Finances and Fate: Parent Financial Socialization, Locus of Control, and Mental Health in Emerging Adulthood

Abstract

Utilizing a sample of 4182 U.S. emerging adults and structural equation modeling, we examined how parent financial socialization received during childhood and adolescence is associated with mental health in emerging adulthood and whether locus of control is an intervening variable. Financial socialization was negatively associated with anxiety and depressive symptoms, and positively associated with life satisfaction. Indirect pathways were found through locus of control. That is, emerging adults who had received better financial socialization were more likely to report an internal locus of control and thus were less likely to be experiencing anxiety and depressive symptoms and more likely to be satisfied with life. These findings provide educators with further evidence of the importance of parent financial socialization, being associated with not only financial health but also mental health. Clinicians of emerging adults may consider financial education and internal locus of control development as intervention points for mental health improvement.

Parental financial socialization, financial behaviors, and well‐being among Hong Kong young adults amid COVID‐19

“…Parental financial socialization includes (a) discussion—verbal communication, (b) modeling—setting behavioral examples, and (c) experiential learning—using life experiences to help offspring internalize rules, norms, and knowledge (LeBaron et al, 2018; LeBaron‐Black, Curran, et al, 2022; LeBaron‐Black, Li, et al, 2022). Parental financial socialization helped individuals develop financial behaviors during childhood and adolescence, which—while controlling for possible predictors such as employment, personal income, personal education, stable personalities, and family income—can cause a long‐lasting and substantial impact on individuals' well‐being (Dew & Xiao, 2011; Goyal & Kumar, 2021; Gudmunson & Danes, 2011; Li et al, 2020; Li et al, 2022; Sorgente & Lanz, 2017).…”

“…Taking together theory and empirical studies, a mediational process is proposed that parental financial socialization is associated with young adults' well-being via financial behaviors (i.e., parental financial socialization à financial behaviors à well-being; Gudmunson & Danes, 2011;LeBaron-Black, Li, et al, 2022;Li et al, 2020;Li et al, 2022;Li et al, 2019). Because the economic world is getting increasingly complicated by social changes such as the COVID-19 pandemic (Kelley et al, 2023;Sun et al, 2021), drawing from family financial socialization theory and empirical studies to test the mediational process is important for preparing the younger generation for a better future.…”

Parental financial socialization and life satisfaction of college students: mediation and moderation analyses

“…Additionally, future research could investigate the specific financial behavior that mediate the relationship between family financial socialization and life satisfaction. Third, the current study mainly focuses on the influence of direct parental teaching; however, LeBaron-Black et al (2022) show that parent financial modeling (children learn by observing) is also associated with financial behaviors and financial satisfaction. Therefore, future studies may examine the association between indirect parent financial socialization and life outcomes.…”

“…For example, Serido et al (2010) finds that the quality of communication between parents and children on financial topics is the strongest predictor of children's financial, psychological and personal well-being. Moreover, research also indicated that parental financial socialization received during childhood and adolescence is helpful for combating anxiety and depressive symptoms, thus positively associated with financial satisfaction and life satisfaction (Allsop et al, 2021;LeBaron-Black et al, 2022). Based on the above literature, the following hypothesis is proposed: H1.…”

“…In this paper, we would like to examine the relationship between parental financial socialization and young adults' life satisfaction. Although previous literature shows that parental financial socialization is positively associated with children's specific-domain wellbeing, for example, financial well-being (LeBaron-Black et al, 2022;Rea et al, 2018;She et al, 2023;Shim et al, 2009), little research explores the impact on young adults' overall well-being. Second, despite the crucial role of parents in shaping children's financial behavior and well-being during their formative years (Danes and Haberman, 2007), certain studies suggest that the influence of parents can be mitigated by other agents of socialization such as partners, peers, media and school education as they mature (Perry et al, 1993;Serido et al, 2015;Shin and Lwin, 2017).…”