Abstract: Based on survey data from Chinese urban household consumer finance, this paper discusses the specific effects and functionary channels of financial literacy on household wealth from both the subjective and objective aspects. The findings suggest that financial literacy has a directly and significantly positive impact on household wealth, and can also has an indirectly positive impact through financial behaviors such as formulating planning, invest in stock, investment decentralization and consulting financial advisors; the net value of financial behavior after excluding financial literacy also plays an important role in promoting household wealth. In addition, financial literacy self-confidence bias has an inverse U-shaped nonlinear impact on household wealth, the reduction in the degree of self-confidence deficiency has a positive effect on household wealth, but with the increase of self-confidence, the increase in overconfidence will reduce household wealth. The conclusion of the study has policy implications for cultivating and improving residents′ financial literacy.

Key words: financial literacy, household wealth, financial behavior, financial literacy self-confidence bias