The Effect of Socialization and Information Source on Financial Management Behaviors among Low‐ and Moderate‐Income Adults

Abstract

Previous studies on financial socialization have focused on adolescents or college students. This study examined the effect of financial socialization on the financial behaviors of adults aged 24–66 from low‐ and moderate‐income households. Data from the NC‐1172 Complex Nature of Saving data set were analyzed using ordinary least squares regressions and logistic regressions. The four dependent variables were spending less than income, making financial plans, monitoring spending, and having savings goals. Among other results, the regression analyses showed that (i) discussions about money with parents as a child and (ii) learning from financial planners significantly influenced adults’ financial management behavior. The findings suggest that financial socialization has a significant effect beyond adolescent or college years.

Much Ado about Money: Parent–Child Perceptions of Financial Disclosure

“…communication is positively related to children's money management as adults (e.g., Cho, Gutter, Kim, & Mauldin, 2012) and children's actual financial behaviors (e.g., Clarke et al, 2005;Shim, Barber, Card, Xiao, & Serido, 2010;Webley & Nyhus, 2006). Further, discussing financial matters with children can reduce children's economic stress (Serido, Shim, Mishra, & Tang, 2010).…”

Parent’s Beliefs and Behaviours about the Economic Socialisation, through Allowances/Pocket Money, of Their Children

“…Cho, Gutter, Kim and Mauldin (2012) support this, concluding that those who earn higher incomes monitored their spending less frequently. It is interesting that those earning lower salaries also place more importance on giving their children monetary freedom than do those with higher incomes.…”

Determinants of Financial Management Behavior of Millennial Generation in Surabaya

“…Most of the respondents who have their parents in monitoring their expense in the childhood age have less worry about their finance and has no full responsibility to manage their financial management. Meanwhile, Cho et al (2012) stated that primary agents do not influence financial management behavior. Thus, the hypothesis is as follows, H5: There is an influence between primary agents towards financial management behavior to the millennial generation in Surabaya.…”

“…The more they gain the learning and information process from the secondary agents, their financial management behavior will be better. Cho et al (2012) declared that there is a positive influence between secondary agents towards financial management behavior. It is in contrast with the study conducted by Falahati & Paim (2011), where they found that secondary agents have a negative influence on financial management behavior.…”

“…For a reason, this finding stated that the millennial generation in Surabaya who receives the financial information by the primary agent is not necessarily having good financial management behavior and thus who also have less financial data from the primary agent either. Cho et al (2012) found that respondents identified their parents as a person who loves to save money when they grow up. The respondents who showed poor financial planning is because they feel depressed in their growing period.…”