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Knowledge and Skills Are Not Enough—Exploring the Determinants of Financial Behavior Formation

Year: 2024

Type: article

Abstract: ABSTRACT Understanding how young people learn to manage their finances responsibly can guide interventions to improve their financial health and stability in the short and long term, yet merely increasing financial knowledge and skills is ineffective. Psychological and environmental factors appear to be important determinants of financial behavior, yet such factors have long been neglected in the literature. The present study appears to be the first to assess empirically the contribution of intuitive and rational mental capacity as well as opportunities and motivation to financial behavior formation. We surveyed 2299 young adults at 229 high schools and universities in Croatia. Through structural equation modeling, we found that intuitive and rational thinking as well as motivation and opportunity substantially influenced the formation of financial behavior, whereas financial knowledge played a negligible role. Rational thinking was a stronger determinant than intuitive thinking in the case of healthy financial behavior, while the opposite was true in the case of impulsive consumption. These insights may help develop effective interventions for promoting positive financial habits among young adults.

Source: International Journal of Consumer Studies

DOI: 10.1111/ijcs.13100

Authors: Andrea Lučić, Nikola Erceg, Dajana Barbić

Institutions: University of Zagreb, Ekonomski fakultet - Zagreb, Faculty of Humanities and Social Sciences in Zagreb

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: bronze

Funder: Hrvatska Zaklada za Znanost

Award: G2105485741