This study used data from the 2015 National Financial Capability Study to analyze the adoption of mobile payments by U.S. households. While 24% of respondents used mobile payments, the mean rate for those under age 25 was 11 times the rate for those 65 and older. State rates ranged from about 9% in Montana to 34% in Washington, DC. Based on a logistic regression, age and an objective financial knowledge score were negatively while risk tolerance and a subjective financial knowledge score were positively related to mobile payment use. The results have implications for marketing of Fintech applications for personal finance, especially in terms of the extremely low mobile payment use by older consumers.
Your search for all content returned 212 results
This research investigates if ethical behaviors and personal finances are related using a large scale U.S. random survey called the National Longitudinal Survey of Youth 1997 (NLSY97). Fifteen indicators covering both ethical and unethical behaviors are compared to net worth for people in their 20s and 30s, who are called Generation Y. Breaking rules, stealing, and being arrested are associated with less wealth in this generation. Results suggest that among people in their early 20s, there is little or no relationship between ethical behaviors and wealth. However, as this cohort ages, a positive relationship between acting more ethically and wealth emerges.
- Go to article: Prediction of Default Risk in Peer-to-Peer Lending Using Structured and Unstructured Data
Using data from Lending Club, we analyzed funded loans between 2012 and 2013, the default status of which were mostly known in 2018. Our results showed that both the borrower characteristics and the conditions of the loan were significantly associated with the loan default rate. Results also showed that the sentiment of a user-written loan description influenced the borrower's loan interest rates. It contributes to expanding the scope of peer-to-peer (P2P) loan research by implementing unstructured data as a new model variable. Financial counselors need to consider the growth potential of the P2P loan market using data analysis: This will reveal niche market opportunities, enabling the development of services necessary for the safe supply of small loans at reasonable interest rates.
- Go to article: The Effectiveness of Financial Literacy Instruction: The Role of Individual Development Accounts Participation and the Intensity of Instruction
The Effectiveness of Financial Literacy Instruction: The Role of Individual Development Accounts Participation and the Intensity of Instruction
We examine improvements in financial knowledge for 8th-grade participants in our financial fitness camp, part of our multifaceted financial literacy program. Eighty-three students enrolled in the camp, and 59 had individual development accounts (IDA). We address several issues raised in the literature by focusing on low-income, predominantly Hispanic students, varying the treatment intensity, comparing outcomes for students in our IDA program with those who are not, addressing the potential endogeneity of IDA participation, and testing for selection bias. Financial knowledge increased by approximately 12 percentage points from camp participation. Standardized Language Arts scores, rather than treatment intensity or IDA participation, most affected gains in financial knowledge. There was no evidence of selection bias. Parents with high “present bias” were less likely to enroll their students in the camp, implying that integrating financial literacy education in the regular school curriculum will better serve students in such families.
This study was intended to find out whether social media could be a solution to improve personal financial literacy and ability. The authors examined the antecedents and consequences of using social media for personal finance with survey data from 359 individuals who used social media tools to view, learn, post, or ask for financial information or advice. They found that usefulness and compatibility were two reasons why people use social media for personal finance, while ease of use and concerns/risks were not. The study also revealed that social media use for personal finance were associated with positive financial outcomes and user satisfaction, which in turn prompted users' intentions to continue using social media for personal finance in the future. These findings suggested that social media could be a legitimate and fruitful source for individuals and financial industry to improve personal financial well-being.
This paper examines the relationship between self-reported health status and medical debt outcomes using data from the 2013 Panel Study of Income Dynamics. There were two outcomes of interest: (a) the likelihood of having any medical debt, which included 4,227 households and (b) the amount of medical debt (medical debt > 0), which included 631 households. The results from the multivariate models showed that fair/poor health status increased the likelihood of having any medical debt by 73% and was associated with an increase in the amount of medical debt among those with medical debt by about 77% (p < .001) compared to those who reported better health. Poor health status appears to impose a financial burden on some households.
The impact of financial stress on college students can range from psychological distress to adverse academic outcomes. The purpose of this study was to identify how resources and perceptions alter the amount of financial stress felt by college students and how this relates to academic achievement. Results from 2,236 Midwestern college students indicate that financial and life stressors, higher subjective financial knowledge, fewer financial resources, negative perceptions, and lower mastery are associated with higher financial stress. Financial stress was not associated with academic achievement, but financial stressors, objective financial knowledge, and financial resources were highly related to financial stress. Increasing available financial resources to students, in addition to providing opportunities to increase financial knowledge for students, would likely be associated with decreased stress and better academic achievement.
- Go to article: Work, Remuneration, and Negotiation for Pay in Early Adolescence: Exploring Early Causes of Gender Pay Inequity
Work, Remuneration, and Negotiation for Pay in Early Adolescence: Exploring Early Causes of Gender Pay Inequity
Work and negotiation experiences were examined among early adolescents (12–15 years) through a survey (N = 157) and follow-up interview (N = 89) conducted in two Canadian cities. Key findings, based on a mixed-method research approach, were (a) gifts were the primary income source; (b) females completed more chores than males, and younger adolescents received payment for chores more than older adolescents; (c) discussion of negotiation rarely occurred between participants and parents or peers; (d) neither age nor gender impacted absence of negotiation; (e) those who had negotiated for more money reported satisfaction; (f) gender differences in negotiation strategies were present; and (g) age differences in beliefs about negotiator qualities were found. Consistencies and changes from extant literature were discussed.
Most private sector employees have access to defined contribution retirement plans while public sector employees often may choose defined benefit or defined contribution plans. This research utilized a survey of faculty to analyze retirement plan satisfaction. Advice from a financial planner was positively associated with satisfaction with portability. Retirement plan knowledge was negatively associated with satisfaction with the decision period. Selection of a defined benefit plan was positively related to four aspects of satisfaction and negatively related to regret. Financial planners assisting individuals who face such choices should acknowledge the decision's challenges and evaluate the client's level of retirement planning knowledge. Focusing on long-term goals and the client's investment and mobility risk tolerance may be helpful, especially after market corrections.
There are numerous factors associated with successful reentry, but one that has not yet been addressed is financial behavior after release. This study used a primary data set collected in the fall of 2017. The theory of planned behavior was applied to investigate post-release financial behavioral intentions of men and women approaching return to society via a work release program in Georgia. Support for the theory of planned behavior was identified; attitude, subjective norms, and perceptions of behavioral control are significant predictors of financial intentions for this sample. Length of incarceration was the most important aspect of incarceration history. Innovative use of a control variable indicated that socially desirable response patterns about key variables were not confounding. This research is valuable to practitioners and policy makers in that it provides insight into planned financial behaviors that could affect the success of the individual's reentry back into society, and it fortifies prior evidence that the theory of planned behavior is a useful analytical framework.
This study explored how an alternative presentation of loan information affects financial-aid decisions among students (n = 204) at a large public university. Building from decision-aid literature and using an experimental design, we found that when financial-aid forms were formatted in a way that makes interest rates more accessible and salient, students tended to: (a) accept fewer high-cost private loans and (b) work more during the college years. Results indicate that minor revisions in financial-aid documentation can have a significant impact on students' financial-aid choices. Those working in the fields of higher education and financial counseling and planning can use this information to further educate borrowers prior to the encumbrance of student loan debt.
This article examined the relationship of household financial behaviors and accesses. Using the 2015 National Financial Capability Study, the current study conducted latent class analysis of financial behaviors to identify latent classes (N = 27,564). The distribution of access was investigated among latent classes, which were regressed on the financial behaviors of financial planning and financial spending factors and other covariates using multinomial logistic regression. After controlling for other variables, the odds of being in Thinly Banked, Limited Access, and Working Families classes instead of being in Investors class decreased by 90%, 88%, and 66% for every point higher in financial planning behavior, respectively. Results suggest that desirable financial behaviors such as planning are important for consumers with the least financial access.
This article investigates associations between confidence about financial knowledge and two outcome variables, financial behaviors and financial satisfaction. On one hand, subjective financial knowledge (confidence) is necessary to make proactive decisions, yet overconfidence has been associated with a range of negative financial behaviors and outcomes. Both types of objective and subjective knowledge may be related to critical financial behaviors and choices such as credit card usage which in turn may be associated with financial satisfaction, an important component of consumer well-being. This article analyzes data from the 2015 National Financial Capability Study to examine how financial knowledge confidence relates to credit card behaviors and financial satisfaction. We use mediation and floodlight analyses to uncover relevant relationships between variables of interest. We find evidence that confidence is associated with healthy credit card use that contributes to financial satisfaction. We also observe strong interactions with knowledge to find that confidence is more strongly associated with credit card use and overall financial satisfaction as knowledge increases. Findings from this study can help financial educators and advisors to deliver the right mix of financial knowledge to better financial choices and behaviors.
- Go to article: The Relationship Between Credit Card Use Behavior and Household Well-Being During the Great Recession: Implications for the Ethics of Credit Use
The Relationship Between Credit Card Use Behavior and Household Well-Being During the Great Recession: Implications for the Ethics of Credit Use
This article uses a random digit dial probability sample (N = 328) to examine the relationship between credit card use behaviors and household well-being during a period of severe economic recession: The Great Recession. The ability to measure the role of credit card use during a period of recession provides unique insights to the study of credit behavior because of the knowledge that all respondents have the same macroeconomic constraint. Framed by the assumptions of the permanent income hypothesis and the life-cycle savings hypothesis, multinomial logistic regression was used to estimate the relationship between credit card use behaviors and three measures of household well-being: emotional well-being, financial well-being, and general household financial condition.
- Go to article: The Utilization of Robo-Advisors by Individual Investors: An Analysis Using Diffusion of Innovation and Information Search Frameworks
The Utilization of Robo-Advisors by Individual Investors: An Analysis Using Diffusion of Innovation and Information Search Frameworks
This study examines the roles of internal and external search characteristics and attitudinal factors in investors' decisions to utilize robo-advisor-based platforms. Using the 2015 state-by-state National Financial Capability Study and Investor Survey, this study finds that the need to free up time, higher risk tolerance, higher subjective financial knowledge, and higher amounts of investable assets were positively associated with individual investors' adoption of robo-advisors. Additionally, the results from the interaction model indicates that individuals under 65 with a higher risk tolerance and greater perceived investment knowledge were more likely to use robo-advisors. Implications of the key findings for scholars, practitioners, and industry leaders are included.
The study examines whether an external locus of control (LOC) moderates the association between financial constraints and emotional exhaustion related to one's financial situation. The participants for this study were 821 U.S. adults aged 20 and older who completed an online survey in September 2019. Results revealed that the association between financial constraints and emotional exhaustion was moderated by an external LOC. Although individuals with a high external LOC were found to perceive more emotional exhaustion, the positive association between financial constraints and emotional exhaustion was stronger for those with a low external LOC than those with a high external LOC. Findings identify the LOC as an important phenomenon of inquiry on emotional exhaustion related to one's financial situation. Findings suggest that an external LOC may serve as a potential point of intervention. Our findings could be used by practitioners to identify populations at greater risk for the experience of emotional exhaustion related to one's financial situation.
- Go to article: Financial Management Competency, Financial Resources, Locus of Control, and Financial Wellness
Guided by a proactive coping theory, this online, cross-sectional study examined whether income, savings, debt service-to-income ratio, reluctance to think about finances, locus of control, and financial management competency were related to financial wellness. Based on data from a United States sample (N = 1,039), results of hierarchical regressions indicated that financial management competency, internal locus of control, and savings were positively associated with financial wellness, explaining 43.5% of the variance. Results suggest that, rather than resources themselves, resource allocation and perceived usefulness of financial actions are most critical to financial wellness. Educators and practitioners can emphasize proactive coping through behavioral approaches to financial management that foster greater internal locus of control and financial wellness.
The purpose of this article is to assess the student teachers’ capacity and willingness to teach financial literacy in Flanders via on-site paper surveys of 368 final-year teacher education students. We argue that the Flemish teacher education program needs to be revised to introduce financial education in secondary schools. We find that revisions to the program can improve student teachers’ capacity and increase their willingness to teach for financial literacy. Moreover, student teachers support such reforms. Thus, policymakers and researchers can use this article as a guideline for revising teacher education programs with respect to financial education.
As defined contribution (DC) plans become more popular than defined benefit (DB) plans, American workers are increasingly responsible for their retirement savings. Because retirement plan participants' portfolio allocation is constrained by the available funds in the plan, the construction of a plan's investment menu has become extremely important. No research has evaluated fund selection in retirement plans or compared plans involving an advisor with self-directed plans. To fill this research gap, this study employs cross-sectional, nationwide data that include 5,570 retirement plans with 100 or more participants in 2013, 2014 and 2015. Results show that in most cases, using advisors is not related to plan performance. Plan sponsors should require advisors to periodically evaluate the performance of plans under their management using objective measures.
The efficacy of family budgeting programs is often measured purely in terms of financial outcomes. There has been less research on its potential impacts on cognitive outcomes. The present study investigated whether an existing financial counseling intervention could help people improve their deliberative cognitive capacity. A community sample of participants in Auckland, New Zealand who identified that they wanted to better manage their money were randomly assigned to a month-long financial counseling intervention or a wait-list control group. Results showed that participants exposed to the intervention had a greater improvement in self-control than participants in the control group, and that self-control improved more for people with a low income than a high income. Financial counseling interventions may impart broader cognitive benefits that help people escape further financial hardship.
This article describes the current status and trends in the past three decades (1990–2019) of the Journal of Financial Counseling and Planning (JFCP). Since its first issue published in 1990, JFCP has become a major research outlet in consumer finance. The journal publishes cutting-edge, peer-reviewed, original research papers on consumer financial counseling, planning, and education that have broad impacts on both academic research and business practices in the field of consumer finance. It is included in many major indexes such as Scopus, Emerging Source Citation Index, EconLit, among others. It has published influential papers on consumer financial well-being, financial capability, financial education, financial counseling, financial planning, retirement planning, risk tolerance, and financial behavior change.
- Go to article: Factors Mediating the Association Between Financial Socialization and Well-Being of Young Adults: Testing a Conceptual Framework
Factors Mediating the Association Between Financial Socialization and Well-Being of Young Adults: Testing a Conceptual Framework
This study establishes an integrated conceptual framework to examine the influences of financial socialization on young adults' financial and subjective well-being. Using the National Financial Well-Being Survey and structural equation modeling methods with a national sample of young adults aged 18–35, this study highlights two key potential influences of financial socialization: (a) early financial socialization experience is directly and positively associated with young adults' financial knowledge and financial motivations (goal-oriented financial planning and self-control ability) and (b) there are indirect and positive associations between financial socialization and young adults' perceived financial skill, financial behavior, and financial and subjective well-being. Moreover, perceived financial skill significantly mediates the relationship between financial motivations and financial management behavior and could indirectly influence financial and subjective well-being. Finally, this study also finds positive associations among financial management behavior, financial well-being, and subjective well-being of young adults.
The purpose of this study was to develop the Financial Transparency Scale (FTS) to assess financial transparency, the open and honest disclosure of one's finances, between married partners. A sample of 183 individuals married for less than 5 years, in their first marriage, completed an online survey. Principal components analysis (PCA) was conducted and determined the FTS is comprised of three components: Financial Partnership, Financial Secrecy, and Financial Trust and Disclosure. The FTS was positively correlated with four related scales: the Kansas Marital Satisfaction Scale, the Shared Goals and Values Scale, the Frequency of Financial Management Scale, and the Communication Patterns Questionnaire – Short Form. An alpha of .94 was reported for the FTS. Financial practitioners can use the FTS as a tool to determine the level of financial transparency within a couple relationship, identify areas of concern, and illustrate the importance of open and honest communication about finances.
- Go to article: Combining Adult Education and Professional Development Best Practice to Improve Financial Education Teacher Training
Combining Adult Education and Professional Development Best Practice to Improve Financial Education Teacher Training
Financial education is an important area of study due in part to the need for improved understanding of how to navigate an ever more complex financial decision-making environment, thus the need for effective classroom instruction. The purpose of this study is to examine a “teacher-as-learner” professional development program that is rooted in both professional development and adult education fields of study as means of providing financial education. This program educates teachers on their own personal finance, ultimately better preparing educators to teach financial literacy education. Results showed significant improvements in self-reported financial behaviors between pre- and posttests. Results suggest using contextual learning for teacher professional development because it benefits personal finances and successful teaching practices.
The purpose of this study is to examine the debt burdens, perceived capabilities, and mental health of young adults. Panel data constructed from the 2009 to 2013 waves of the Panel Study of Income Dynamics (PSID) and its Transition to Adulthood (TA) supplement are used in this study. The multinomial logistic regression analysis findings showed that the amount of revolving debt was negatively associated with young adults' mental health. On the other hand, perceived abilities in acting responsibly, in solving problems, and in managing money were positively associated with the mental health of young adults. The fixed effects regression analysis results indicate that the amounts of credit card and student loan debt from the previous period were negatively associated with an increase in the mental health continuum scores of young adults over time. A discussion of the implications of this study's key findings for scholars, policymakers, and practitioners is included.
- Go to article: Consumer Credit Behavior in the Digital Context: A Bibliometric Analysis and Literature Review
This literature review seeks to map the state of research on the effects of digitization on personal financial behavior and management through a bibliometric analysis and a systematic literature review. The findings indicate that current knowledge is primarily based on perspectives of actors in commerce and systems development. More research is needed on how personal financial behavior change in relation to digital technology, the vulnerability of children and adolescents, and the links between changes in credit behavior and indebtedness. Financial counseling could benefit from an awareness of young adults vulnerability as digital consumers and an extended perception of financial literacy that encompasses requirements of digital society. Policymakers need to be aware of the consequences of digital measurability.
- Go to article: Gender, Parental Characteristics, and Financial Knowledge of High School Students: Evidence From Multicountry Data
Gender, Parental Characteristics, and Financial Knowledge of High School Students: Evidence From Multicountry Data
This study examines the gender gap in financial literacy by using the Financial Literacy Assessment from the OECD's Programme for International Student Assessment (PISA). The analysis focuses on the influence of parents on their children's understanding of financial concepts, utilizing multilevel modeling procedures to examine variance among students, within schools, and within countries. Based on data from 18 countries, results suggest that a gender gap in financial knowledge favoring male high school students is present and that parents may influence their children's financial knowledge.
- Go to article: Two Year Sustainability of the Effect of a Financial Education Program on the Health and Wellbeing of Single, Low-Income Women
Two Year Sustainability of the Effect of a Financial Education Program on the Health and Wellbeing of Single, Low-Income Women
Financial stress is implicated in poor health and decreased Quality of Life (QOL). The purpose of this project was to assess the 2-year effect of a financial education program on the health of single, low-income women. A total of 30 women were enrolled and 20 continued through follow-up. Two years following intervention, women demonstrated a $8,026 increase in mean annual income and significant improvements in health-related QOL and hopefulness. Half of the participants lost weight, and while not statistically significant, mean weight decreased by 2.2 pounds. Trends in decreased fast food consumption were observed. The results suggest that financial education has a significant, sustained effect on the health and health-related QOL of single, women of low income.
- Go to article: Differences in Bank Account Ownership Among White, Black, and Latino Children and Young Adults
Using data from the Panel Study of Income Dynamics (PSID) Child Development Supplement and Transition into Adulthood, this study compared Whites, Blacks, and Latinos to identify racial and ethnic differences in bank account ownership. Having a bank account as a child was significantly associated with bank account ownership in young adulthood. Black children and young adults lagged in bank account ownership. Parental bank account ownership and family wealth increased the odds of bank account ownership for White children significantly more than for Black children. Financial independence, employment status, and educational attainment of young adults showed greater associations with bank account ownership than family background. Findings call for educational programs and policies to increase opportunities for the bank account ownership of minority youths.
We use data from a Dutch data set, the DNB Household Survey, annually covering the period 1996–2015, to study the relationship between informal parental saving education received when people were children or adolescents and two variables aimed to capture adult individuals' concerns for their future: planning horizon and future orientation. Our results indicate that the general future orientation positively correlates with informal saving education, and in particular having received financial teachings. Our findings also suggest that the future orientation index is rather stable over time (which is not trivial, especially because our dataset covers two full business cycles) and declines with age following the life-cycle.
- Go to article: Parental Financial Education During Childhood and Financial Behaviors of Emerging Adults
The purpose of this article was to determine whether overt financial education from parents during childhood (retrospective measure collected in the same survey wave) is associated with a greater frequency of healthy financial management behaviors in emerging adulthood, and whether this relationship is dependent on gender. Using a sample of emerging adults from the Flourishing Families dataset (N = 437), we ran two multivariate linear regressions—one with and one without the interaction variable. Results suggest that financial education from parents during childhood is linked with a greater frequency of healthy financial behaviors in emerging adulthood but was not dependent on gender. Financial educators should involve parents when teaching children about money, and they should educate parents on how to teach their children about money.
- Go to article: Childhood Financial Socialization and Debt-Related Financial Well-Being Indicators in Adulthood
The purpose of this study was to explore the potential influence of childhood financial socialization on financial well-being in adulthood. Using a sample (N = 2,213) from De Nederlandsche Bank Household Survey (DHS) we modeled the likelihood of household debt/asset ratio less than or equal to 40%, and the likelihood of a household reporting a current ratio (liquid asset /short-term debt ratio) greater than or equal to 100%. Consistent with predictions of social learning theory, being encouraged to save during childhood had a positive association with meeting the financial planning industry benchmarks for these financial ratios in adulthood. The key implication is that the path to financial well-being does not begin with financial knowledge attained in adulthood, but instead begins with experiential learning and socialization during childhood.
- Go to article: Financial Ratios and Financial Satisfaction: Exploring Associations Between Objective and Subjective Measures of Financial Well-Being Among Older Americans
Financial Ratios and Financial Satisfaction: Exploring Associations Between Objective and Subjective Measures of Financial Well-Being Among Older Americans
This study explores the relationship between objective measures and perceptions of financial well-being for older Americans. Financial well-being is measured objectively using three financial ratios including the liquidity ratio, the debt-to-asset ratio, and the investment ratio. Individuals' perceptions of their financial well-being are measured by a question in the Health and Retirement Study that asks respondents how satisfied they are with their present financial condition. An ordered probit model is used to examine the relationship between the perceptions of financial well-being and the three financial ratios. The findings in this analysis suggest that there is a positive relationship between the investment ratio and perceptions of financial well-being. There is also a small but statistically significant improvement in the perception of financial well-being with increases in the liquidity ratio. For large categorical differences, the positive relationship also holds for the debt-to-asset ratio.
- Go to article: Financial Planning for Retirement: Bibliometric Analysis and Future Research Directions
This study aims to determine the status of existing research on financial planning for retirement. We used bibliometric analysis and content analysis to examine a sample of 1,116 studies conducted over a span of more than five decades. Bibliographic coupling network was developed to determine the intellectual themes in the field. Our findings suggest that the structural, economic, and cultural disparities worldwide lead to distinct pressures for savings on individuals. Further studies should be conducted considering emerging economies and the aforementioned disparities to gain deeper insights. While a few studies have examined the influence of social biases, behavioral biases, personality traits, and psychological constructs on financial literacy and the impact of this interaction on financial planning for retirement. We conclude by suggesting potential future research directions.
- Go to article: Active Versus Passive Investment Management Of State Pension Plans: Implications For Personal Finance
Active Versus Passive Investment Management Of State Pension Plans: Implications For Personal Finance
There are 19 million workers and retirees and $3 trillion of assets in state pension plans. However, questions have arisen about the long-run ability of the plans to pay promised benefits to retirees. Consequently, proposals have been made to reduce promised pension payments or alter other terms of the pension contracts. Yet another heretofore unexplored alternative is to reduce state pension plan management fees by moving from actively managed portfolios to low-fee passively managed accounts. Using state pension plan data for the 2003-2012 decade and returns from three alternative low fee portfolios, it is found that all states could have increased after-fee earnings and improved their long-run ability to pay retirees by moving to the low-fee investment accounts. While clearly relevant for workers and retirees in state pension plans, the findings also have implications for all investors regarding the ongoing debate between active and passive investment management strategies.
- Go to article: Purposive and Unintentional Family Financial Socialization, Subjective Financial Knowledge, and Financial Behavior of High School Students
Purposive and Unintentional Family Financial Socialization, Subjective Financial Knowledge, and Financial Behavior of High School Students
Using the family financial socialization theory, this study investigated the financial knowledge and behavior of high school students' contextualizing unintentional and purposive family financial socialization. The sample of 4,473 high school students were 51% females, 45% seniors, and ethnically diverse. A path analysis tested conceptual relationships between variables. Results indicated that the two unintentional socialization indicators were positively associated with subjective financial knowledge and financial behavior. Those indicators were also indirectly associated with financial behavior through knowledge. Student-earned income, a purposive indicator of socialization, was positively associated with behavior through knowledge. Exclusively obtaining money through parents was negatively associated with behavior through knowledge. Knowledge was positively associated with behavior.
- Go to article: Review of Family Financial Decision Making: Suggestions for Future Research and Implications for Financial Education
Review of Family Financial Decision Making: Suggestions for Future Research and Implications for Financial Education
This article reviews the theories and literature in intrahousehold financial decisions, spousal partners and financial decision making, family system and financial decision process, children, and financial decisions. The article draws conclusions from the literature review and discusses directions for future research and educational programs. Most financial education and counseling takes place at the individual level, whereas financial decisions take place at household and intrahousehold levels. Family members, spouses/partners, children, and others play a key role in individuals’ financial decisions. The article proposes the key programmatic implications for financial professionals and educators that need to be integrated into financial education and counseling. Understanding the unique dynamics of family financial decision making would help create effective educational and counseling strategies for the whole families.
The purpose of this study is to examine factors associated with households’ willingness to take financial risks, particularly the effect of households’ expectations. The data used in this study are the Survey of Consumer Finances 2007 by which researchers can examine the household financial issues before the financial crisis. By employing multinomial logit regression, the new finding of this study is that when the households expect that the future economy will be better, they are not willing to take either no or substantial financial risk. This study uses the uncertainty theory with the timing of the survey to interpret this seemingly unintuitive result. Other findings are that age, more working people in a household, male, education, and majority race are household characteristics positively affecting the probability of the household’s willingness to take average and above average financial risks.
We examined the relationship between holding a student loan and financial satisfaction and financial education's moderating role using the 2015 National Financial Capability Study dataset. Households with a student loan had lower levels of financial satisfaction than those without one. We found a moderating role of receiving both formal and informal financial education on the relationship between a student loan and financial satisfaction, regardless of for whom the loans were taken. Our findings confirm the importance of financial education and suggest that receiving a thorough combination of formal and informal education will improve student loan holders' financial satisfaction.
A variety of risk assessment questionnaires are used within the financial planning profession to assess client risk preferences. Evidence indicates that the average person overweighs losses relative to an arbitrary reference point. This paper evaluated risk assessment questions on how well they correlate with monetary loss aversion. Twenty-nine Western Texas residents between the ages of 27 and 56 participated in experimental research and filled out several risk assessment questionnaires. Two weeks later their levels of loss aversion were measured using monetary gain and loss scenarios. The individual risk assessment questions were placed into three categories: expected utility theory, prospect theory and self-assessment. Composite measures were created for within-group and between-group comparisons. Statistically significant correlations were found between monetary loss aversion and different composite measures. The results provide financial planners with a group of risk assessment questions that capture loss-averse preferences.
Lack of standardized measurement is one of the main factors that inhibits rigorous evaluations of financial literacy programs. However, although several scholars have developed financial self-efficacy measurements, none have been tailored for women. This article aims to develop and validate a Women's Financial Self-Efficacy Scale (WFSES). Results showed that the WFSES had an excellent reliability coefficient alpha (.93). The scale had good content-related validity, which covered all key domains in financial management for women. The criterion-related validity showed that the WFSES was positively correlated with the New General Self-Efficacy Scale (NGSES). Factor analysis showed four factors to be consistent with the common categories in financial management curricula.
An increasing number of individuals will be unable to retire comfortably amidst an international retirement savings crisis. Research suggests that behavioral factors contribute to inadequate retirement savings. We present a procedure that reframes the retirement savings decision, aimed at alleviating some of the negative effects of the behavioral factors. This procedure shifts the focus from the required wealth at retirement (the future) to the lifestyle an individual can afford to maintain now (the present). A sustainable lifestyle level (SLL) approach is expressed mathematically and illustrated with practical examples. The SLL approach offers a practical tool for retirement planning professionals to present recommendations that are simple and easy to understand for individuals faced with complex retirement planning decisions.
This study examined how retirement planning information search was related to retirement savings of working women. By controlling for sociodemographic variables, the study further explored factors associated with individual information sources for retirement planning. An online survey was developed to collect data from a national population, obtaining 591 valid responses. The results showed that women who learned about retirement planning through discussions with friends/relatives tended to save less in their personal retirement savings, whereas those who obtained information from financial advisors tended to save more. Personal income was positively associated with seeking information from financial advisors. The study concluded by discussing the implications for financial service providers, retirement plan marketers, financial educators, researchers, and policymakers.
- Go to article: Financial Experiences, Beliefs, and Near Field Communication Based Mobile Payments Among Young Adults
Financial Experiences, Beliefs, and Near Field Communication Based Mobile Payments Among Young Adults
This study examined a conceptual model on the intention to adopt NFC-based mobile payment that incorporates financial experiences and beliefs. NFC refers to Near Field Communication, a new technology in mobile payments. From an online experimental survey of 463 U.S. young adults, this research found consumers who used cards among their payment methods as opposed to cash-only were less likely to adopt NFC mobile payment. Previous experience in non-NFC mobile payments had a significant positive association with intention to adopt NFC mobile payment. Among the beliefs, consumers with higher trust and higher perceived usefulness about NFC mobile payment had greater intentions to adopt it. Moreover, trust was found to have a mediating effect between non-NFC mobile payment experience and the intention to adopt NFC mobile payment. This study not only provides mobile payment providers with effective marketing strategies to increase consumers' adoption of NFC mobile payment but also provides financial educators with important implications to develop targeted education programs.
This research sought to further understanding of factors related to low-income household saving behavior. Saving behavior, defined as whether a household spent less than income, was analyzed by applying institutional theory, which proposes that households' institutional environment has a substantial effect on financial decisions. Two logistic regression models were used to test the effects of variables on saving behavior; the first logit was based on the life cycle hypothesis and the second added noneconomic individual factors (i.e., social networks, financial literacy, and psychological variables) and institutional factors (i.e., access, incentives, and facilitation). Institutional factors, including the number of institutions used, credit access, and having an employer sponsored retirement plan, had significant effects even after controlling for the effect of variables based on the life cycle model, suggesting that promoting institutional access and facilitation—especially through employer-provided plans—may encourage saving behavior among low-income households.
This study examined the link between overindulgence and buying impulsiveness and the link between buying impulsiveness and credit card misuse among undergraduate students from 2 Midwestern universities. Hierarchical multiple regression was used to examine these relationships. Overindulgence predicted buying impulsiveness when controlling for the effects of age, race, gender, public or private school, and whether or not the student was employed. Buying impulsiveness predicted credit card misuse while using the same control variables. Overindulgence was not found to predict credit card misuse.
In setting a new direction for the field by highlighting the importance of measure development, this article offers an original approach to modeling financial literacy, in which theories of situated learning meet self-efficacy: an approach that we claim fits well with the aims of program evaluation. It presents results from the validation of a new set of measures, intended for use with 16- to 19-year-olds, of financial literacy self-efficacy pertaining to contexts such as the classroom or the everyday activity of personal banking. Self-efficacy implies a domain in which confidence is measured specific to that context—in this case financial literacy. The data were collected in the United Kingdom from high school and college students enrolled in an optional certificate course in personal financial management. The measures were validated on a subset (n = 171) of a larger sample and was an off-shoot project of a larger 3-year evaluation study of the financial literacy certificate course (n = 2,000), which provided additional mixed-methods data used in validation. Correlation analysis supports the contention—incorporated within the framework presented—that self-efficacy is context-specific and so measures of self-efficacy must adequately reflect the contexts in which the associated literacies reside.