An Analysis of Personal Financial Distress: A Review of Financial Behaviors among Rural and Urban Communities

The development is intended to provide welfare to the community and to boost the nation’s economy. Financial wellbeing is the state which lies opposite to financial distress. The rural community people in Penyangga village, North Sumatera Indonesia, have not generated significant income from non-timber forests products and other sources. The present study aims at comparing the financial distress experienced by rural community people of Penyangga village and urban community people of Medan city with relatively similar amount of income. A total of 30 rural people and 30 urban people were involved as the respondents in this study. To observe the difference between financial behavior and financial distress, a discriminant analysis was performed. The test results demonstrated that at alpha five percent, there is no difference in the spending behavior and debt payoff between these two groups. However, there is a significant difference in the financial distress being experienced. Rural community people tend to feel more prosperous with their own financial condition and feel less financially depressed. Despite being financially short and rely solely on rice and vegetables in their neighborhood for food, they live at the constant state of happiness.