Healthy Financial Behaviors and Financial Satisfaction in Emerging Adulthood: A Parental Socialization Perspective

Abstract

To understand the relation between financial behaviors and satisfaction in emerging adults (EAs) and parental financial socialization, we conducted a cross-sectional study focusing on families from a collectivistic, former communist country, Romania, a cultural context marked by extreme financial dependence of youth on their parents. Participants were 143 parent–EAs child dyads from Romania (83% mothers, M age = 47.5 years and 80% girls, M age = 20.7 years). Results showed significant relations between parents’ and EAs’ view on parental financial socialization. EAs’ healthy financial behaviors were predicted by previous healthy financial behaviors in parents and previous parental financial monitoring of spending habits, only as reported by EAs. Moreover, EAs’ financial satisfaction was predicted by high socioeconomic status, previous healthy financial behaviors in parents, and current healthy financial relationship with parents, only as reported by EAs. We discuss the implications for supporting healthy financial behaviors and satisfaction in EAs.

Financial Socialization: A Decade in Review

“…When emerging adults were asked to think about their parents' previous healthy financial behaviors, those behaviors were positively associated with emerging adults' own healthy financial behaviors and financial satisfaction (Damian et al 2019). Parents' investing experience was associated with their children's investing decisions (Gouskova et al 2010) and was also positively associated with emerging adults' financial knowledge, especially for those who had less financial education in college (Tang and Peter 2015).…”

“…It appears as though monitored financial experiences (i.e., parents' knowledge of children's finances; Kim and Chatterjee 2013) may be important. Parental monitoring of spending during childhood was positively associated with emerging adults' healthy financial behaviors and perception of being good at managing money, and negatively associated with emerging adults' financial worry (Damian et al 2019;Kim and Chatterjee 2013). Given this empirical documentation for experiential learning of finances, perhaps "experiential learning should be regarded as a principal method of financial socialization and should be considered in theory building, research, and pedagogy" (LeBaron et al 2019, p. 435).…”

Does family affect financial outcomes and psychological biases? Evidence from small investors in Bangladesh

“…Parental portfolio performance in this case is more crucial and informative compared to parental stock market entry. Parents' current and previous healthy financial behaviors predict adults' healthy financial behavior and financial satisfaction in Romania (Damian et al, 2019). Webley and Nyhus (2006) find that parental saving and discussion of financial matters with their children positively predict children's saving behavior among household in the Netherlands.…”

“…First, Bangladesh is considered as a collectivist society where people have strong ties and give higher values to family members' opinions [1]. In highly collectivist countries, individual's financial dependence is most likely on their parents (Damian et al, 2019). Thus, Bangladesh's high collectivism may breed the family's influence on an investor's financial decision.…”

Introduction to the Special Issue on Couples, Families, and Finance

“…Three sets of authors in the special issue addressed understudied aspects of family financial socialization: Gibby et al, White et al and Miller et al In previous research, it has been established that family financial socialization is associated with financial outcomes (e.g., Damian et al 2019;Jorgensen et al 2017). To advance the literature, Gibby et al examined whether and how family financial socialization was associated with financial disagreements for U.S. married couples.…”