Family financial socialization during emerging adulthood: Insights from a cross-lagged panel model.

Abstract

The present study tested the Gudmunson and Danes (2011) family financial socialization model (FFSM) using three waves of longitudinal data gathered from a college cohort of emerging adults in the United States. Specifically, we aimed to test the validity of this model in emerging adulthood (Aim 1), to verify whether the effect of the parent’s socialization on a child’s end financial outcome is mediated by intermediary financial outcomes (Aim 2), and to verify whether the effects found when testing the FFSM are stable across time points (Aim 3). Our findings indicate that of eight paths in the model between family socialization processes and financial socialization outcomes, seven paths were significant, thereby lending support for the validity of FFSM in emerging adulthood (Aim 1). Second, we found no mediation effects of parental financial socialization on emerging adult financial behavior and well-being via the internalization of parents’ beliefs, values, and practices (Aim 2). We offer plausible explanations for this result. Last, we verified that the financial socialization processes and their effects are generally invariant across the beginning, the middle, and the end of the emerging adulthood (Aim 3). We interpret our findings in the context of the extant literature on emerging adults’ transition to adult independence and provide insights for practice.