utilising Partial Least Squares Structural Equation Modeling (PLS-SEM) to examine the relationships between variables related to financial stability and family well-being. Data are collected from Muslim households in both coastal and urban communities in Indonesia, allowing for comparative analysis.

Findings — The study found that financial behaviour based on the Sakinah Finance model significantly influences financial well-being. Individuals who apply Islamic values in managing their finances tend to experience greater well-being, driven by a sense of gratitude. Financial literacy and experience showed no significant effect, yet effective Sharīʿah-based financial management remains essential. Urban and coastal communities in Indonesia exhibit similar financial patterns, prioritising basic needs and income management in line with Islamic principles.

Originality/Value — This study contributes to the growing body of literature on Islamic family finance by integrating the Sakinah Finance model in a quantitative framework and offering a comparative analysis between coastal and urban communities. It provides a unique perspective on how financial well-being is connected to Islamic values and socio-environmental factors.

Research Limitations/Implications — The study is limited by its focus on specific geographic areas, which may affect the generalisability of the findings to other regions or countries. The use of cross-sectional data also limits the ability to observe changes over time or infer causality. Additionally, cultural, institutional, and religious diversity among Muslim communities may introduce contextual biases. Future studies should consider longitudinal data and a broader regional scope to validate and expand upon these findings.

Practical Implications — The findings are expected to offer practical insights for policymakers, community leaders, and financial educators in designing interventions and financial literacy programmes that align with the needs and values of Muslim families, particularly in relation to their living environments.