Financial Literacy in Millenials Generation in Indonesia

Abstract

This study aims to examine financial literacy in millennials in Indonesia. The dependent variable used in this study is a propensity for indebtness. The independent variable used is financial literacy as measured by financial behaviour, financial attitude and financial knowledge. Variables that act as independent dependent variables are materialism and compulsive buying. The sample of this study used 535 respondents who used a purposive sampling method. The data analysis model used is structural equation modelling (SEM). The results of this study indicate that financial literacy has a negative impact on propensity to indebtedness, materialism has a positive impact on compulsive buying, compulsive buying has a positive impact on propensity to indebtedness, materialism has a positive impact on compulsive buying, financial literacy has a negative impact on materialism and literacy finance has a positive impact on compulsive buying. Therefore, raising the level of financial literacy from an early age on individuals through financial education can lead a prosperous life and can be effective in minimizing negative behaviours such as compulsive buying, materialism, and propensity to indebtness. This research is unique and innovative in so far as measuring the direct impact of financial literacy is very influential on other factors such as compulsive buying, materialism, and propensity to indebtedness which is that financial literacy has a far more significant impact than shown by other academic studies, especially on the millennial generation in Indonesia.

Financial Literacy, Risk Perception, Materialism and Propensity to Indebtedness

“…Individuals who have high financial literacy can help individuals manage their finances better, make better financial decisions and can improve financial well-being thereby reducing the propensity to indebtedness. The results of this research are in accordance with the results of research conducted by Potrich and Vieira (2018), Prashella and Leon (2020), Wahono and Pertiwi (2020) and Patulak, Sarita and Hamid (2020).…”

“…The research results of Doosti and Karampour (2017) show that financial literacy has a positive effect on propensity to indebtedness. Different research results were found by Potrich and Vieira (2018), Prashella and Leon (2020) and Wahono and Pertiwi (2020) who stated that financial literacy has a negative effect on propensity to indebtedness.…”

Pengaruh Financial Literacy Dan Compulsive Buying Terhadap Propensity to Indebtedness

“…Analisis data pada penelitian ini menggunakan metode SEM (Structural Equation Modelling) dan memanfaatkan software Smart PLS (Partial Least Square). 2021), Prashella & Leon, (2020). Mitta & Pamungkas, (2022), menjelaskan bahwa financial literacy yang matang, diantisipasi akan membantu menghindarkan timbulnya masalah finansial di masa mendatang.…”

“…Menurut Ardiansyah & Budiani, (2021) individu yang mengalami compulsive buying akan mengeluarkan banyak uang saat berbelanja, dan ketika dana mereka habis mereka akan berutang untuk memuaskan keinginan mereka untuk berbelanja, jika perilaku ini terus berlanjut maka akan terjadi penumpukan utang yang semakin meningkat dan sulit untuk dilunasi secara tepat waktu. Prashella & Leon, (2020) Prashella & Leon, (2020) juga menambahkan bahwa tingkat pembelian kompulsif yang tinggi dapat berdampak positif pada kecenderungan untuk berutang, mengindikasikan bahwa individu yang cenderung lebih konsumtif dan memiliki tingkat depresi yang tinggi besar kemungkinan akan terlibat dalam berutang, dengan kata lain semakin tinggi pembelian kompulsif individu, semakin besar kemungkinannya untuk berutang. Dalam konteks ini dapat menjadi keterbaruan karena selama ini umumnya orang-orang hanya menguji direct nya saja, namun pada penelitian ini melibatkan pengujian indirect nya juga.…”