4.5.1 General assessment of financial socialisation
Shim et al. (2010) found that young adults in their first year of college are largely influenced by financial socialisation via their parents, work and the inclusion of financial education in their high school curriculum during their formative years. The cross-sectional study which surveyed 2 098 first-year students in an American university, utilised a conceptual model which sought to establish the link between the students’ financial socialisation during adolescence and their current financial learning as young adults in college.
In a survey conducted among 420 college students, Jorgensen and Savla (2010) discovered that perceived parental influence plays a crucial role in the general financial literacy of most students. The study further noted that although perceived parental influence does not necessarily affect students’ financial knowledge, it has direct and indirect relationships with students’ financial attitude and financial behaviours, respectively.
However, Albeerdy and Gharleghi (2015a) reported that financial socialisation is not a key factor in making good financial decisions. The study surveyed 105 Malaysian college students using Pearson correlation and multiple regression analysis. Sundarasen et al.
(2016) found that, amongst other things, financial socialisation agents play a significant role in postgraduate students and young adults’ money management and financial decision proficiencies. The study which utilised an SEM analysis, was conducted among 300 students in private and public universities in Malaysia.
Friedline et al. (2017) found that the community in which a child/young adult is nurtured could significantly impact his/her financial socialisation and subsequent credit card behaviours. This was discovered in a longitudinal survey of 748 students and young adults.
The study found that students and young adults from communities characterised by a high unemployment rate, average total debt, average credit score and few bank branch offices are vulnerable to acquisition and accumulation of credit card debt.
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Ergün (2018) study among 409 university students in Germany, Poland, Estonia, Russia, Italy, Romania, The Netherlands and Turkey found an overall average literacy rate of 72.2%. The study observed that students that are male, business majors, doctoral students, live in rented apartments, have rich parents and often seek financial advice from their friends were more financially literate than their peers.
4.5.2 Categorical assessment of financial socialisation
Wagner and Walstad (2015) assert that engaging in social learning opportunities is an effective path to improving long-term financial behaviours and capability. This is consistent with previous studies which showed that people do not only obtain financial knowledge via financial educational networks but also from interactions with socialisation agents (Mitchell et al., 2009). These agents include family members, peers, school friends and social media (Mitchell et al., 2009; Isomidinova and Singh, 2017).
4.5.3 Family influence
Most financial socialisation occurs within the family circle (Danes and Yang, 2014). The family financial model enables the development of positive financial behaviours during the formative years. Furthermore, more often than not, the necessary motivation for future changes in financial behaviours emanates from relationships and interactions within family circles, from early childhood socialisation to making diverse financial decisions over a life time. Lee and Mortimer (2009) found that financial independence among adolescents and young adults in the transition towards adulthood is influenced by direct communication and a positive self-concept. Serido et al. (2010) note that factors such as the parent-child relationship as well as parental expectations of children psychologically influence financial coping behaviours among students and young adults. Gudmunson and Danes (2011) stress the importance of family financial socialisation as a plausible alternative to improving financial illiteracy. The authors conducted a critical meta-analysis of 100 interdisciplinary articles that consider the effects of such socialisation.
Whilst many students agree that their financial socialisation was significantly influenced by observing how family responsibilities were shared among family members (Solheim et
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al., 2011; Serido and Deenanath, 2016), Solheim et al. (2011) found that inculcating financial responsibility in children for their own desires via mandatory and target-savings approaches, influence their financial decision making in later years. This was affirmed by Drever et al. (2015) who posited that being financially responsible at an early age builds the necessary foundation for financial well-being later in life.
Mimura et al. (2015) are of the view that parents, as well as taking personal finance courses at university play a significant role in the financial socialisation of students and young adults regardless of their socio-demographic characteristics. This was revealed in a survey among 1 249 first-generation students at a large provincial university in America.
The study group consisted off a diverse cohort of native Americans, as well as immigrants or children of immigrants studying towards undergraduate degrees. Agnew and Harrison (2015) asserted that gender bias exists within family financial socialisation.
Their study found that male children are more likely to be financially socialised by their parents at an early age than female children. The authors observed that this could be a plausible explanation for the existing narrative of male individuals being more financially literate and capable than females.
Serido and Deenanath (2016) investigation of parents’ role in influencing their children’s progress towards being financially independent and capable adults, recommends financial parenting practices that encourage the development of financial knowledge and skills amongst children at an early age. Sundarasen et al. (2016) found that parental norms and other financial socialisation agents such as financial educators, friends, and the media are key influencers of money management habits and wealth optimisation among students and young adults. Likewise, Curran et al. (2018) survey of 504 university students in the southwest region of the US found that young adults’ financial capability and well-being is determined by financial socialisation by their romantic partners, their self-behaviours and parental socialisation.
In contrast, Ergün (2018) study on financial literacy amongst university students in eight European universities found that in recent years, technological and environmental
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influences have been more influential in university students’ financial socialisation than parental influence.
4.5.4 Friends’ influence
Kretschmer and Pike (2010) surveyed 102 adolescent siblings in order to understand the impact of peer socialisation on aspirations, affiliations and financial success. The study concluded that friendship experiences have more influence on young adults than their relationships with siblings. The study also found that being socialised by the same parent does not result in siblings having shared aspirations, affiliations and financial success and that these outcomes are largely influenced by friendships and peer groups.
Montandon (2014) explored the role played by siblings and friends in influencing Generation Y’s risk behaviours. The study concluded that peer pressure plays a significant role in the critical choices made by this age group. Although it was found that a parental protective style has the greatest impact on children, (Mitchell et al., 2015) assert that peers and friends are more influential in young adults’ choices when there are disagreements between parents and their adolescent children. This is due to the direct and indirect interactions between young adults and their peers as well as social media’s influence on young adult behaviours (Mitchell et al., 2015; Isomidinova and Singh, 2017).
Alwi et al. (2015) found that self-determination was the weakest influence on the savings behaviours of Malaysian millennials enrolled in a business school. The study concluded that parental and peer socialisation agents contribute to the millennials’ financial decision- making capacity. This finding was affirmed by Jamal et al. (2015b) who found that friends influenced the savings habits and money management practices of students in higher education institutions in the Kota Kinabalu region of Malaysia.
Jamal et al. (2015b) found that peer influence, the individual’s own financial literacy and family socialisation are statistically significant in determining savings behaviours among students. Wagner (2015) applied the social learning theory within the context of students’
financial literacy and financial behaviours and concluded that students who had better opportunities to observe and hold discussions with their parents, peers and friends were more likely to save and budget than those that did not. Similarly, a study conducted among
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110 university students in Uzbekistan found that financial socialisation agents such as family, financial educators, friends, peer groups and the media were crucial in improving financial decisions and money management practices among students (Isomidinova and Singh, 2017).
4.5.5 Media Influence
In general, studies have found that social media is a powerful tool in shaping consumer buying decisions (Berger Paul et al., 2012; Forbes, 2013; Hira et al., 2013; Xiang et al., 2016). A few studies (Albeerdy and Gharleghi, 2015a; Mimura et al., 2015; Ergün, 2018) have also found that it plays a vital role in the financial socialisation of students.
Berger Paul et al. (2012) assert that social media plays a fundamental role in individual purchase decisions as well as consumer values. Forbes (2013) found that majority of consumers under the age of 22 used social media such as Twitter for purchase recommendations and buying decisions. This could be related to the modern trend of wanting instant results. However, it could also explain impulsive buying decisions via social media platforms (Xiang et al., 2016).
Hira et al. (2013) stress that the media plays a crucial role in financial socialisation by affecting purchase decisions. Furthermore, in choosing financial investment products, many consumers are influenced by the amount of information available and accessible on media outlets such as the internet. Albeerdy and Gharleghi (2015a) highlighted that peer groups, family, schools and the media are students’ main financial socialisation agents.
Furthermore, at some point in time, all these agents socialise individuals. They added that students and young adults’ financial literacy can be significantly impacted by social media.
Mimura et al. (2015) found that social media was statistically insignificant as a determinant of financial knowledge and practices among 1 249 American college students. In contrast, Sundarasen et al. (2016) SEM analysis revealed that individuals that access information via the media and their parents are likely to exhibit better financial practices.
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They add that the media is an alternative essential socialisation mechanism for youngsters and teenagers. Likewise, Ergün (2018) asserts that in recent years, technological and environmental influences are more influential in university students’ financial socialisation than parental influence.
4.6 Financial socialisation and Socio-economic factors