Impact of financial behaviour on financial well-being: evidence among young adults in Malaysia

Abstract

The high cost of living and prolonged lockdowns due to the COVID-19 pandemic made the financial well-being of individuals vulnerable, especially young adults. This paper examines the impact of financial behaviour on financial well-being (FWB) among young Malaysians during the COVID-19 pandemic. The study collected variable data on financial literacy, financial behaviour, financial socialisation, self-control, financial technology and FWB. To collect a representative sample of Malaysian young adults, a multi-stage random sampling method was used, and 360 young adults aged 18–29 years old completed the questionnaires. Structural equation modelling was adopted to investigate the factors influencing young adults' FWB. The empirical findings revealed a significant mediating effect of financial behaviour in the relationships between financial literacy, financial socialisation, self-control, financial technology, and FWB. The research concluded that the mediation analysis yields a clear and firm conclusion that financial behaviour is important in empowering young adults’ FWB. Thus, the present study adds value to the existing literature on the relationship between financial behaviour and FWB. Furthermore, the paper’s findings will assist government agencies and non-governmental organisations in developing outreach programmes for young adults per the strategies outlined in the Twelfth Malaysia Plan and the aspirations pledged in the Malaysian Youth Policy 2015–2035. Supplementary Information The online version contains supplementary material available at 10.1057/s41264-023-00234-8.

The Mediating Effect of Financial Self-Efficacy on Financial Behavior and Financial Well-Being of College Students in Region XI

“…The results showed a p-value of 0.000 (β = 0.27, x⎺= 0.272, σ= 0.072, f 2 =0.041, |O/STDEV|=3.746), indicating that a significant relationship between financial behavior and the financial well-being of college students in Region XI exists. This study further supports the conclusions stated by Mathew and Kumar (2022), Garman (1999), and Sabri et al (2023). ( 2022).…”

“…It has been established that an individual's level of satisfaction with their financial condition is mainly determined by their financial conduct; otherwise stated, financial behavior is the key determinant of financial well-being. According to Sabri et al (2023) and Garman (1999), individual financial behaviors may define financial well-being. Poor money management increases the chance of financial problems, whereas good financial habits improve well-being.…”

“…Students frequently exhibit wasteful behavior due to their lack of financial goal-setting and failure to plan for their current needs. Many studies have explored college students' general knowledge of certain financial principles (Lelis et al, 2023), correlated financial behavior to financial well-being (Garman, 1999;Sabri et al, 2023;Mathew & Kumar, 2022;Obenza et al), measuring the financial well-being of students (Chikezie & Sabri, 2017;Norvilitis et al, 2019;Obenza et al;Philippas & Avdoulas, 2019). However, there is a dearth of studies that look at financial behavior and financial self-efficacy as predictors of financial wellbeing among college students, particularly in the context of Region XI, Philippines.…”

Socio-Economic and Psychological Well-Being: An Analytical Study for Sustainable Policy-Making

“…There was shift from an objective approach to a subjective approach, which focused on the behavioural aspects of financial well-being [7]. It was not until 2009 that the topic of financial well-being research became widespread, and researchers began studying its impact on overall life satisfaction, academic success, psychological and physical health, and normative expectations [8,9]. Subsequently, many different studies have attempted to define and measure financial well-being, financial capabilities, and financial behaviours among different groups, including college students, American women, Malaysian college students, and consumers [10][11][12][13].…”