Drawing from socialization theory this study investigates the effect of financial socialization and mediating role of “attitude toward money” (ATM) and financial literacy on the financial behavior of young adults in an emerging economy.
A cross-sectional survey of 302 young adults was conducted and responses were analyzed to determine the key antecedents of financial behavior. The model was tested using OLS regression. Parallel mediation was tested using Process Macro in SPSS.
ATM, subjective financial literacy, objective financial literacy are positively associated with financial behavior. Furthermore, parallel mediation analysis establishes the role of ATM and subjective financial literacy as a mediator between financial socialization and financial behavior.
These findings have implications for both financial and academic institutions and policymakers. Academic institutions should introduce personal wealth management courses at early stages in their courses to help young adults make appropriate financial decisions. Policymakers should emphasize creating a habit of budgeting and managing expenses among young adults in addition to promoting financial literacy.
This study focuses on determinants of financial behavior in young adults and specifically, argues that involving parents to financially socialize their children have a crucial impact on subjective financial literacy and ATM which has not been explored in previous literature.
