What drives working adults to be better prepared for their retirements?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Soo Ming Chua ◽  
Phaik Nie Chin
Keyword(s):  
Financial Literacy ◽  
Descriptive Analysis ◽  
Multiple Logistic Regression Analysis ◽  
Well Being ◽  
Retirement Planning ◽  
School Curriculum ◽  
Financial Behavior ◽  
Policy Makers ◽  
Content Type ◽  
Working Adults

PurposeThis study aims to understand the drivers that help working adults to be better prepared for retirement, by examining the relationship between financial literacy (FL), financial attitude (FA), financial well-being (FWB), financial behavior (FB) and retirement preparation (RP). RP includes multidimensional measures, which are retirement confidence, retirement planning, long-term financial planning and private retirement schemes (PRS) participation.Design/methodology/approachThis was a quantitative study adopting non-probability sampling with self-administered questionnaire distributed to all working adults. Descriptive analysis was used to examine the 294 useable data, and the multiple logistic regression analysis was adopted for hypothesis testing.FindingsThe empirical results show that FB is positively associated with RP and then followed by FWB on retirement confidence. Although insignificant influence is found on FL and FA, better FL and FA will still improve individuals' RP.Research limitations/implicationsThe study provides insights to working adults that practicing positive FB and good FWB will improve RP. Besides, for financial institutions, income level is the main determinant for consumers to participate in PRS; for policy makers, to incorporate financial attributes knowledge as part of the school curriculum since early school years.Originality/valueThis study is one of the few studies in Malaysia that explored FL, FA, FB and FWB on retirement planning, respectively.

scholarly journals Financial Homo Ignorans: measuring vulnerability to behavioral biases in household finance

2020 ◽  
Author(s):  
Kinga Barrafrem ◽  
Daniel Västfjäll ◽  
Gustav Tinghög
Keyword(s):  
Financial Literacy ◽  
Household Finance ◽  
Well Being ◽  
Financial Behavior ◽  
Policy Makers ◽  
Total N ◽  
Behavioral Biases ◽  
Finance Management ◽  
Item Questionnaire ◽  
Application Potential

Understanding systematic differences in sound financial behavior between individuals is a key area for public policy and the possibility to tailor interventions to promote financial well-being. In this paper we develop and validate a concise 12 item questionnaire measuring individual’s vulnerability to behavioral biases in household finance – the Financial Homo Ignorans (FHI) Scale. We conduct two studies with general population samples (total N=2508) and show that the FHI scale can predict behavior in financial tasks such as consumer purchases, loan choices, or investment decisions, also when controlling for demographics, financial literacy and other related constructs. In addition, we show that consumer heterogeneity as assessed by the FHI scale explains the variation in household finance management and financial well-being. The FHI scale has application potential as it can be used by researchers, policy makers, and financial institutions to study the psychological underpinnings of financial behavior and design interventions by targeting individuals who are particularly vulnerable.

Financial education and financial satisfaction

2017 ◽  
Vol 35 (5) ◽  
pp. 805-817 ◽  
Author(s):  
Jing Jian Xiao ◽  
Nilton Porto
Keyword(s):  
Financial Literacy ◽  
Financial Education ◽  
Well Being ◽  
Financial Behavior ◽  
Future Research ◽  
Financial Satisfaction ◽  
Financial Capability ◽  
Data Set ◽  
Content Type ◽  
Mediating Factors

Purpose The purpose of this paper is to investigate roles of financial literacy, financial behavior, and financial capability as mediating factors between financial education and financial satisfaction. Design/methodology/approach Data are from the 2012 National Financial Capability Study, a large national data set with detailed information on financial satisfaction, education, literacy, behavior, capability, and related variables. Mediation analyses are used to answer research questions. Findings Financial education may affect financial satisfaction, a subjective measure of financial well-being, through financial literacy, financial behavior, and financial capability variables. Results show that subjective financial literacy, desirable financial behavior and a financial capability index (a sum of Z-scores of objective financial literacy, subjective financial literacy, desirable financial behavior, and perceived financial capability) are strong mediators between financial education and financial satisfaction. Research limitations/implications The study has used cross sectional data that can only document associations between financial education and satisfaction and the mediators between them. Future research could use relevant longitudinal data to verify multiple benefits of financial education. Practical implications The findings have implications for financial service professionals to take advantages of multiple benefits of financial education in content acquisition, confidence in knowledge and ability, and action taking when they communicate with their clients. Social implications Policy makers on consumer financial education may use the information to advocate and promote effective education programs to improve consumer financial well-being. Originality/value This study is the first of this kind to examine the association between financial education and financial satisfaction and several financial capability variables as mediating factors.

The effect of financial literacy and gender on retirement planning among young adults

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Osvaldo García Mata
Keyword(s):  
Young Adults ◽  
Financial Literacy ◽  
Structural Equation ◽  
Structural Equation Models ◽  
Retirement Planning ◽  
Financial Inclusion ◽  
Financial Behavior ◽  
Moderator Variable ◽  
Content Type ◽  
And Gender

PurposeThe purpose of this paper is to analyze financial literacy's effect on retirement planning among young adults in Mexico, with gender as a moderator variable. Planning refers to the actual or intended implementation of several retirement strategies: private pension funds, investing in assets, government subsidies and family assistance.Design/methodology/approachThe article's methodology is quantitative, empirical and cross-sectional. Ajzen's theory of planned behavior (1991) works as the theoretical framework to examine planning for retirement intentions determined by individuals' financial inclusion, attitudes, knowledge, behavior, occupation and family traits. The methodology follows generalized structural equation models (GSEM) with logistic regression basis, constructed with data from the National Survey on Financial Inclusion 2018.FindingsResults confirm that the most financially knowledgeable individuals have lesser intentions to pursue passive strategies, while financial behavior and inclusion associate with actively planning. Gender plays a fundamental role in retirement planning too.Research limitations/implicationsObservations for several years are necessary to effectuate longitudinal analysis. Further research should include a more in-depth study of strategy choice triggers and policy impact on retirement planning.Social implicationsFindings can be useful to public and private institutions focused on saving, investment and retirement, especially in economies comparable to Mexico's. Avoiding the higher social costs associated with poor retirement planning depends on timely decision-making.Originality/valueThis study goes beyond the traditional pension fund strategy to analyze other options. It delivers information about young people's long-term financial plans in Mexico concerning financial literacy and gender.

Financial literacy and retirement planning in Ghana

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Emmanuel Sarpong-Kumankoma
Keyword(s):  
Low Income ◽  
Financial Literacy ◽  
Retirement Planning ◽  
Financial Behavior ◽  
Vulnerable Groups ◽  
Primary Data ◽  
Formal Sector ◽  
Content Type ◽  
The Impact ◽  
The Empirical Analysis

PurposeThis paper aims to investigate the impact of financial literacy on savings and retirement planning in Ghana.Design/methodology/approachThe study uses primary data collected from a sample of formal sector workers and probit models, to assess how financial literacy affects retirement planning.FindingsThe empirical analysis of this study shows that most individuals lack knowledge of basic concepts of finance. This study finds that only about 27% of respondents were able to correctly answer three simple questions on inflation, interest compounding and risk diversification. Generally, the young, the old, women, low-income earners and the less educated perform worst on financial literacy measures. Also, financial literacy has a positive significant impact on the probability of saving for retirement.Practical implicationsThe low level of financial literacy observed should be of concern to policymakers. Evidently, concrete measures are required to strengthen the knowledge of particularly those in the vulnerable groups such as the young, the old, women, low-income earners and the less educated, in order to enable them to prepare adequately for retirement.Originality/valueThe study contributes to the scant financial literacy and financial behavior literature in developing countries such as Ghana.

Can gamification improve financial behavior? The moderating role of app expertise

2019 ◽  
Vol 37 (4) ◽  
pp. 951-975 ◽  
Author(s):  
Julia Bayuk ◽  
Suzanne Aurora Altobello
Keyword(s):  
College Students ◽  
Financial Literacy ◽  
Financial Services ◽  
Well Being ◽  
Financial Behavior ◽  
Content Type ◽  
Financial Measures ◽  
Subjective Knowledge ◽  
Financial Applications ◽  
Social Features

Purpose The purpose of this paper is to explore potential benefits of gamification (application of game-playing elements) for financial well-being and motivation to save. Design/methodology/approach A preliminary survey of college students explored how gamification principles incorporated into money-savings/personal finance smartphone apps could improve financial well-being. The main study utilized Mechanical Turk participants, exposing them to financial game app descriptions that emphasized social features (e.g. leaderboards and ability to share achievements) or economic features (e.g. ability to earn real money or a higher interest rate). Objective and subjective financial measures including expertise with financial apps, perceived benefits of financial apps and behavioral intentions were examined. Findings Financial worry, financial literacy, subjective knowledge and expertise with money-savings/financial applications predicted financial well-being. Additionally, consumers varied in their preferences for certain financial game app features based on past financial app experience. Those who already used a financial app tend to exhibit higher subjective (though not objective) knowledge, and want both “social” and “economic” features of financial applications, whereas those with no experience are more motivated by economic features. Practical implications These results could be used to guide game designers regarding which features may be more attractive to consumers depending on their prior expertise with financial smartphone applications. Financial services marketing would benefit from further research into whether smartphone financial applications that emphasize social features have benefits for consumers’ motivation and financial well-being. Originality/value Examining college students about to enter the real world and the general population, this project contributes to research to improve understanding of financial well-being by examining how already having a financial gamification application impacts perceptions of knowledge and expertise, as well as intentions to save given a more socially focused vs economically focused savings app. Additional research needs to further explore gamification as an experimental intervention to ultimately improve both subjective financial well-being and objective financial behaviors, especially for consumers with lower expertise and high risk of financial vulnerability.

Talking money at home: the value of family financial socialization

2020 ◽  
Vol 38 (7) ◽  
pp. 1617-1634
Author(s):  
Haidong Zhao ◽  
Lini Zhang
Keyword(s):  
Financial Literacy ◽  
Well Being ◽  
Financial Behavior ◽  
Equation Modeling ◽  
Financial Socialization ◽  
Content Type ◽  
Financial Outcomes ◽  
The Family ◽  
Parental Financial Socialization ◽  
At Home

PurposeThe objective of this study was to empirically examine how family financial socialization affects individuals' financial outcomes, including financial literacy, financial behavior and financial well-being, based on the family financial socialization theory (FFST).Design/methodology/approachUsing a national representative sample of 6,311 US respondents from the 2016 National Financial Well-Being Survey, structural equation modeling (SEM) was conducted to test the hypotheses in this study. Sampling weights were incorporated into the structural model using the maximum likelihood estimation with robust standard errors and a Satorra-Bentler scaled test statistic (MLM estimation).FindingsThis study concludes the effectiveness of family financial socialization by showing that parental financial socialization has significant positive impacts on financial literacy, financial behavior and financial well-being. In addition, parents' education can significantly influence the quality of parental financial socialization.Practical implicationsThe result underscores the importance of financial socialization in the family context and encourages parents to discuss financial matters with their children at home. Detailed implications have been provided to financial educators, practitioners and policymakers to incorporate parental involvement in the design of financial education programs, as well as financial services providers to improve marketing strategies for their banking services.Originality/valueThis research is amongst the first to empirically explore the relationships among parental financial socialization, financial literacy, financial behavior and financial well-being based on the FFST. The study also contributes to the literature by confirming the effects of parental socialization received in childhood on adults' later financial outcomes.

scholarly journals Predictors of Financial Well-Being among Malaysian Employees: Examining the Mediate Effect of Financial Stress

2013 ◽  
Vol 1 (3) ◽  
pp. 61 ◽  
Author(s):  
Mohamad Fadzli Sabri ◽  
Leila Falahatib Falahati
Keyword(s):  
Financial Literacy ◽  
Financial Stress ◽  
Sampling Technique ◽  
Well Being ◽  
Financial Behavior ◽  
Financial Problem ◽  
Financial Capability ◽  
Public And Private ◽  
Policy Makers ◽  
Multi Stage

Financial well-being and its impact on the quality of life among employees have received considerable attention from researchers, consumer and financial educators, practitioners and policy makers. The purpose of this study is to examine the determinant factors of employees’ financial well-being in Malaysia. The results of this study can be used for better understanding of the relationship between and among determinants of financial well-being by highlighting the relationships among financial literacy, financial behavior, financial capability, financial problem, and financial stress. Samples were selected using multi-stage sampling technique among employees in public and private sectors. A total of 2,000 completed questionnaires were analyzed using path analysis to identify direct and indirect effects on financial well-being. The results identified that financial well-being determinants were financial literacy, financial behavior, financial capability, financial problem; and financial stress had either a direct and indirect effect on financial well-being. The findings indicated that financial stress partially mediate the effect of factors on predicting financial well-being.

Financial access and economic development: the moderating role of financial consumer protection

2019 ◽  
Vol 15 (4) ◽  
pp. 406-424 ◽  
Author(s):  
Maryam Kriese ◽  
Joshua Yindenaba Abor ◽  
Elikplimi Agbloyor
Keyword(s):  
Economic Development ◽  
World Bank ◽  
Financial Literacy ◽  
Compliance Monitoring ◽  
Financial Access ◽  
Policy Makers ◽  
Content Type ◽  
The World Bank ◽  
Moderating Role

Purpose The purpose of this paper is to examine the moderating role of financial consumer protection (FCP) in the access–development nexus. Design/methodology/approach The study is based on cross-country data on 102 countries surveyed in the World Bank Global Survey on FCP and Financial Literacy (2013). The White heteroscedasticity adjusted regressions and Two-stage least squares regressions (2SLS) are used for the estimation. Findings Interactions between FCP regulations that foster fair treatment, disclosure, dispute resolution and recourse and financial access have positive net effects on economic development. However, there is no sufficient evidence to suggest that interactions between financial access and enforcement and compliance monitoring regulations have a significant effect on economic development. Practical implications First, policy makers should continue with efforts aimed at instituting FCP regimes as part of strategies aimed at broadening access to financial services for enhanced economic development. Second, instituting FCP regimes per se may not be enough. Policy makers need to consider possible intervening factors such as the provision of adequate resources and supervisory authority, for compliance monitoring and enforcement to achieve the expected positive effect on economic development. Originality/value This study extends evidence in the law–finance–growth literature by providing empirical evidence on the effect of legal institution specific to the protection of retail financial consumers on the access–development nexus using a nouvel data set, the World Bank Global survey on FCP and Financial Literacy (2013).

Financial capabilities development: essential discourse in social work

2019 ◽  
Vol 46 (10) ◽  
pp. 1234-1246
Author(s):  
Lambert K. Engelbrecht ◽  
Abigail Ornellas
Keyword(s):  
Sustainable Development ◽  
Social Work ◽  
Financial Literacy ◽  
Community Education ◽  
Work Practice ◽  
Well Being ◽  
Social Work Practice ◽  
Content Type ◽  
Vulnerable Households ◽  
Definition Of

Purpose Within a neoliberal environment, financial vulnerability of households has become an increasing challenge and there is a requirement of financial literacy education, a necessary activity to facilitate sustainable development and well-being. However, this is seldom a mainstream discourse in social work deliberations. The paper aims to discuss these issues. Design/methodology/approach First, introducing the neoliberal impact on financial well-being and capability for vulnerable households, the authors’ postulation is substantiated on a seven-point argument. The contexts of financially vulnerable households are sketched. Second, a conceptualisation of financial literacy is offered, and third, perspectives on and approaches to financial literacy as a fundamental capability are presented. This is followed by a theoretical foundation of community education as a practice model in social work to develop financial capabilities. In the fifth place, prevailing practices of Financial Capabilities Development (FCD) programmes are offered. Subsequently, the implications of a neoliberal environment for social work practice are examined. Findings The revised global definition of social work encourages the profession to understand and address the structural causes of social problems through collective interventions. As a response, it is argued that community education towards FCD of vulnerable households within a neoliberal environment should be an essential discourse in social development. Originality/value The authors reflect on the significance of FCD, highlighting its contribution towards human security and sustainable development. Although this paper draws on Southern African contexts, the discourse finds resonance in other contexts across the world.

scholarly journals Analysis of Factors Affecting Financial Well Being Millennial Generation in Batam

2020 ◽  
Vol 2 (1) ◽  
pp. 33
Author(s):  
Yandi Suprapto
Keyword(s):  
Financial Literacy ◽  
Millennial Generation ◽  
Negative Relationship ◽  
Financial Stress ◽  
Well Being ◽  
Financial Behavior ◽  
Financial Socialization ◽  
Factors Affecting ◽  
The People ◽  
Socialization Agents

The purpose of this study is to determine whether financial behavior, financial socialization agents, financial attitude,  financial stress, and financial literacy can influence financial well being in millennial generation in Batam City. Financial well being is described when a person is able to prosper in the field of financial finance. Welfare is reflected in the ability to meet and manage all needs and desires. While millennial is the most current generation so that it can be a hope and reflection of a country. This research method begins with the distribution of questionnaires to the people of Batam city aged 15-19 years. Data were collected as many as 300 respondents then processed with multiple regression research models using SPSS. Variable financial literacy, financial attitude and financial socialization agents provide a significant positive relationship to financial well being. Meanwhile financial stress has a significant negative relationship with financial well being. Then for financial behavior variables show no significant relationship to financial well being.

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