Publication year
2019
Citation Title
The influence of parental financial socialisation techniques on student financial behaviour.
Journal Name
International Journal of Economics and Finance Studies
Journal Volume
11
Issue Number
2
Page Numbers
72-88
DOI
10.34109/ijefs.201911205
Summary
The financial behavior of young adults is influenced by their parents’ financial socialization. This study examined the impact of various parental financial socialization techniques on the financial behavior of college students. The findings indicate that the financial behavior of young adults was influenced by some parental financial socialization techniques (e.g., financial teaching and monitoring), but not by other techniques (e.g., financial secrecy).
Key Findings
Parental teaching and monitoring were the most important financial socialization techniques used by parents to influence young adults’ financial behavior.
The financial behavior of young adults was associated with parents’ reinforcement of financial behavior, a form of parental financial socialization.
The financial behavior of young adults was not associated with financial secrecy, parental relationships, or financial conflicts within the family.
Implications for Military Professionals
Examine ways to actively involve parents in youth’s financial education
Help develop modules or activities to inform young adults of best practices to improve their financial behaviors
Implications for Program Leaders
Provide workshops on financial literacy for youth and their families
Host classes for parents and young adults that aim to increase communication and conflict-resolution skills around finances
Implications for Policy Makers
Recommend integrating parenting education into existing service delivery systems (e.g., after-school programs)
Continue to provide support for programs that work to increase youth’s readiness for transition to adulthood
Methods
Data were collected from undergraduate students in the Eastern Cape, South Africa whose parents financially supported them.
Participants completed self-report measures on information about financial socialization techniques used by parents, and students’ own financial behaviors.
An analysis of the data was done to determine how financial socialization techniques by parents impacted the financial behavior of young adults.
Participants
The sample consisted of 350 undergraduate students.
Nearly 60% of participants were female, 58% were Black, 28% were White, and racial identity of the rest of the sample was not disclosed.
The age range of 65.28% of participants was between 20 and 29 years.
Limitations
The sample consisted of students from only one university in South Africa, which limits the generalizability of the findings.
Since the data were collected only at one time point, conclusion about long term impact of parents’ financial socialization on South African youth cannot be made.
The data were dependent on only participants’ self-reporting of their own as well as their parents’ financial socialization techniques; using only college students’ report for both variables could introduce unintended bias among the results.
Avenues for Future Research
Collect data from young adults and their parents to obtain more accurate estimate of the techniques of financial socialization
Recruit young adults with a broader range of ethnicities, genders, and education levels so that the results can be better generalized
Include standardized questionnaires with established reliability and norms
Focus
Civilian
Target Population
Population Focus
Abstract
This study investigated which financial socialisation techniques parents used to influence students’ financial behaviour. Few students possess satisfactory levels of knowledge regarding financial concepts and, as a result, often struggle with high debt levels. Although parents can play an important role in developing and shaping the financial behaviour of students, they often fail to teach students about money management. Studies find that for students to demonstrate responsible financial behaviour, their financial socialisation by their parents should improve. The literature review identified seven financial socialisation techniques parents use to socialise students about financial concepts. These include financial secrecy, financial conflict, financial teaching, modelling of financial behaviour, monitoring of financial behaviour, reinforcement of financial behaviour and parental relationships. The study followed a quantitative research design to gather the responses of 350 South African students by means of a self-administered, structured questionnaire. Only six financial socialisation techniques were extracted from the exploratory factor analysis. Hypotheses were re-formulated to test the relationships between the financial socialisation techniques of parents and the financial behaviour of students. The empirical results revealed that three financial socialisation techniques used by parents, namely, financial teaching and monitoring, modelling of financial behaviour and reinforcement of financial behaviour significantly influence the financial behaviour of students. Therefore, parents should increase financial teaching and monitoring, the modelling of financial behaviour as well as the reinforcement of financial behaviour to improve the financial behaviour of students. These results have implications for parents and financial educators, and the implementation of this study’s recommendations could ultimately improve the financial behaviour of South African students.
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