Talk is cheap: Parent financial socialization and emerging adult financial well‐being

• Published in: Family relations 2023-07, Vol.72 (3), p.1201-1219
• Main Authors: LeBaron‐Black, Ashley B., Curran, Melissa A., Hill, E. Jeffrey, Toomey, Russell B., Speirs, Katherine E., Freeh, Margaret E.
• Format: Article
• Language: English
• Subjects: Adolescents; Adults; Behavior; Child development; Children; Children & youth; Economic well being; Education; emerging adulthood; Experiential learning; Families & family life; family financial socialization theory; financial behaviors; Financial management; financial self‐efficacy; financial well‐being; Knowledge; Life transitions; Money Management; parent financial socialization; Parents & parenting; Self-efficacy; Socialization; Structural equation modeling; Teachers; Teenagers; Well being
• ISSN: 0197-6664; 1741-3729; 0197-6664
• DOI: 10.1111/fare.12751

Objective We test how three main methods of family financial socialization (retrospectively reported) are uniquely associated with three indicators of financial well‐being, and whether financial self‐efficacy and financial management behaviors mediate these associations. Background Although the link between family financial socialization and financial well‐being in emerging adulthood is well established, no previous study has differentiated between the three main socialization methods nor tested their unique pathways. We expand on family financial socialization theory to begin addressing this gap. Method We utilize reliable and valid measures of parent financial socialization and data from 4,182 U.S. emerging adults. Results Structural equation modeling revealed that (a) parent financial modeling was directly associated with financial behaviors and financial satisfaction and indirectly associated with all three financial outcomes through financial behaviors, (b) experiential learning was directly associated with financial self‐efficacy and indirectly associated with all three financial outcomes through financial self‐efficacy, and (c) parent–child financial discussion had zero direct or indirect associations. Conclusion To prepare children and adolescents for future financial well‐being, parents should focus on modeling financial behaviors and providing experiential learning opportunities rather than lecturing. Implications To improve the financial well‐being of emerging adults, educators should promote parent financial modeling and experiential learning.