The influence of financial socialization on young adults

by

Christina Elaine Glenn

B.B.A., Fort Hays State University, 2004

M.B.A., Fort Hays State University, 2012

AN ABSTRACT OF A DISSERTATION

submitted in partial fulfillment of the requirements for the degree

DOCTOR OF PHILOSOPHY

Personal Financial Planning

College of Human Ecology

KANSAS STATE UNIVERSITY

Manhattan, Kansas

2018
 Abstract

College is a time when many young adults are beginning to make financial decisions on

their own. The financial behaviors they engage in can have effects on their academic success, life

satisfaction, relationship quality, physical and mental well-being, and financial well-being. This

dissertation examined the direct and indirect relationships between financial socialization,

financial knowledge, financial self-efficacy, and financial behaviors in college students using

data from the 2014 National Student Financial Wellness Study (NSFWS). The sample consisted

of 12,598 college students from 52 college institutions. Structural Equation Modeling (SEM) was

conducted with the tested model guided by Gudmunson and Danes’ (2014) Family Financial

Socialization (FFS) conceptual framework.

Results revealed financial socialization has a direct influence on financial knowledge,

financial self-efficacy, and financial behaviors. An indirect association between financial

socialization and financial behaviors through its association with financial self-efficacy was also

found. Alternative models discovered neither parental financial socialization nor formal financial

education alone impacted financial knowledge, but when combined, their influence became

significant, suggesting a possible interaction effect between formal financial education and

parental financial socialization. Objective financial knowledge was not found to influence

financial self-efficacy or financial behaviors in college students. Results showed financial self-

efficacy to be the strongest predictor of students engaging in positive financial behaviors. A one

standard deviation increase in financial self-efficacy was associated with a 90% increase in the

standard deviation of financial behavior.

 This study provides support and implications for the FFS conceptual framework.

Financial counselors, advisors, and therapists can use these findings to educate their clients on

the importance of financial socialization of their children. Furthermore, results reinforce the need

for mandatory formal financial education and infer the importance of parents and educators

working together to cultivate financial knowledge in children.

 The influence of financial socialization on young adults

by

Christina Elaine Glenn

B.B.A., Fort Hays State University, 2004

M.B.A., Fort Hays State University, 2012

A DISSERTATION

submitted in partial fulfillment of the requirements for the degree

DOCTOR OF PHILOSOPHY

Personal Financial Planning

College of Human Ecology

KANSAS STATE UNIVERSITY

Manhattan, Kansas

2018

Approved by: Approved by:

Co-Major Professor Co-Major Professor

Stuart J. Heckman Sonya L. Lutter
 Copyright

© Christina Elaine Glenn 2018.

 Abstract

College is a time when many young adults are beginning to make financial decisions on

their own. The financial behaviors they engage in can have effects on their academic success, life

satisfaction, relationship quality, physical and mental well-being, and financial well-being. This

dissertation examined the direct and indirect relationships between financial socialization,

financial knowledge, financial self-efficacy, and financial behaviors in college students using

data from the 2014 National Student Financial Wellness Study (NSFWS). The sample consisted

of 12,598 college students from 52 college institutions. Structural Equation Modeling (SEM) was

conducted with the tested model guided by Gudmunson and Danes’ (2014) Family Financial

Socialization (FFS) conceptual framework.

Results revealed financial socialization has a direct influence on financial knowledge,

financial self-efficacy, and financial behaviors. An indirect association between financial

socialization and financial behaviors through its association with financial self-efficacy was also

found. Alternative models discovered neither parental financial socialization nor formal financial

education alone impacted financial knowledge, but when combined, their influence became

significant, suggesting a possible interaction effect between formal financial education and

parental financial socialization. Objective financial knowledge was not found to influence

financial self-efficacy or financial behaviors in college students. Results showed financial self-

efficacy to be the strongest predictor of students engaging in positive financial behaviors. A one

standard deviation increase in financial self-efficacy was associated with a 90% increase in the

standard deviation of financial behavior.

 This study provides support and implications for the FFS conceptual framework.

Financial counselors, advisors, and financial therapists can use these findings to educate their

clients on the importance of financial socialization of their children. Furthermore, results

reinforce the need for mandatory formal financial education and infer the importance of parents

and educators working together to cultivate financial knowledge in children.

 Table of Contents

List of Figures ................................................................................................................................. x

List of Tables ................................................................................................................................. xi
Acknowledgements ....................................................................................................................... xii
Dedication .................................................................................................................................... xiv
Chapter 1 - Introduction .................................................................................................................. 1
Research Questions ..................................................................................................................... 3
Conceptual Framework ............................................................................................................... 4
Hypotheses .................................................................................................................................. 7
Chapter 2 - Review of Literature .................................................................................................... 8
Financial Socialization ................................................................................................................ 8
Financial Socialization and Financial Knowledge .................................................................. 8
Financial Socialization and Financial Self-Efficacy ............................................................. 11
Financial Socialization and Financial Behavior ................................................................... 13
Financial Knowledge ................................................................................................................ 15
Financial Knowledge and Financial Self-Efficacy ............................................................... 15
Financial Knowledge and Financial Behavior ...................................................................... 17
Financial Self-Efficacy ............................................................................................................. 19
Financial Self-Efficacy and Financial Behavior ................................................................... 19
Summary ................................................................................................................................... 20
Chapter 3 - Methods...................................................................................................................... 23
Data ........................................................................................................................................... 23
Missing Data ............................................................................................................................. 23
Operationalization of Variables ................................................................................................ 24
Financial Socialization ...................................................................................................... 24
Financial Knowledge ........................................................................................................ 26
Financial Self-Efficacy ..................................................................................................... 29
Financial Behavior ............................................................................................................ 29

viii
 Demographics/Characteristics .......................................................................................... 31
Chapter 4 - Results ........................................................................................................................ 35
Descriptive Statistics................................................................................................................. 35
Confirmatory Factor Analysis .................................................................................................. 42
Model Fit ............................................................................................................................... 45
Structural Model Results....................................................................................................... 45
Direct Effects .................................................................................................................... 48
Indirect Effects .................................................................................................................. 50
Alternative Models............................................................................................................ 50
Chapter 5 - Discussion .................................................................................................................. 53
Financial Socialization .............................................................................................................. 53
Demographics and Financial Socialization ........................................................................... 53
Financial Socialization and Financial Knowledge ................................................................ 55
Financial Socialization and Financial Self-Efficacy ............................................................. 56
Financial Socialization and Financial Behavior ................................................................... 57
Financial Knowledge ................................................................................................................ 58
Financial Knowledge and Financial Self-Efficacy ............................................................... 58
Financial Knowledge and Financial Behavior ...................................................................... 59
Financial Self-Efficacy ............................................................................................................. 59
Financial Self-Efficacy and Financial Behavior ................................................................... 59
Family Financial Socialization Conceptual Model ................................................................... 60
Contributions ............................................................................................................................ 61
Implications .............................................................................................................................. 62
Strengths and Limitations ......................................................................................................... 65
Future Research ........................................................................................................................ 66
References ..................................................................................................................................... 68
Appendix A - Supplemental Tables and Figures .......................................................................... 75
Appendix B - SAS and Mplus Code ............................................................................................. 86

ix
 List of Figures

Figure 1.1 Revised Family Financial Socialization Conceptual Model ......................................... 4

Figure 2.1 Revised Family Financial Socialization Conceptual Model ...................................... 22
Figure 4.1 Significant Pathways in Structural Model Predicting Financial Behavior (N =
12,598)* ................................................................................................................................ 47
Figure A.1 Significant Pathways in Structural Model Predicting Financial Behavior with Split
Socialization Construct (N = 12,598)*.................................................................................. 84

x
 List of Tables

Table 3.1 Items in Parcels ............................................................................................................. 33

Table 4.1 Summary Statistics ....................................................................................................... 37
Table 4.2 Confirmatory Factor Analysis Results for Latent Constructs without Parcels (N =
12,598) .................................................................................................................................. 42
Table 4.3 Confirmatory Factor Analysis Results for Latent Constructs with Parcels (N = 12,598)
............................................................................................................................................... 44
Table 4.4 Direct Effects with Financial Behavior (N = 12,598) ................................................... 49
Table A.1 Correlation Matrix for All Variables ........................................................................... 75
Table A.2 Split Socialization Model Direct Effects with Financial Behavior (N = 12,598)* ...... 78
Table A.3 Split Socialization Model Indirect Effects (N = 12,598)* ........................................... 79
Table A.4 Direct Effects with Financial Behavior without First Year Students (N = 10,302)* ... 80
Table A.5 Direct Effect with Financial Behavior for Do Not Know Income (N = 12,598)* ....... 81
Table A.6 Direct Effects with Financial Behavior for Prefer Not to Answer (N = 12,598)* ....... 82
Table A.7 Glossary ....................................................................................................................... 83

xi
 Acknowledgements

They say “A journey of a thousand miles begins with a single step” and this degree has

definitely felt like a thousand mile journey! And I could not have completed this part of my

journey without the help of many kind souls. So I must thank God for putting these people in my

life and for helping me achieve this dream. Thank you God, my Lord and Saviour!

Stu Heckman, thank you for your guidance on this dissertation and other research

projects. Your unique perspective and vast knowledge has always had me in awe. Sonya Lutter

and Kristy Archuleta, you both have been such an inspiration to me, personally and

professionally. It has been an honor to learn from such talented researchers and to have you both

as role models. Catherine Montalto, at The Ohio State University, thank you for being my “grand

advisor” and allowing me to work with your data. I appreciate the suggestions and resources you

provided. Christy Craft, thank you for being a part of my committee. I enjoyed getting to know

more about your research and appreciate your thoughtful feedback. Tierra Dimond, thank you for

being a great advisor and making things seem less daunting. Martin Seay and Morey

MacDonald, you both have provided me with wonderful words of wisdom along the way, and

I’m grateful you are a part of my journey. I have learned so much from all of the faculty at

Kansas State and for that I am eternally grateful.

To my crazy cohort members: Kate (the craziest of them all), David, Julie, Ben, Vincent,

and Dennis, thank you for your friendship and support over these past four years. United we

stand (and eventually graduate)! Derek Lawson, you have been such a great friend and peer in

this experience. I don’t know what I would have done without your guidance on SEM! Sarah

Asebedo, thank you for cheering me on and hooking me up with Stats Camp to learn SEM. You

too have been an inspiration to me and I thank you.

xii
 To Dawn and Phil Anderson at the Anderson Bed and Breakfast, I could not have

survived my summers at “boot camp” without the comforts of home you provided. You have

become my Manhattan family and home away from home. If only those chocolate chip cookies

didn’t stick to my waistline!

I must also thank my friends and colleagues at Fort Hays State University (especially

Nanette Fitzhugh, Rachel Dolecheck, and Linda Kepka) for listening to me rejoice and complain

and encouraging me along the way. I also can’t forget to thank the professor whose stories and

teaching planted the seed that made me want to get my doctorate, Micol Maughan. Micol, I love

you!

And last, but certainly not least, thank you Mom and Bob! Without you guys, this

wouldn’t be possible.

xiii
 Dedication

To quote my favorite president, Abraham Lincoln, “All that I am, or hope to be, I owe to

my angel mother.” For that reason, this dissertation is dedicated to my amazing mother, Elaine,

whose mental, spiritual, and financial support over the years has allowed me to pursue my

dreams. Thank you, Mom, for all you have done for me. My love for you is unmeasurable.

xiv
 Chapter 1 - Introduction

College is a time when many young adults are leaving home for the first time, meeting

new people, and trying to establish the delicate balance of school, friends, work, and finances. As

college students make their way into the adult world, they find themselves facing new financial

challenges – paying rent and bills, managing student loan debt, applying for credit cards, and

establishing financial behaviors that they may continue as they grow older. The financial

behaviors these college students engage in can profoundly impact their well-being. Positive

financial behaviors have been linked to higher GPA, greater academic satisfaction, and greater

life satisfaction (Xiao, Tang, & Shim, 2009). Financial behavior is fundamental to financial well-

being (Brüggen, Hogreve, Holmlund, Kabadayi, & Löfgren, 2017; Gutter & Copur, 2011), with

financial well-being in turn being positively associated with psychological and physical health

(Shim, Xiao, Barber, & Lyons, 2010), relationship quality (Dew & Xiao, 2013), and overall life

satisfaction (Netemeyer, Warmeth, Fernandes, & Lynch, 2018). Engaging in positive financial

behaviors is associated with lower financial stress, higher subjective well-being, and lower

psychological distress (Serido, Shim, Mishra, & Tang, 2010).

With financial behavior having such a strong influence on many areas of well-being,

teaching children to manage their finances should be a major priority for parents. Yet nearly 52%

of parents reported reluctance to discuss financial matters with their children, and only 33% of

parents reported discussing financial topics with their kids once a week or more (T. Rowe Price,

2016). Parents may be unsure how to teach their children to engage in positive financial

behaviors or which financial socialization practices are effective. Family financial socialization

is the process by which children acquire and develop financial knowledge, skills, attitudes, and

behaviors over time (Gudmunson & Danes, 2011). Parents are often considered the primary

1
socialization agent for their children. Financial socialization can result from conversations

parents have with their children about money, children observing their parents’ financial

behaviors, formal education at school, working at a job, and through direct experience with

money. Financial socialization is thought to influence financial self-efficacy, financial

knowledge, and financial behaviors.

The concept of self-efficacy is perfectly embodied by Henry Ford’s famous quote,

“Whether you think you can or you cannot, you are right”. First postulated by Albert Bandura

(1977) as a construct to mediate behavior change, self-efficacy represents one’s confidence in

their ability to produce a desired result. The greater one’s self-efficacy, the more likely they will

attempt a behavior, as well as persist in the face of difficulties (Bandura, 1977). Financial self-

efficacy is domain specific, reflecting confidence in one’s ability to manage their personal

finances. Studies have found individuals with higher levels of financial self-efficacy experience

lower levels of financial stress (Lapp, 2010), improved financial behavior, and greater financial

well-being (Serido, Shim, & Tang, 2013). Furthermore, the influence of self-efficacy appears to

be enduring. In a longitudinal study conducted over nine years, higher levels of economic self-

efficacy in high school students was associated with increased odds of completing college by age

24, higher income in young adulthood, and early adult financial independence (Lee & Mortimer,

2009). Despite the positive influences of having greater financial self-efficacy, limited research

has been conducted to determine the antecedents of financial self-efficacy. This study seeks to

add to the literature by examining the direct and indirect effects of financial socialization on

financial self-efficacy, financial knowledge, and financial behaviors. (For those not familiar with

these terms, definitions can be found in the Appendix, Table A.7.)

2
 The current study tests the family financial socialization model developed by Gudmunson

and Danes (2011), which suggests implicit and explicit socialization directly influence financial

attitudes, knowledge, and capabilities. Self-efficacy is considered a motivating factor of

capabilities (Gudmunson & Danes). Financial behaviors are thought to be directly influenced by

financial self-efficacy and indirectly affected by financial socialization. Structural equation

modeling was used to examine the association between financial socialization, financial self-

efficacy, financial knowledge, and financial behaviors in college students using data from the

2014 National Student Financial Wellness Survey.

Research Questions

Following the paths for the revised financial socialization conceptual model shown in

Figure 1.1, this study sought to answer the following research questions:

R1: What is the relationship between financial socialization and objective financial knowledge?

R2: What is the relationship between financial socialization and financial self-efficacy?

R3: What is the relationship between financial socialization and financial behaviors?

R4: Is there an indirect relationship between financial socialization and financial behaviors

through financial self-efficacy?

R5: Is there an indirect relationship between financial socialization and financial behaviors

through financial knowledge?

R6: What is the relationship between financial knowledge and financial self-efficacy?

R7: What is the relationship between financial knowledge and financial behaviors?

R8: What is the relationship between financial self-efficacy and financial behaviors?

3
Figure 1.1 Revised Family Financial Socialization Conceptual Model

Conceptual Framework

Financial literacy research conducted over the last 40 years has used a variety of

theoretical frameworks, such as behavioral life cycle, consumer socialization, resource

management, and systems theories to explore the variables related to financial behaviors

(Gudmunson & Danes, 2011). These studies have primarily focused on the individual as the unit

of analysis, without consideration of how family has influenced the individual through

socialization (Gudmunson & Danes). Through their examination of over 100 research articles,

Gudmunson and Danes created the family financial socialization (FFS) conceptual model to

outline the relationship between family socialization processes and the financial socialization

outcomes of financial attitudes, knowledge, capabilities, behavior, and well-being. The current

study utilizes the FFS conceptual model to examine if explicit and implicit socialization

4
processes influence financial self-efficacy in college students, as self-efficacy is considered to be

a motivation source for a person to attempt what they are capable of doing (Danes & Yang,

2014), and also for behavior change (Bandura, 1977). Further analysis was conducted to explore

the associations between financial socialization, financial self-efficacy, financial knowledge, and

financial behaviors in college students.

The FFS model proposes using the demographic variables of gender, age, and race, and

family characteristics, such as family size and socioeconomic status, as predictors of financial

outcomes through their association with family socialization processes. Since the exact nature of

these relationships is unknown (Danes & Yang, 2014; Gudmunson & Danes, 2011) and not the

focus of the present study, demographics were treated as control variables for the purpose of this

paper.

Family interactions and relationships are representative of family dynamics and implicit

socialization processes. Families interact as a system, with individual behaviors influencing and

eliciting feedback from others in the family system. Communication and relationship quality

impact how implicit and explicit messages are received. Implicit financial socialization occurs

from children observing parent financial behaviors and daily interactions. Explicit financial

socialization involves purposive efforts to teach, model, and practice financial knowledge and

behaviors. Purposive financial socialization can occur bi-directionally, and within any family

relationship, not just from parent to child (Danes & Yang, 2014)

Family interactions and relationships are evaluated separately from purposive financial

socialization in Gudmunson and Danes (2011) model, in order to gain a greater understanding of

how these constructs influence attitudes, knowledge, and capabilities. Capabilities define what an

individual is able to do, rather than what is done proficiently, and also includes internal sources

5
of motivation such as self-efficacy, values, perceived needs, and living standards. Self-efficacy

may explain variations in what individuals of similar circumstances are capable of achieving.

Through its interaction with knowledge, self-efficacy may help produce behavior change

(Gudmunson & Danes, 2011).

In the FFS model, financial attitudes, knowledge, and capabilities influence financial

behavior and financial well-being. The financial behavior construct consists of two types of

financial behaviors. The first type of financial behaviors represents patterns of action over time.

The second type of behaviors is related to decision making and financial turning points, such as

setting up a retirement account, or establishing automatic savings from one’s paycheck. The

relationship between financial attitudes, knowledge, and capabilities and financial behaviors and

well-being requires further research to determine if the influences are enhancing or constraining.

Financial behaviors directly impact financial well-being. Financial well-being consists of

objective measures, such as income, savings, net worth, asset accumulation, and financial ratios,

as well as subjective measures, such as financial satisfaction (Danes & Yang, 2014). Because

most college students have not yet had time to acquire many assets, and many are acquiring

student loans, any objective evaluation of financial well-being in college students would be

futile, and therefore, is not included in this study. Instead the focus is on the financial behaviors

of college students, with the presumption that they may continue their financial behaviors into

adulthood.

The present study examines the influence of implicit and explicit socialization agents,

such as direct teaching about money, parents as financial role models, and formal education on

financial self-efficacy, financial knowledge, and financial behaviors in college students. As self-

efficacy is considered a motivation source of capabilities, it is hypothesized the financial

6
socialization processes will be positively associated with financial self-efficacy. As parents and

educators socialize children on positive financial norms, confidence in one’s ability to manage

their finances should increase. It is posited higher financial self-efficacy will result in

performance of a greater number of positive financial behaviors. By using the FFS conceptual

model, the present study provides an opportunity to test an emerging theory specifically

developed for the personal finance field.

Hypotheses

Based on the Family Financial Socialization conceptual model, the following hypotheses

will be tested:

H1: Financial socialization will be associated with objective financial knowledge.

H2: Financial socialization will be associated with financial self-efficacy.

H3: Financial socialization will have a positive and direct relationship with financial behaviors.

H4: Financial socialization will have an indirect relationship with financial behavior through

financial self-efficacy.

H5: Financial socialization will have an indirect relationship with financial behavior through

financial knowledge.

H6: Financial knowledge will be positively associated with financial self-efficacy.

H7: Financial knowledge will be positively associated with financial behaviors.

H8: Financial self-efficacy will be positively associated with financial behaviors.

7
 Chapter 2 - Review of Literature

An indirect link between financial socialization and financial self-efficacy has been

demonstrated through its association with financial knowledge—financial socialization has been

shown to influence financial knowledge (Grohmann, Kouwenberg, & Menkoff, 2015; Shim,

Barber, Card, Xiao, & Serido, 2009; Shim et al., 2009) and others have shown that financial

knowledge influences financial self-efficacy (Danes, Huddleston-Casas, & Boyce, 1999; Lapp,

2010; Sanders, Weaver, & Schnabel, 2007; Serido et al., 2013). Both financial knowledge and

self-efficacy have a positive relationship with financial behaviors (Bandura, 1977; Babiarz &

Robb, 2013; Henager & Cude, 2016; Lown, Kim, Gutter, & Hunt, 2015; Montford & Goldsmith,

2016). Socialization tends to influence financial behaviors, though results vary when examining

specific socialization activities (Jorgensen, Rappleyea, Schweichler, Fang, & Moran, 2017; Kim

& Chatterjee, 2013; Kim, LaTaillade, & Kim, 2011; Serido et al., 2010). The following literature

review provides support for the need for further study on the influence of financial socialization

on self-efficacy, financial knowledge, and financial behaviors.

Financial Socialization

Financial Socialization and Financial Knowledge

Parents are commonly considered the primary socialization agents for their children

(Gudmunson & Danes, 2011). With regard to finances, parents socialize their children by

modeling consumer behaviors, establishing the rules and norms for their children’s financial

behaviors, and directly discussing financial related topics with their children (Allen, 2010). By

encouraging their children to open a bank account, save, and/or invest money, parents are

providing direct teaching of their financial attitudes and beliefs. Parents sometimes pay their

8
children an allowance as a way for the child to learn how to manage their own money (Hira,

1997). Financial socialization can also occur through formal financial education, such as a class

or workshop in high school and/or college, as well as experience gained from working and

earning money. According to the FFS model, purposive financial socialization can either

promote or inhibit financial knowledge, attitudes, and capabilities (Danes & Yang, 2014).

In a survey of freshmen college students, researchers examined the influence of direct

parental financial teaching, parental financial behavior, high school financial education, and high

school work experience on financial knowledge (Shim et al., 2010). Financial knowledge was

modeled as a common latent construct, using both objective and subjective measures of

knowledge. A single item question asked students to rate their overall understanding of money

management concepts to determine their subjective financial knowledge. Fifteen true/false

questions provided the measurement for objective financial knowledge. Results of the study

found direct parental teaching, high school financial education, and high school work experience

had a significant direct effect on financial knowledge (Shim et al., 2010).

Previous research conducted by Shim et al. (2009) surveyed a random sample of

undergraduate and graduate college students and found parental socialization (measured by

asking respondents if their parents/guardians included them in discussions on saving, family

spending, their own spending, and use of credit) and formal financial education were

significantly related to perceived financial knowledge. In this study, gender was also included as

a possible influence on perceived financial knowledge. Compared to male students, female

students were significantly less likely to perceive themselves as financial knowledgeable (Shim

et al.). Research has suggested there may be differences in financial socialization between

genders. Garrison and Gutter (2010) found significant differences in social learning opportunities

9
between males and females in regards to finances. Females were found to have more

opportunities to discuss financial matters with their parents and with their peers, and had more

opportunities to observe their parents and their peers engage in positive financial behaviors

(Garrison & Gutter, 2010). Formal financial education, however, may be more beneficial for

females, as suggested by Danes and Haberman (2007) who found when high school students

received formal financial education, the female students had a greater increase in financial

knowledge than the male students. Danes and Haberman attributed this difference to the

possibility that female and male students may experience differences in context and degree of

socialization within the family. As illustrated in Figure 1.1, the FFS model suggests demographic

variables such as gender, age, race, and family income influence socialization processes, which

in turn influence financial outcomes.

Other studies have found differences in how explicit and implicit socialization practices

influence financial knowledge (Grohmann et al., 2015; Jorgensen & Savla, 2010). In a study of

middle-class Thai households, researchers found financial socialization by parents through

instruction on budgeting and saving had a positive relationship to financial literacy, while

socialization through work experience and early money experience had a negative influence on

financial literacy (Grohmann et al., 2015). Jorgensen and Savla (2010) found that perceived

parental influence had a negative association with objective financial knowledge in college

students; however these results were not significant. Using different measurements for

socialization may provide different results. The current study examines parental financial

socialization and formal financial education to determine if there is a relationship between

financial socialization and objective financial knowledge.

10
Financial Socialization and Financial Self-Efficacy

Financial self-efficacy represents one’s confidence in their ability to manage their

personal finances. Using path analysis, Heckman and Grable (2011) examined the direct

relationship of parental debt attitudes, student income, and dependency status on financial

knowledge, and explored the indirect effect of these variables on financial self-efficacy. Data

was collected from a small sample (N = 80) of university students via online and paper survey.

Perceived parental debt attitudes were measured using nine survey items, the sum of which

indicated either positive attitudes (higher scores) or negative attitudes (lower scores) toward

debt. Self-reported percentage of monthly expenses paid for by parents/guardians indicated

financial dependency. Lower percentages reflected greater financial independence. Financial

self-efficacy was measured using a single item question asking how strongly the participant

agreed or disagreed with the statement, “I feel confident about making decisions that deal with

money.” A 20-item personal finance quiz measured objective financial knowledge, with the

number of correct items summed, and higher scores reflective of greater financial knowledge.

Results of the study showed students with higher levels of income had greater financial

knowledge and higher financial self-efficacy. Students who relied on their parents financially

showed lower levels of financial knowledge and lower self-efficacy; however, these results were

not significant. A significant positive relationship was found between students with higher

financial knowledge and financial self-efficacy. This lends support for further examination of the

relationship between objective financial knowledge and financial self-efficacy. An indirect path

from financial socialization to financial self-efficacy showed a weak yet insignificant association

between the two. The weakness of the association could be due to the small sample size

(Heckman & Grable, 2011).

11
 Studies examining the direct link between financial socialization and financial self-

efficacy have found mixed results. One study followed high school students from their freshmen

year until six years after their scheduled graduation from high school to determine if family

socialization influenced economic self-efficacy (Lee & Mortimer, 2009). Economic self-efficacy

was measured during their senior year of high school by asking respondents to respond to three

questions about how they viewed the future. Questions asked “what are the chances that you will

have a job that pays well?,” “what are the chances you will have a job that you enjoy doing?,”

and “what are the chances you will be able to own your own home?” Economic self-efficacy was

similar between boys and girls, yet girls were more optimistic about having a job they enjoy

doing in the future. A baseline model examined the influence of family background and

academic performance on self-efficacy. Family income and grades were found to have a

significant positive influence on economic self-efficacy in high school. Parents’ education level

also had an influence on the child’s economic self-efficacy. A second model tested the influence

of socialization on self-efficacy. Children whose parents talked with them about their work had

greater economic self-efficacy; however, receiving an allowance resulted in lower levels of self-

efficacy. A third model tested the combined effects of family background and socialization on

economic self-efficacy. Only parent-child discussions related to work and receiving an allowance

were shown to significantly influence economic self-efficacy in the third model, suggesting

background differences and academic performance cannot fully explain differences in self-

efficacy (Lee & Mortimer, 2009).

The direct link between financial socialization and financial self-efficacy was also

examined in a longitudinal study of college students, conducted during their first and fourth year

of college (Shim, Serido, Tang, & Card, 2015). Perceived parental financial role modeling,

12
perceived parental communication about finances, perceived parental financial expectations,

perceived friends’ financial behaviors, formal classroom learning, and informal self-learning

were analyzed to determine if changes in the socialization agents influenced change in financial

self-efficacy. Only changes in parental communication and changes in formal classroom learning

significantly influenced change in financial self-efficacy (Shim et al., 2015). The results of Shim

and associates’ study are based on changes in socialization agents. It does not address

socialization from a previous point in time. If parents did not change their socialization behaviors

during the four years their child was in college, then it is unlikely it would produce a change in

financial self-efficacy. The present research analyzes socialization practices from a prior point in

time to determine if the practices themselves influence self-efficacy.

Financial Socialization and Financial Behavior

Several studies have examined the relationship between socialization and financial

behavior. Financial communication between parents and children has been shown to have a

positive association with budgeting and cash management, credit management, saving and

investment behavior, and long-term planning (Jorgensen et al., 2017). Similar results were found

by Serido et al. (2010) in a study examining financial parenting, coping behaviors, and financial

well-being of college students. Perceived parental financial communication (based on perception

of communication quality) and perceived parental financial expectations were found to be

positively related to preventative financial coping behaviors (tracking expenses, following a

budget) and proactive financial coping behaviors (saving money and investing in long-term

financial goals; Serido et al.). A study of adults, ages 24-66 with low-and moderate-income, also

found evidence supporting financial communication’s influence on financial behaviors (Cho,

Gutter, Kim, & Mauldin, 2012). Respondents whose parents discussed the importance of saving,

13
using credit, and having a spending plan were more likely to report having a spending plan and

written financial goals than respondents whose parents did not have financial discussions with

them (Cho et al.).

Parental financial behavior has been linked to children’s financial behavior (Cho et al.,

2012; Webley & Nyhus, 2006). Adult children who categorized their parents as savers were

more likely to engage in financial planning behaviors than those whose parents were not

categorized as savers (Cho et al., 2012). Categorizing one’s parents as savers or non-savers

suggested a level of implicit or explicit socialization, either through perceived financial behavior

or direct financial conversations about saving from the parent. In a Dutch study examining

parental influence on children’s saving behavior, the amount of money saved by parents was

found to be positively related to the amount of money children (ages 16-21) saved (Webley &

Nyhus, 2006).

Webley and Nyhus (2006) also found that financial socialization through means of

financial communication, earning money as a teenager, and being encouraged to have a bank

account was found to be associated with children having a preference for saving left-over money

rather than spending it. Some socialization processes may be more effective than others at

influencing financial behavior. A study using a nationally representative sample examined

financial socialization and young adult (ages 18-21) financial management found that children

who had a savings account as a child, whose parents monitored their spending, and those who

worked for pay were more likely to have bonds, CD’s, or other non-bank account related liquid

assets (Kim & Chatterjee, 2013). Receiving an allowance has been shown to have mixed results

(Kim & Chatterjee; Kim et al., 2011). In a study examining adolescents’ financial behaviors,

receiving an allowance was not related to having a savings account, nor was it related to saving

14
for future schooling among those who had savings accounts (Kim et al.). Adult children ages 18

to 21 who reported receiving an allowance were more likely to carry a credit card balance;

however, they were also less likely to report financial anxiety and to be fully responsible for

managing their finances (Kim & Chatterjee).

In a meta-analysis of 126 studies, Kaiser and Menkhoff (2017) found financial education

interventions to have a significant, positive influence on financial knowledge and financial

behaviors. Specifically, they found financial education to have significant influence on

budgeting, saving, and retirement saving; however, there was not a significant difference in

borrowing and debt management, insurance and risk mitigation, or bank account behavior. The

analysis also examined how the setting/type of financial education (classroom versus non-

classroom, online, counseling, and informational nudge) influenced knowledge and behavior.

While classroom learning significantly increased financial knowledge, there were no significant

differences in financial behavior by education setting/type. Furthermore, the meta-analysis found

financial knowledge to be a significant predictor of financial behaviors.

Financial Knowledge

Financial Knowledge and Financial Self-Efficacy

Research examining the antecedents of financial self-efficacy have primarily focused on

the influence of financial knowledge. In a study conducted by Serido et al. (2013), college

students were surveyed during their first and fourth year of college to determine if changes in

objective and subjective financial knowledge influenced changes in financial self-efficacy.

Subjective financial knowledge was measured using a single-item question asking the respondent

to rate their overall level of understanding of personal finance concepts and practices. Objective

financial knowledge was measured using a 15-item true/false quiz on financial topics. Students

15
showed significant increases in objective and subjective financial knowledge, as well as financial

self-efficacy between their first and fourth year of college. Change in subjective knowledge was

found to be significantly related to change in financial self-efficacy; however, change in

objective financial knowledge did not influence change in self-efficacy. This suggests that what

individuals think they know is more influential on self-efficacy than what they actually know

(Serido et al., 2013). Results for objective financial knowledge could potentially differ,

depending on variable measurement. True/false responses provide for a 50% chance of the

respondent guessing the correct answer, when actually they may not know the answer.

Other studies have examined the influence of financial education on financial knowledge

and financial self-efficacy. Participants of a financial training program were surveyed on their

subjective financial knowledge and financial self-efficacy both before they participated in the

training and one year later (Lapp, 2010). Results showed subjective financial knowledge

significantly increased one year after the training. While the study did not indicate if there was a

significant increase in financial self-efficacy, changes in subjective financial knowledge were

found to be significantly related to changes in financial self-efficacy (Lapp, 2010). Similar

results were found in a study of high-school students (Danes et al., 1999). Financial education

was found to significantly increase both subjective financial knowledge and financial self-

efficacy, although the relationship between financial knowledge and financial self-efficacy was

not explored (Danes et al., 1999).

The review of the literature highlights the important difference between objective and

subjective financial knowledge. Objective financial knowledge represents what one actually

knows about personal finance, while subjective financial knowledge represents what one thinks

they know about personal finance. Results of these studies suggest instilling financial self-

16
efficacy might not be a result of actual knowledge, but rather a result of encouragement and

experience, something socialization can provide. The present study examines the relationship

between objective financial knowledge and financial self-efficacy by measuring objective

financial knowledge using four multiple choice questions in order to explore if a different

variable measurement yields different results.

Financial Knowledge and Financial Behavior

A relationship between financial knowledge and financial behaviors has been identified

in many studies. Both objective and subjective financial knowledge has been found to be

positively associated with having an emergency fund, planning for retirement (Angrisani,

Kapteyen, & Lusardi, 2016; Chatterjee, Fan, Jacobs, & Haas, 2017; de Bassa Scheresberg;

2013), spending less than income, paying credit cards in full (Angrisani et al.); having

investments, and not overdrawing one’s checking account (Henager & Cude, 2016). Objective

financial knowledge has also been found to be negatively associated with high cost borrowing

(de Bassa Scheresberg). In a study examining financial knowledge and best financial practices,

Robb and Woodyard (2011) found a significant correlation between both objective and

subjective financial knowledge and positive financial behaviors. Positive financial behavior was

measured using a scale that summed the number of best practice financial activities performed

out of six possible activities: having an emergency fund to cover 3 months of expenses, checking

one’s credit report in the past 12 months, not overdrawing one’s checking account, having a

retirement account, and having insurance. The study did not examine the activities on an

individual basis (Robb & Woodyard).

A two-time period longitudinal study conducted by Serido et al. (2013) investigated the

association between change in financial knowledge over time and change in financial behaviors

17
through a survey of college students. Students were surveyed during their first year of college

and again during their fourth year of college. Objective financial knowledge was measured using

a 15-item true/false quiz. While a change in objective financial knowledge did not have a

significant association with a change in financial behaviors, a significant positive relationship

between change in subjective knowledge and change in financial behaviors did exist. Financial

behaviors consisted of a scale of six items, including tracking monthly expenses, spending with

their budget, paying credit cards in full each month, saving money each month, and investing for

long-term financial goals. Change in specific behaviors were not examined in the study (Serido

et al.).

Objective financial knowledge has also been found to decrease negative financial

behaviors (Nghia & Scott, 2018; Xiao, Chen, & Chen, 2014). While examining the influence of

financial knowledge and behavior on financial distress, Nghia and Scott (2018) found higher

levels of financial knowledge lowered the likelihood of not saving enough for retirement, and

reduced the probability of making late mortgage payments. Similarly, Xiao, Chen, and Chen

(2014) found a strong negative correlation between objective financial knowledge and negative

financial behaviors, indicating the higher a person’s financial knowledge, the less likely they

were to engage in negative behaviors, such as spending more than income, carrying a credit card

balance, making late credit card or mortgage payments, and taking a 401(k) loan. Xiao and

associates also found objective financial knowledge to be positively correlated with positive

financial behaviors, such as having an emergency fund, calculating retirement needs, requesting

a credit report, and comparing loan offers for autos, mortgages, and/or credit cards. In both

studies, objective financial knowledge was measured using 5 multiple-choice questions

examining knowledge on interest rates, inflation, bond prices, mortgage payments, and stocks.

18
The present study explores the relationship between objective financial knowledge and financial

behaviors, including following a budget, tracking spending, paying bills on time, and saving

regularly.

Financial Self-Efficacy

Financial Self-Efficacy and Financial Behavior

The relationship between self-efficacy and behavior has been examined from two points

of view. As posited by Albert Bandura (1977), efficacy expectations – whether one believes they

can successfully perform a behavior – determines the amount of effort and persistence an

individual will expend to achieve behavior success. Efficacy expectations are influenced by

previous successful attempts at the behavior, seeing others succeed at the behavior, verbal

persuasion, and emotional arousal (Bandura, 1977). Socialization experiences, such as parental

encouragement to open a bank account, save and invest money, as well as opportunities to

practice money management with income received either from working or as an allowance, may

increase self-efficacy and lead to performance of positive financial behaviors in young

adulthood. Likewise, the successful completion of positive financial behaviors, such as

budgeting, tracking expenses, paying bills on time, and regularly saving could boost financial

self-efficacy. This suggests a bi-directional relationship between self-efficacy and behavior.

Many studies have examined the relationship from self-efficacy to behavior (Asebedo et al.,

2018; Asebedo & Browning, 2017 ; Farrell, Fry, & Risse, 2016; Lapp, 2010; Lown et al., 2015;

Montford & Goldsmith, 2016). Montford and Goldsmith found that higher financial self-efficacy

was associated with willingness to make riskier investment decisions. Women with higher levels

of financial self-efficacy were more likely to hold a mortgage, a savings account, or investments,

and less likely to hold debt in the form of a credit card or loan (Farrell et al.). Self-efficacy has

19
also been shown to have a positive relationship with saving (Asebedo et al.; Lapp; Lown et al.),

lower levels of debt, fewer financial problems (Lapp), and lower portfolio withdrawal rates

(Asebedo & Browning). Gutter, Copur, and Garrison (2009) found that students who used a

budget to avoid overspending, checked their credit report in the last year, and regularly saved

had higher levels of financial self-efficacy than student who did not perform these behaviors.

The FFS model takes the position that socialization influences financial attitudes and capabilities

such as financial self-efficacy, which in turn influences financial behaviors. This study explores

the indirect effect of financial self-efficacy on the relationship between financial socialization

and financial behaviors in college students.

Summary

The current study expands upon the body of literature by exploring the direct and indirect

relationships between specific financial socialization practices, financial self-efficacy, financial

knowledge, and financial behaviors using the FFS conceptual model. Financial socialization

practices studied include parents talking to their children about money, children observing their

parents’ financial behaviors, formal education at school, working at a job, and direct experience

with money. Financial behaviors explored include following a budget, tracking spending, paying

bills on time, saving regularly, spending more than earned, and purchasing expensive items they

did not need. The family financial socialization model suggests self-efficacy will be influenced

by implicit and explicit socialization practices; however, further research is needed to determine

whether that influence is positive or negative (Danes & Yang, 2014). Objective financial

knowledge was tested as a possible influence on financial self-efficacy. Previous studies have

shown mixed results as to whether or not objective financial knowledge influences self-efficacy

(Heckman & Grable, 2011; Serido et al., 2013). The family financial socialization model

20
suggests both implicit and explicit socialization will influence financial knowledge; however,

more research is needed to determine whether that influence is enhancing or constraining (Danes

& Yang; Gudmunson & Danes, 2011).

According to the FFS model, financial knowledge interacts with self-efficacy to influence

financial capabilities; and financial self-efficacy is posited to directly and indirectly influence

financial behaviors through its association with socialization (Danes & Yang, 2014; Gudmunson

& Danes, 2011). Figure 2.1 shows the revised conceptual model in which the financial

knowledge, attitudes, and capabilities construct was divided into separate constructs for financial

knowledge and financial self-efficacy to reflect the interaction between socialization, financial

knowledge, self-efficacy, and financial behaviors. It is hypothesized financial socialization will

directly influence both financial knowledge and financial self-efficacy and through these

associations have an indirect relationship with financial behaviors. It is also hypothesized

financial knowledge will positively influence financial self-efficacy and both financial

knowledge and self-efficacy will be positively associated with financial behaviors.

21
Figure 2.1 Revised Family Financial Socialization Conceptual Model

22
 Chapter 3 - Methods

Data

The current study utilized data from the 2014 National Student Financial Wellness Study

(NSFWS, 2014) to perform structural equation modeling (SEM) on the variables of interest.

Online surveys were administered to a random sample of college students during the fall 2014

and winter 2015 semesters. The response rate for all institutions that participated in the study was

11.5%, with a total of 18,795 responses. The survey asked a total of 11 questions about financial

socialization, allowing for this data to be useful in analyzing explicit and implicit financial

socialization processes. Information was also collected on financial knowledge, financial self-

efficacy, financial behaviors, and personal and family demographics, which provides the

necessary variables to examine the influence of financial socialization on college student

financial self-efficacy and financial behaviors, as well as the appropriate variables associated

with the family financial socialization conceptual model framework.

The NSFWS data file was prepared using SAS® 9.4 and converted to an Excel comma

separated values file in order for SEM to be conducted with Mplus version 8.0. Due to the use of

latent constructs, SEM was deemed the appropriate method of analysis for this study.

Confirmatory factor analysis (CFA) was conducted to determine the relationship between items

and the constructs they represent. All factors for constructs were created based on item

correlations and use of the facet method of parceling.

Missing Data

In examining the data, a total of 2,390 responses for the 11 financial socialization survey

items were coded “missing-not asked,” as were 4,044 responses for mother’s education, father’s

23
education, respondent’s income, and gender, and 5,635 for GPA. Responses coded as “missing

not asked” are due to respondents not completing the questionnaire and were listwise deleted,

resulting in a usable sample of 12,598. Self-income was evaluated in three manners: as a

continuous variable with “asked but missing” and “prefer not to answer” responses estimated

using full information maximum likelihood (FIML), categorically for “prefer not answer” and

“answered” responses, and categorically for “do not know” and “answered” to explore if

respondents who prefer not to answer income or do not know income are different than those

who did specify their income range. For the categorical measurements of income, “asked but

missing” responses were placed in a category with the “prefer not to answer” responses. For all

other variables “asked but missing” responses were estimated using the full information

maximum likelihood (FIML) method in Mplus.

Operationalization of Variables

The following section outlines the operationalization of variables for the current study.

Financial Socialization

The 2014 NSFWS asked a total of 11 questions on financial socialization which will

serve as the measurements for financial socialization. The 11 financial socialization questions

were parceled based on correlations and using the facet method, resulting in four factors to

measure different facets of financial socialization. According to Danes and Yang (2014), family

dynamics, communication, and daily interactions, as well as observed financial skills

demonstrated by parents, are considered implicit socialization. For this study, three survey items

were used to represent implicit socialization. Students were asked to rate whether they strongly

disagree, disagree, agree, or strongly agree for the following questions:

24
  “Prior to college/university: My parent(s) or guardian(s) were comfortable talking

about money with me.”

 “My parent(s) or guardian(s) were role models of sound financial management.”

 “My parent(s) or guardian(s) told me what I needed to know about money

management.”

If parents were comfortable talking with the student about money, this represents positive family

dynamics and communication. If parents were thought to be good role models of financial

management, this represents the behavior the student observed in the household. Point values

were assigned to responses ranging from 1 (strongly disagree) to 4 (strongly agree). The implicit

socialization factor had a standardized lambda loading of .51 for the construct of financial

socialization. A standardized lambda represents the amount each indicator or parcel contributes

to the construct (Little, 2013).

Explicit socialization is defined as purposive, direct teaching and practice of financial

skills (Danes & Yang, 2014). For this study, explicit socialization was measured using responses

to three survey items. Students were asked to answer “yes” or “no” to the following questions:

Prior to college/university:

 “Did your parents or guardians encourage you to save money?”

 “Did your parents or guardians encourage you to open a bank account?”

 “Did your parents or guardians encourage you to invest your money?”

Point values were assigned to responses with “no” equal to 0, and “yes” equal to 1 point. The

factor explicit socialization had a standardized lambda loading of .53 on the construct of

financial socialization.

25
 A factor measuring financial education was created using responses to two items.

Students were asked if they had attended a personal finance class or workshop (1) while in high

school or (2) while in college. Responses included: (a) no, (b) yes, one-time event(s), or (c) yes,

term long course(s) or repeated sessions. Point values were assigned to responses with “no” = 1

point, “yes, one-time event” = 2 points, and “yes, term long course” = 3 points. The factor

financial education had a standardized lambda loading of .34 on the construct financial

socialization.

A factor measuring experience with money was created using responses the following

three items:

 “Did you ever receive an allowance as a child (age 12 or younger)?”

 “Did you ever receive an allowance as a child (age 13 or older)?”

 “Did you work for pay while in high school?”

Point values were assigned to responses with “no” = 0, and “yes” = 1 point. The factor money

experience had a standardized lambda loading of .60 on the construct financial socialization. See

Table 3.1 for a full list of items in parcels for all variables. The latent construct financial

socialization has a Cronbach’s alpha of .68, boarding on the acceptable range of .70 or higher,

indicating an acceptable level of internal consistency in the measure.

Financial Knowledge

Objective financial knowledge represents actual knowledge about personal finances.

Students were asked the following five financial knowledge questions:

1) “Imagine that the interest rate on your savings account is 1% per year and

inflation is 2% per year. After 1 year, would you be able to buy more than today,

exactly the same as today, or less than today?”

26
 a) More than today

b) Exactly the same as today

c) Less than today*

d) Don’t know

2) “Suppose you have $100 in a savings account and the interest rate was 2% per

year. After 5 years, how much would you have in the account if you left the

money to grow?”

a) More than $102*

b) Exactly $102

c) Less than $102

d) Don’t know

3) “All paycheck stubs show your gross pay (the total amount you earned before any

taxes were taken out for the pay period) and your net pay (the amount of your

check after all taxes). The taxes that are commonly taken out include federal,

state, and local income tax, Social Security tax, and Medicare tax. On average,

what percentage of your income would you expect to receive as take-home pay?”

a) 100%

b) 99-99%

c) 80-89%

d) 70-79%*

e) Don’t know

4) “Suppose you borrowed $5,000 to help cover college expenses for the coming

year. You can choose to repay this loan over 10 years, 20 years, or 30 years.

27
 Which of these repayment options will cost you the least amount of money over

the length of the repayment period?”

a) 10-year repayment option*

b) 20-year repayment option

c) 30-year repayment option

d) Don’t know

5) “Which of the following make up the TWO largest components of a credit

score?” (select two)

a) Amounts owed*

b) New credit

c) Types of credit used

d) Length of credit history

e) Payment history*

f) Don’t know

An exploratory factor analysis of the five items produced one factor with an Eigenvalue

of 1.80 that included all items except for the question on the two components of a credit score.

Removing the credit score question from the scale improved the Cronbach’s alpha from a .53 to

a .57. A confirmatory factor analysis resulted in a low standardized lambda loading of .21 for the

credit score question as well, indicating this item should not be part of the financial knowledge

construct. The present study measured the construct objective financial knowledge using the

remaining four financial knowledge questions (interest, inflation, take-home pay, and loan

repayment). Correct responses were coded as 1, with incorrect responses coded as 0.

Standardized lambda loadings for the remaining four financial knowledge questions are as

28
follows: interest (.61), inflation (.77), take-home pay (.74), loan repayment (.38). While the final

Cronbach’s alpha was low (.57), it will not be problematic with the use of Structural Equation

Modeling (SEM). Little, Lindenberger, and Nesselroade (1999) found that confirmatory analyses

techniques are better suited for fitting measurement models than exploratory analyses techniques,

as they result in a nearly unbiased estimate of construct correlations.

Financial Self-Efficacy

Financial self-efficacy represents one’s confidence in their ability to manage their

personal finances. For the present study, financial self-efficacy was measured using responses to

two survey questions. Respondents were asked to rate if they strongly disagree, disagree, agree,

or strongly agree with the statements:

 “I am confident I can manage my finances.”

 “I manage my money well.”

Point values were assigned to responses ranging from 1 (strongly disagree) to 4 (strongly

agree). The confidence item had a standardized lambda loading of .71, and the manage money

well item had a standardized lambda loading of .66, indicating they are both good measurements

for the construct of financial self-efficacy. The Cronbach’s alpha for the financial self-efficacy

scale is .77, supporting the validity of the construct. With latent constructs that have only two

indicators, Heywood cases may occur. Heywood cases are present when a parameter estimate

has an illogical value, such as a negative variance or are greater than 1.0 (Kline, 2016). Results

were checked and negative variance was not found, indicating this was not an issue.

Financial Behavior

Financial behavior represents personal financial management activities self-reported by

the respondent. For the present study, financial behavior was measured using seven survey items.

29
Three factors were created to measure the construct of financial behavior based on correlations

and using the facet method of parceling. An accounting factor was created using the following

three items. Respondents were asked to rate how often they perform the following activities:

 “I have a weekly or monthly budget that I follow.”

 “I track my spending in order to stay within my budget.”

 “I track all debit card transactions/checks to balance my account.”

Responses included never, sometimes, frequently, and always. Point values were assigned

ranging from 1 (never) to 4 (always).

A timeliness factor was created using the following two items:

 “I pay my bills on time every month.”

 “I add to my savings on a regular basis.”

Responses included never, sometimes, frequently, and always. Point values were assigned

ranging from 1 (never) to 4 (always).

A factor measuring “lives within means” was also created using responses to two survey

items. Respondents were asked to rate how strongly they agree with the following statements:

 “I regularly spend more money than I have by using credit or borrowing.”

 “In the past three months, I purchased something expensive that I wanted, but

did not need.”

Responses included strongly disagree, disagree, agree, and strongly agree. As these are

considered negative financial behaviors, the responses were reverse coded, with point values

assigned as follows: strongly disagree equal to 4, disagree equal to 3, agree equal to 2, and

strongly agree equal to 1.

30
 A confirmatory factor analysis indicated all parcels belong to the financial behavior

construct, with the following standardized lambda loadings for the factors: accounting (.38),

timeliness (.41), and living with means (.62). The latent construct financial behavior has a

Cronbach’s alpha of .59; however, based on the findings of Little, Lindenberger, and

Nesselroade (1999), exploratory analyses techniques should not be heavily relied upon for

indicator selection in latent constructs, but rather practical and theoretical considerations should

drive indictor selection.

Demographics/Characteristics

In the family financial socialization conceptual model, personal and family characteristics

are thought to influence implicit and explicit socialization (Danes & Yang, 2014). The present

study included the highest level of parent education, respondent’s current annual income, gender,

race, age, grade point average, number of years enrolled in school, and institution type as control

variables. Parent(s)/guardian(s) education level were treated as a continuous variable in order for

the model to converge in Mplus. Responses for education level included: (a) less than high

school, (b) high school diploma or the equivalent, (c) attended college but did not earn a degree,

(d) associate’s degree, (e) bachelor’s degree, (f) master’s degree, (g) professional degree, (h)

doctorate, and (i) don’t know. Professional degree and doctorate were combined into one

category, representing professional degrees. Point values were assigned for categories ranging

from 1 (less than high school) to 7 (professional degree) in order to create a continuous variable

representing highest level of parent education. Parent education was used as a proxy for parent

income as nearly 32% of the sample responded “don’t know” or “prefer not to answer” for the

survey item regarding parent income. The parent income variable may also be unreliable for

those who did answer, as students may have only guessed their parents’ income and not actually

31
know for certain. Respondent’s current annual income was treated as a continuous variable.

Current annual income responses included: (a) $0; (b) $1-$2,499; (c) $2,500-$4,999; (d) $5,000-

$7,499; (e) $7,500-$9,999; (f) $10,000-$14,999; (g) $15,000-$19,999; (h) $20,000-$24,999; (i)

$25,000-$29,999; (j) $30,000 or higher; (k) don’t know; (l) prefer not to answer. Point values

were assigned to categories, ranging from 1 (no income) to 10 ($30,000 or higher) in order to

treat respondent income as a continuous variable. As more than 12% of the sample responded

“don’t know” or “prefer not to answer,” these responses were treated as separate categories of

missing income to determine if these groups vary significantly from those with reported income.

Race was categorized as White, Black, Hispanic, Asian, mixed, and other. Prefer not to answer

responses to race were treated as “asked but missing” responses and estimated using FIML.

Gender was reduced to males and females, as less than one percent of the sample identified as

transgender or self-defined. Age and unweighted grade point average (GPA) were treated as

continuous variables. First-year students may have reported high school GPA, anticipated GPA,

or zero GPA if asked prior completing their first semester at the institution. To account for

potential inconsistency in GPA reporting for first-year students, the analyses was conducted both

with and without first-year students to determine if there were significant differences in the

models. Number of years in school responses included: 1 year, 2 years, 3 years, 4 years, or 5 or

more years. In order to compare first-year students to the rest of the sample, number of years in

school was treated as a binary categorical variable with first-year students = 1, and other cohorts

= 0. Institution type was treated as a categorical variable with categories (a) four-year public; (b)

four-year private; and (c) two-year public.

32
Table 3.1 Items in Parcels

Parcel Items Measurement

Financial Socialization
My parents were comfortable talking about money
Implicit Socialization w/me. Strongly disagree (1), disagree (2), agree (3), strongly agree (4)
My parents were role models of sound financial
management. Strongly disagree (1), disagree (2), agree (3), strongly agree (4)
My parents told me what I needed to know about
money management. Strongly disagree (1), disagree (2), agree (3), strongly agree (4)
Explicit Socialization My parents encouraged me to save money. Yes (1), No (0)
My parents encouraged me to invest my money. Yes (1), No (0)
My parents encouraged me to open a bank account. Yes (1), No (0)
Experience with Money Received an allowance as a child. Yes (1), No (0)
Received an allowance as a teen. Yes (1), No (0)
Worked for pay while in high school. Yes (1), No (0)
Attended personal finance classes/workshops while in
Financial Education high school. No (1), Yes, one-time event (2), yes, term long course (3)
Attended personal finance classes/workshops while in
college. No (1), Yes, one-time event (2), yes, term long course (3)
Financial Knowledge
Imagine that the interest rate on your savings account is
1% per year and inflation is 2% per year. After 1 year,
would be able to buy more than today, exactly the same
FQ1 as today, or less than today? Less than today (1), else (0)
Suppose you have a $100 in a savings account and the
interest rate was 2% per year. After 5 years, how much
would you have in the account if you left the money to
FQ2 grow? More than $102 (1), else (0)
Suppose you borrowed $5,000 to help cover college
expenses for the coming year. You can choose to repay
this loan over 10 years, 20 years, or 30 years. Which of
these repayment options will cost you the least amount
FQ3 of money over the length of repayment? 10 years (1), else (0)

33
 All paycheck stubs show your gross pay and your net
pay….On average, what percentage of your income
FQ4 would you expect to receive as take-home pay? 70-79% (1), else (0)
Financial Self-Efficacy
FSE1 I am confident I can manage my finances. Strongly disagree (1), disagree (2), agree (3), strongly agree (4)
FSE2 I manage my money well. Strongly disagree (1), disagree (2), agree (3), strongly agree (4)
Financial Behavior
Timeliness I pay my bills on time every month. Never (1), Sometimes (2), Frequently (3), Always (4)
I add to my savings on a regular basis. Never (1), Sometimes (2), Frequently (3), Always (4)
Accounting I have a weekly or monthly budget that I follow. Never (1), Sometimes (2), Frequently (3), Always (4)
I track my spending in order to stay within my budget. Never (1), Sometimes (2), Frequently (3), Always (4)
I track all debit card transactions/checks to balance my
account. Never (1), Sometimes (2), Frequently (3), Always (4)

I regularly spend more money than I have by using

Lives within Means credit or borrowing. (Reverse Coded) Strongly disagree (4), disagree (3), agree (2), strongly agree (1)
In the past three months, I purchased something
expensive that I wanted, but did not need. (Reverse
Coded) Strongly disagree (4), disagree (3), agree (2), strongly agree (1)

34
 Chapter 4 - Results

Descriptive Statistics

Table 4.1 provides the summary statistics for the sample. The sample consisted of 12,598

college students from the fall 2014 and winter 2015 semesters. The majority of the sample was

female (68%), White (74%), and between ages 18 and 23 (71%). This varies slightly from

national post-secondary education statistics for 2014, which reported approximately 57% of

college students were female, 60% were White, and 61% were between the ages of 18 and 24

(Snyder, de Brey, & Dillow, 2016). Black, Hispanic, and Asian students were underrepresented

in the NSFWS 2014 sample compared to the national college student population. The NSFWS

2014 sample consisted of approximately 5% Black, 5% Hispanic, and 2% Asian students, while

the national college student population in 2014 consisted of approximately 15% Black, 15%

Hispanic, and 6% Asian students (Snyder et al., 2016). Respondents had lower income levels,

with 10% reporting having no income, 15% having income less than $2,500, and almost 14%

having income between $2,500 and $4,999. The sample consisted of a relatively equal

distribution of students in their first year, second year, third year, fourth year, and five-plus years

enrolled. Most respondents had a relatively high GPA, with 71% reporting a GPA between 3.00

and 3.99 and nearly 6% reporting a perfect 4.0 GPA. The high GPA of respondents may be an

indication of self-selection bias, in which better performing students opted to participate in the

survey, while other students may have chosen not to participate. Approximately 29% of

respondents reported the highest level of education obtained by a parent was a Bachelor’s

degree. Nearly 83% of respondents were from four-year public schools.

35
 With regard to financial socialization, the majority of the sample reported their parents

encouraged them to save (86%) and to open a bank account (88%), but very few indicated their

parents encouraged them to invest (30%). Less than half of the sample reported receiving an

allowance as a child (44%) or as a teenager (37%), but most reported working for pay in high

school (76%). Only 31% attended some sort of financial education in high school, and even

fewer attended financial education in college (24%). A moderate level of implicit financial

socialization was reported with a mean of 3.08 (on a scale of 1 to 4) for “My parents were

comfortable talking about money with me”

High levels of financial self-efficacy were reported with a mean of 3.12 for “I am

confident I can manage my finances” on a scale of 1 to 4. The financial knowledge level of the

respondents was average, with a mean of 2.64 on a scale of 1 to 4. The majority of the sample

were able to answer the repayment options question correctly (80%) and the interest rate

question correctly (80%), while less than half could answer the question on take-home pay

correctly (44%). Most reported positive financial behaviors, with a mean of 3.63 for pays bills on

time, a mean of 2.93 for track spending to stay within budget, and a mean of 2.6 for follows a

budget (all on a scale of 1 to 4). See Table 4.1 for full results.

36
Table 4.1 Summary Statistics
Full Sample First Year Other Cohorts

Proportion/ Proportion/ Proportion/

Variables Mean Missing Mean Missing Mean Missing
N = 12,598 (n) n = 2,296 n = 10,302 (n)
Financial Socialization
Implicit Socialization Factor
Parents comfortable talking about money (1-4) 3.08 41 3.22 9 3.05 32
Parents taught money management (1-4) 2.87 45 2.84 11 2.84 34
Parents role models of sound financial mgmt (1-4) 2.89 51 2.87 12 2.87 39
Experience with Money Factor
Received allowance prior to age 12 43.50% 14 41.02% 2 44.05% 12
Received allowance as teenager 36.99% 23 34.25% 4 37.60% 19
Worked for pay in high school 75.46% 12 74.59% 2 75.65% 10
Explicit Socialization Factor
Parents encouraged saving 86.37% 18 90.19% 3 85.52% 15
Parents encouraged bank account 88.07% 19 89.40% 4 87.77% 15
Parents encouraged investing 29.59% 23 31.32% 7 29.20% 16
Financial Education Factor
Attended financial education in HS 30.75% 73 39.66% 14 28.76% 59
Attended financial education in college 23.54% 67 17.22% 14 24.95% 53

Financial Knowledge
Inflation correct 59.76% 52.57% 61.37%
Interest correct 79.78% 74.04% 81.06%
Repayment options correct 80.11% 73.91% 81.50%
Percent take home pay correct 44.44% 40.42% 45.33%
Credit score correct 38.30% 40.81% 37.74%

37
Financial Self-efficacy
Confident can manage finances 3.12 42 3.07 7 3.13 35
Manage money well 3.03 49 3.03 8 3.03 41

Financial Behaviors
Personal Accounting Factor
Follows budget (1-4) 2.6 40 2.5 5 2.62 35
Tracks spending (1-4) 2.93 69 2.92 14 2.93 55
Tracks checks/debits (1-4) 3.12 84 3.17 9 3.1 75
Timeliness Factor
Pay bills on time (1-4) 3.63 84 3.57 23 3.64 61
Saves regularly (1-4) 2.38 76 2.48 12 2.36 64
Lives within Means Factor
Regularly spends more than income w/credit
(RC 1-4) 3.36 50 3.53 12 3.32 43
Purchased something expensive wanted but didn't
need (RC 1-4) 2.85 55 2.82 8 2.86 42

Gender
Male 32.12% 29.92% 32.62%
Female 67.66% 69.77% 67.19%
Missing 0.22% 0.31% 0.19%

Age
Age 18-23 71.27% 87.76% 67.59%
Age 24-29 13.82% 3.70% 16.07%
Age 30-39 8.44% 3.92% 9.44%
Age 40 or older 6.29% 3.79% 6.84%
Missing 0.19% 0.83% 0.05%

38
Race
White 73.73% 71.78% 74.17%
Black 4.73% 5.18% 4.63%
Hispanic 5.31% 5.27% 5.32%
Asian 1.54% 5.58% 5.22%
Mixed race 7.76% 9.67% 7.33%
Other 1.54% 0.92% 1.68%
Missing 5.39% 1.60% 1.65%

GPA
0.00 - .99 0.31% 1.13% 0.13%
1.00 - 1.99 0.80% 0.91% 0.78%
2.00 - 2.99 22.49% 15.42% 24.06%
3.00 - 3.99 70.79% 69.03% 71.18%
4.00 5.61% 13.50% 3.85%

Respondent's Income
No income 10.44% 24.31% 9.29%
Less than $2,500 15.02% 28.28% 14.76%
BT $2,500 - $4,999 13.51% 17.77% 14.88%
BT $5,000 - $7,499 9.46% 9.04% 11.14%
BT $7,500 - $9,999 7.87% 5.23% 9.75%
BT $10,000 - $14,999 10.14% 4.97% 12.92%
BT $15,000 - $19,999 5.18% 2.20% 6.67%
BT $20,000 - $24,999 4.52% 2.61% 5.67%
BT $25,000 - $29,999 2.83% 1.46% 3.58%
GT $30,000 8.87% 4.13% 11.34%
Don't know 6.26% 9.32% 5.58%

39
Prefer not to answer/Missing 5.91% 7.36% 5.60%

Parent's Income
LT $15,000 4.64% 6.96% 6.80%
BT $15,000 - $29,999 6.60% 9.99% 9.66%
BT $30,000 - $39,999 6.90% 9.99% 10.20%
BT $40,000 - $59,999 10.37% 15.27% 15.29%
BT $60,000 - $79,999 10.60% 13.85% 16.02%
BT $80,000 - $99,999 9.20% 14.05% 13.44%
BT $100,000 - $149,999 11.03% 16.56% 16.19%
GT $150,000 8.53% 13.34% 12.40%
Don't know 22.57% 22.69% 22.54%
Prefer not to answer/Missing 9.56% 9.71% 9.52%

Highest Parent Education Level

Less than HS 2.80% 2.70% 2.82%
HS 14.01% 12.06% 14.44%
Some college 12.76% 12.24% 12.88%
Associates degree 13.34% 13.20% 13.88%
Bachelors degree 28.67% 29.66% 28.44%
Graduate degree 17.53% 18.68% 17.27%
Professional degree 7.88% 89.19% 7.81%
Don't know/Missing 3.01% 3.27% 2.95%

Institution Type
2 year public 8.20% 11.54% 7.45%
4 year public 82.59% 78.57% 83.49%
4 year private 9.21% 9.89% 9.06%

40
Number of years enrolled
First year 18.23% 100.00%
Second year 19.57% 23.94%
Third year 22.25% 27.21%
Fourth year 20.51% 25.08%
Five or more years 19.20% 23.48%
Missing 0.24% 0.29%

41
 Confirmatory Factor Analysis

Using the fixed factor method of scale setting with the scale set to 1, a confirmatory

factor analysis (CFA) was first conducted with individual items to determine how the items were

correlated with the constructs they were intended to represent. Setting the scale to 1 allows for

the relationship between latent factors to be estimated in a standardized metric, as well as for the

estimates between latent constructs to be interpreted as correlations (Little, 2013). Table 4.2

displays the CFA correlation matrix for items pre-parcel. Items with standardized lambdas lower

than .30 were removed from analysis, as this was an indication that the item did not correlate

well with the construct it was intended to measure. Only one item, the financial knowledge

question regarding components of a credit score, had a lambda loading of less than .30. This

question differed from all other survey items as it required students to correctly identify more

than one answer.

Table 4.2 Confirmatory Factor Analysis Results for Latent Constructs without Parcels (N =
12,598)

Unstandardized Standardized
Parameter b SE β SE

Financial Socialization (FS)

FS→FS1: Parents Comfortable Talking about
Money 3.41 0.021 0.58 0.002
FS→FS2: Parents Taught Money Management 3.41 0.023 0.56 0.002
FS→FS3: Parent Financial Role Models 3.43 0.024 0.53 0.002
FS→FS4: Received Allowance as Child 3.01 0.01 0.90 0.001
FS→FS5: Received Allowance as Teen 3.00 0.016 0.70 0.002
FS→FS6: Worked in HS 2.99 0.012 0.96 0.002
FS→FS7: Encouraged to Save 3.00 0.017 0.79 0.002
FS→FS8: Encouraged to Invest 3.00 0.019 0.77 0.002

42
 FS→FS9: Encouraged to Open Bank Account 2.99 0.017 0.70 0.002
FS→FS10: HS Financial Education 2.48 0.036 0.32 0.003
FS→FS11: College Financial Education 2.50 0.038 0.34 0.003

Financial Self-Efficacy (FSE)

FSE→FSE1: Confident in Money Management 4.15 0.033 0.71 0.003
FSE→FSE2: Manage Money Well 4.15 0.033 0.66 0.002

Financial Knowledge (FK)

FK→FK1: Inflation 0.66 0.12 0.66 0.012
FK→FK2: Interest 0.79 0.014 0.79 0.014
FK→FK3: Loan Repayment 0.75 0.014 0.75 0.014
FK→FK4: Take-home Pay 0.42 0.013 0.42 0.013
FK→FK5: Components of Credit Score 0.21 0.015 0.21 0.015

Financial Behavior (FB)

FB→FB1: Spend More than Income 2.59 0.023 0.55 0.003
FB→FB2: Purchased Want vs. Need 2.56 0.018 0.57 0.002
FB→FB3: Budget 2.66 0.021 0.66 0.003
FB→FB4: Tracks Spending 3.18 0.035 0.60 0.003
FB→FB5: Pay Bills on Time 3.43 0.058 0.59 0.005
FB→FB6: Regularly Saves 3.70 0.037 0.67 0.003
FB→FB4: Tracks Checks/Debit Transactions 3.25 0.041 0.56 0.004

A correlation matrix was run in SAS® to check for multicollinearity, and to identify

items that may parcel well together. Correlations greater than .80 are an indication of

multicollinearity (Field and Miles, 2010). No multicollinearity issues were present in the data as

all correlations were less than .65. Table A.1 in the Appendix presents the full correlation matrix

for all variables used in the model. Items were then parceled for each construct based on

correlations and the facets of the construct they represent. Items in parcels were averaged to

retain the original metrics of the scale and for ease in comparing means and variances (Little,

2013). Financial socialization had 11 items parceled into four factors: implicit socialization,

explicit socialization, financial education, and experience with money. Financial knowledge

43
consisted of only four items and was not parceled. Financial self-efficacy consisted of two items

and was not parceled; however, because the construct consisted of only two items, the variances

between the two items were set to equal. Financial behavior consisted of seven items and was

parceled into three factors: accounting, timeliness, and living within means. A second CFA was

conducted after parceling to check that the parcels had acceptable lambda loadings for each

construct. Table 4.3 presents the parceled CFA correlation matrix. A third CFA was conducted

with covariates included with the parceled items to test the proposed model in Figure 2.1. Delta

parameterization was used, which sets the total variance of the latent variables to one and

requires parameter coefficients to be interpreted as the change in standard deviation for a given

latent variable, relative to a one standard deviation change in a common factor (Kline, 2016).

Table 4.3 Confirmatory Factor Analysis Results for Latent Constructs with Parcels (N =
12,598)

Unstandardized Standardized

Parameter b SE β SE

Financial Socialization (FS) 0.019***

FS→FS1: Implicit Socialization 3.51 0.04 0.51 0.00 0.26***
FS→FS2: Explicit Socialization 2.82 0.04 0.53 0.01 0.28***
FS→FS3: Experience w/Money 2.57 0.04 0.60 0.01 0.35***
FS→FS4: Financial Education 2.68 0.06 0.34 0.01 0.12***

Financial Self-Efficacy (FSE) 0.03***

FSE→FSE1: Confident in Money
Management 4.12 0.03 0.71 0.00 0.50***
FSE→FSE2: Manage Money Well 4.12 0.03 0.66 0.00 0.43***

Financial Knowledge (FK) 0.00

FK→FK1: Inflation 0.60 0.01 0.60 0.01 0.36***
FK→FK2: Interest 0.78 0.02 0.78 0.02 0.60***
FK→FK3: Loan Repayment 0.73 0.02 0.73 0.02 0.53***

44
 FK→FK4: Take-home Pay 0.36 0.02 0.36 0.02 0.13***

Financial Behavior (FB) 0.82***

FB→FB1: Timeliness 1.66 0.05 0.40 0.01 0.16***
FB→FB2: Accounting 1.56 0.04 0.38 0.00 0.14***
FB→FB3: Lives w/in Means 2.05 0.04 0.62 0.00 0.39***

Model Fit

The model chi-square exact fit indices was significant, suggesting that the model should

be rejected (χ2 [ 216] = 4385.80, p < .001). The chi-square test estimates are extremely sensitive

to a large sample size and a large number of degrees of freedom and will be significant for most

models (Little, 2013). As this sample is large at 12,598 observations, it is not surprising that the

chi-square test is significant since models with a sample size greater than 400 typically always

have a statistically significant chi-square value (Kenny, 2015). The Root Mean Square Error of

Approximation (RMSEA) measures absolute fit by comparing the saturated model to the

estimated model (Little, 2013). RMSEA for the model is .039, indicating the model is a close fit

(90% CI = .038, .040). The comparative fit index (CFI) for the model is .87 indicating a

mediocre fit, with the model being an 87% improvement over the null model. The Tucker –

Lewis Index (TLI) for the model is .85, also indicating a mediocre fit. Based on the RMSEA,

CFI, and TLI indices, the model was retained.

Structural Model Results

Figure 4.1 presents a diagram of the statistically significant direct effects from the tested

model. The model provides some support for the Family Financial Socialization conceptual

model developed by Gudmunson and Danes (2011). Both direct and indirect relationships were

found between financial socialization and financial behaviors in college students. Overall the

model explains 81% of the variance in financial behavior (R2 = .81), 2% of the variance in

45
financial socialization (R2 = .02), none of the variance in objective financial knowledge (R2 =

.00), and only 3% of the variance in financial self-efficacy (R2 = .03).

46
Figure 4.1 Significant Pathways in Structural Model Predicting Financial Behavior (N = 12,598)*

*Note: *p<.05, **p<.01, ***p<.001. Model Fit Indices: χ2(216) = 4,385.80, p = <.001; RMSEA = .039, 90% CI [.038, .040], CFI = .87, TLI = .85.
All results were computed with Mplus in delta parameterization and STDYX standardization. The structural model was estimated with indicators
from the measurement model for the latent variables and controls for gender, age, race, income, parent education, GPA, years enrolled in school,
and institution type.

47
Direct Effects
Supporting Hypothesis 1, a direct relationship between financial socialization and

objective financial knowledge was found. A one standard deviation increase in financial

socialization predicted a 3% increase in the standard deviation of objective financial knowledge

(β = .03, p < .01). Financial socialization was also found to have a direct and positive affect on

financial self-efficacy, supporting Hypothesis 2. For every one standard deviation increase in

financial socialization, the standard deviation of financial self-efficacy increased by 16% (β =

.16). Hypothesis 3 was also supported, with a direct and positive relationship found between

financial socialization and financial behavior. For every one standard deviation increase in

financial socialization, the standard deviation of positive financial behavior increased by 2% (β =

.020). Financial self-efficacy was found to have the greatest influence on financial behaviors,

with a 90% (β = .90) increase in the standard deviation of positive financial behavior for every

one standard deviation increase in self-efficacy. The direct and positive relationship between

self-efficacy and behavior supports Hypothesis 8. Objective financial knowledge was not found

to influence financial self-efficacy or financial behavior, contrary to Hypotheses 6 and 7. Direct

effects for the full model are shown in Table 4.4.

No significant differences were found between males and females with regard to financial

socialization. Significant differences among races were found in financial socialization, with

Blacks, Asians, Hispanics, and other races receiving less financial socialization than Whites.

Respondent income, parent education, and institution type had no significant associations with

financial socialization. Age was negatively associated with financial socialization, while GPA

was positively associated with financial socialization. First-year students as compared to students

enrolled two or more years reported significantly less financial socialization (β = -.03).

48
Table 4.4 Direct Effects with Financial Behavior (N = 12,598)
Unstandardized Standardized*
Parameter b SE β SE p
Financial Self-Efficacy→Financial Behavior 2.028 0.03 0.896 0.00 .00***
Financial Knowledge→Financial Behavior 0.046 0.03 0.020 0.02 0.18
Financial Socialization→Financial Behavior 0.050 0.01 0.022 0.00 .00***
Financial Self-Efficacy→Fin. Knowledge -.003 0.01 -.003 0.01 0.8
Financial Self-Efficacy→Fin. Socialization 0.164 0.00 0.163 0.00 .00***
Financial Knowledge→Fin. Socialization 0.028 0.01 0.029 0.01 .01**
Female→Financial Socialization -.041 0.03 -0.019 0.01 0.15
Black→Financial Socialization -.277 0.05 -0.058 0.01 .00***
Asian→Financial Socialization -.199 0.05 -0.044 0.01 .00***
Hispanic→Financial Socialization -.148 0.06 -0.033 0.01 .01**
Mixed Race→Financial Socialization -.049 0.05 -0.013 0.01 0.32
Other Race→Financial Socialization -.389 0.07 -0.047 0.01 .00***
Income→Financial Socialization 0.000 0.00 0.013 0.01 0.34
Parent Education→Financial Socialization -.001 0.09 0.000 0.01 0.99
Four-Year Private→Financial Socialization -.031 0.04 -.009 0.01 0.43
Two-Year Public→Financial Socialization -.020 0.04 -0.005 0.01 0.65
Age→Financial Socialization -.012 0.00 -.087 0.01 .00***
GPA→Financial Socialization 0.075 0.03 0.039 0.01 .00**
First Year Students→Financial Socialization -.070 0.03 -.027 0.01 .02*
R-Squared .81
*Note: *p<.05, **p<.01, ***p<.001 All results were computed with Mplus in delta parameterization and STDYX standardization.
Overall Model Fit Indices: χ2(216) = 4,385.80, p = <.001; RMSEA = .039, 90% CI [.038, .040], CFI = .87, TLI = .85.
Reference Groups: male, White, four-year public, students enrolled two or more
years

49
Indirect Effects

An indirect relationship between financial socialization and financial behavior through

financial knowledge was proposed in Hypothesis 5 but was not supported, as there was no direct

relationship found between financial knowledge and financial behavior. Hypothesis 4 was

supported, with a positive indirect relationship found between financial socialization, financial

self-efficacy, and financial behavior. A one standard deviation increase in financial socialization

was associated with a 15% increase in the standard deviation of positive financial behaviors

through increased financial self-efficacy (β = .15, p<.001).

Alternative Models

Due to the low CFI of the original model and lower lambda loadings for financial

education with financial socialization, an alternative model splitting out financial socialization

into two constructs, parental financial socialization and financial education, was conducted. The

alternative model did not improve model fit [(χ2diff [10] = 1,531); (χ2 (df 226) = 5917.360, p =

<.001; CFI = .86; RMSEA = .045, CI .044, .046)], and was therefore rejected; however, it did

yield some interesting results. Shown in Figure A.1 in the Appendix, the path from financial

socialization to financial education was found to have a positive and significant relationship. For

every one standard deviation increase in parent financial socialization, the standard deviation of

financial education increased by almost 53% (β = .525, p<.001). Both parent financial

socialization and financial education were found to increase financial self-efficacy, with a one

standard deviation parental socialization increasing the standard deviation of self-efficacy by

13% (β = .131) and financial education increasing the standard deviation of self-efficacy by

almost 3% (β = .025). Surprisingly, neither financial education nor parental financial

50
socialization significantly increased financial knowledge. A one standard deviation increase in

financial education was associated with a 3% (β = .031) standard deviation increase in positive

financial behaviors, as was parent financial socialization (β = .029). Results of covariates with

parent financial socialization were similar to the original model; however, only gender and age

were significantly associated with financial education. Women were less likely to attend

financial education (β = -.042), while age was positively associated with attending financial

education (β = .031). Table A.2 and Figure A.1 in the Appendix show the full results of direct

effects for the alternative split socialization model, while Table A.3 in the Appendix shows the

full results of the indirect effects of the alternative split socialization model.

Because the reliability of GPA reporting for first-year students was questionable, the

model was conducted both with and without first-year students to test for model sensitivity for

GPA. No differences in direction or significance was found in the model when first-year students

were excluded. Results for the model excluding first-year students can be found in the Appendix,

Table A.3.

Approximately 6% of the sample indicated they did not know their income. Not knowing

one’s income suggests a lack of financial awareness and may be an indication of socialization

differences. A separate model was conducted to determine if there were differences in

socialization for those who indicated they did not know their income compared to those who did

know their income. No significant differences in financial socialization were found between

these two groups. See Table A.4 in the Appendix for full results.

Six percent of the sample also answered “prefer not to answer” for the income item. A

preference to keep income private may be a result of financial socialization, in which parents

may have taught the child not to discuss income or finances with others. A separate model was

51
conducted to determine if there were differences in socialization for those who preferred not to

answer their income as compared to those who did answer the income item. No significant

differences in financial socialization were found between these two groups. See Table A.5 in the

Appendix for full results.

52
 Chapter 5 - Discussion

This study examined the direct and indirect relationships between financial socialization,

financial knowledge, financial self-efficacy, and financial behavior using Gudmunson and

Danes’ (2011) Family Financial Socialization conceptual model (FFS) to guide the hypotheses.

Analysis was conducted using Structural Equation Modeling (SEM) due to the use of latent

constructs and the need to explore the direct and indirect effects among the variables. Results of

the study show strong support for the FFS conceptual model, along with insight into the

important predictors of financial self-efficacy and positive financial behavior.

Financial Socialization

Demographics and Financial Socialization

While not the focus of this study, the relationship between the demographic variables and

financial socialization revealed some intriguing results. In the combined financial socialization

model, there were no significant differences in financial socialization between males and

females. These results contradict previous findings which indicate females are more likely to

have discussions with parents’ and peers’ regarding finances, and more likely to observe parents’

and peers’ financial behaviors (Gutter et al., 2009; Gutter & Garrison, 2010). The difference in

results could be attributed to socialization measurements, as the present study included a broader

range of financial socialization factors. In the split socialization model, the results indicate there

is a difference in financial socialization between males and females with regard to financial

education. Being female was negatively associated with participating in financial education.

There were no significant differences in parental socialization between males and females in the

split socialization model. Looking more closely at the split model, there was a strong, positive

53
association between parental financial socialization and formal financial education, suggesting

that parental financial socialization is an important factor in whether or not a student participates

in a personal finance class or workshop while in high school or college. Gender differences in

financial education could possibly be attributed to parents suggesting to their sons to enroll in

financial education courses, but not their daughters. More research is needed to determine if

there is an indirect relationship between gender, parental socialization, and participation in

financial education courses.

Difference in financial socialization were also found among races. Compared to White

respondents, Black, Asian, Hispanic, and other races reported less financial socialization. This

finding opposes Gutter, Copur, and Garrison’s (2009) study, which found that White students

were less likely to discuss finances with their parents or peers than students of other races. The

difference in financial socialization between races was found to be significant in parental

financial socialization, but not in formal financial education, according to the split socialization

model. This suggests there may be cultural differences in willingness of parents to discuss

financial matters with their children.

Age was negatively related to financial socialization, indicating the older a student was,

the less financial socialization they received. The relationship between age and financial

socialization supports Gutter, Copur, and Garrison’s (2009) findings that older students were less

likely to discuss personal finances with parents or to observe parents’ financial behaviors. The

negative relationship between age and financial socialization might be attributed to generational

differences in financial socialization. It could be that parents of older students did not discuss

finances with their child growing up because it was not socially acceptable to talk about financial

matters. Another possible explanation is that as the student ages, the more financially

54
independent they become, and the less need for financial socialization from their parents. Results

of the split socialization model indicate that age is negatively associated with parental financial

socialization, but positively associated with formal financial education. The number of years a

student was enrolled was also significantly related to financial socialization. Compared to other

cohorts, first year students received less financial socialization. First year students are often

living in the dorm and participating in meal plans, or still living at home with their parents,

which removes the immediate responsibility of paying rent and bills, and the need to budget

finances. Parents may wait to engage in certain financial conversations with their child such as

how to create a budget, timeliness of bill payments, and use of credit, until the child moves off-

campus. The split model of socialization supports this possibility, as first year students did

receive significantly less parental financial socialization than other cohorts. No difference was

found between first year students and other cohorts in regards to formal financial education.

Financial Socialization and Financial Knowledge

The retained model showed a positive relationship between financial socialization and

financial knowledge, consistent with previous research (Lapp, 2010; Shim et al., 2009; Shim et

al., 2010); however, in the alternative split model of financial socialization, neither parental

financial socialization nor formal financial education alone were significantly related to financial

knowledge. Formal financial education bordered on statistical significance at the p<.10 level, yet

parental financial socialization was no where near statistical significance. This suggests that

there may be an interacting relationship between formal financial education and parental

financial socialization that influences financial knowledge. Children who receive formal

financial education at school may discuss what they are learning with their parents, providing

parents with the opportunity to discuss their own financial attitudes and beliefs with their

55
children, and thereby teaching their children more about managing their finances and

strengthening their financial knowledge. The fact that formal financial education borders on

statistical significance provides support for findings from Shim and associates (2010), Lapp

(2010), and Kaiser and Menkhoff (2017), all of which found financial education to have a

positive relationship with financial knowledge. Differences in the strength and level of

significance may also be attributed to a difference in financial knowledge measurements.

Financial Socialization and Financial Self-Efficacy

Within the model, the relationship between financial socialization and financial self-

efficacy was the second strongest association between variables. While other studies have found

weak or mixed results (Heckman & Grable, 2011; Lee & Mortimer, 2009), the present study

found financial socialization to have a positive influence on financial self-efficacy. The

alternative split model of financial socialization shows that parental financial socialization has a

much stronger influence on financial self-efficacy than formal financial education, though both

were significantly related to increased self-efficacy. Of the financial socialization practices

included in this study, the experience with money parcel (λ = .60) and two of the indicators

within this parcel (working for pay while in high school, λ = .96; receiving an allowance as a

child, λ = .90) contained the highest correlations with the financial socialization construct.

Providing children with experience in earning and managing money is an important factor in

increasing their financial self-efficacy and teaching them positive financial behavior. These

results support Bandura’s (1977) theory of self-efficacy, which posits that self-efficacy is

inferred from our experiences mastering a task and comparison of our capabilities to others.

What parents teach their children from direct conversations about finances, experiences the child

has managing money earned from working or allowance, and the financial behaviors parents

56
model around their children instill confidence in the child’s belief that they can successfully

manage their finances.

Financial Socialization and Financial Behavior

In accordance with previous research, financial socialization was found to have a direct,

positive influence on financial behaviors (Cho et al., 2012; Kim & Chatterjee, 2013; Webley &

Nyhus, 2006). Among the individual activities included in the financial socialization factors,

working for pay while in high school yielded the strongest correlation at β = .96, suggesting this

is a compelling way for young adults to gain experience with money. Receiving an allowance as

a child (younger than age 12) also produced a high correlation at β = .90, further highlighting the

importance of money experience. Explicit financial socialization from parents is necessary as

well, as conversations about saving, investing, and using credit can help guide children toward

better financial behaviors (Cho et al., 2012). The alternative split model of financial socialization

shows both parental financial socialization and formal financial education have similar levels of

influence on financial behavior (β = .03 for each). At this time, there are few, if any studies

exploring the effect of parental financial socialization on participation in financial education. The

findings in the split model of financial socialization suggest that parental financial socialization

has a strong, positive association with children enrolling in formal financial education. Given

that other studies have found a positive relationship between financial education and financial

behaviors (Kaiser & Menkhoff, 2017), this finding further emphasizes the importance of parents

socializing their children regarding financial matters.

Furthermore, there is a positive, indirect relationship between financial socialization and

financial behavior through financial self-efficacy. Financial socialization influences self-efficacy,

and self-efficacy, in turn, influences financial behavior. As parents model good financial

57
behaviors, discuss financial topics with their children, and provide their children with

opportunities to make their own financial decisions, this instills higher efficacy beliefs in the

child regarding his or her own abilities to perform positive financial behaviors. Since financial

self-efficacy is a key factor in implementing positive financial behaviors, this underscores the

need for parents to engage in financial socialization activities.

Financial Knowledge

Financial Knowledge and Financial Self-Efficacy

The results of the model show that objective financial knowledge has no significant

relationship with financial self-efficacy. This could be due to how objective financial knowledge

was measured, as this is one limitation of the study. Heckman and Grable (2011) found objective

financial knowledge to increase financial self-efficacy when using a more thorough measurement

of objective financial knowledge that consisted of a 20-item personal finance quiz. Yet, Serido

and associates (2013) found objective financial knowledge (measured with 15 true/false

questions) was not an important predictor of financial self-efficacy. However, Serido and

colleagues found subjective financial knowledge to have a positive and significant influence on

financial self-efficacy. In Kazdin’s (1978) review of Bandura’s (1977) self-efficacy theory, he

noted that self-efficacy depends on a level of competence, or at the very least perceived

competence, regarding the behavior. Given that limited research has been conducted as to the

antecedents of financial self-efficacy, both objective and subjective knowledge could be equally

important. More research is needed to determine how objective and subjective financial

knowledge influence financial self-efficacy.

58
Financial Knowledge and Financial Behavior

Considering the numerous studies that have found a strong relationship between financial

knowledge and behavior (Angrisani et al., 2016; Chatterjee et al., 2017; de Bassa Scheresberg,

2013; Henager & Cude, 2016; Nghia & Scott, 2018; Xiao et al., 2014), it was surprising to find

no significant relationship between objective financial knowledge and financial behavior in the

model. The most likely explanation for this non-association is the measurement for objective

financial knowledge is fallacious. The construct for objective financial knowledge contained 4

multiple-choice items, covering inflation, interest rate, loan repayment, and take-home pay. Two

items – interest rate and loan repayment – are essentially the same concept, with the loan

repayment question requiring a little more extrapolation of general interest rate knowledge. A

more thorough measurement of objective financial knowledge may yield different results.

Financial Self-Efficacy

Financial Self-Efficacy and Financial Behavior

The direct, positive relationship between financial self-efficacy and financial behavior in

the model was congruent with previous findings (Asededo et al., 2018; Asebedo & Browning,

2017; Farrell et al., 2016; Lapp, 2010; Lown et al., 2015; Montford & Goldsmith, 2016). As

predicated by Bandura (1977) and considered in the FFS conceptual model, the greater one’s

self-efficacy, the more likely the person will attempt a behavior. The magnitude of this

relationship indicates financial self-efficacy is a major factor in performance of positive financial

behaviors. Results of this study show that increasing financial self-efficacy can be achieved

through financial socialization. Both parental financial socialization and formal financial

education are predictors of financial self-efficacy; however, parental financial socialization has a

much stronger influence on financial self-efficacy. Bandura (1977) indicated that self-efficacy

59
can be increased through successful attempts at a behavior. As experience with money had the

strongest correlation with financial socialization, parents should find ways to provide their child

with practice managing their own money, most commonly provided through the child earning an

allowance or working part-time.

Family Financial Socialization Conceptual Model

Overall, results of this study provide support for many of the propositions presented in

Gudmunson and Dane’s Family Financial Socialization (FFS) conceptual model. Differences

were found in age, race, gender, and GPA with regards to receipt of financial socialization;

however, other personal and family characteristics, such as income and parent’s education level

were not related to financial socialization. This study only focused on personal and family

characteristics as control variables, and not predictors of financial socialization, so more

exploration in this area is needed. An association between financial socialization and objective

financial knowledge was supported by the findings. However, the results of the split model of

financial socialization suggested there is an interaction effect between parent financial

socialization and formal financial education that may need to be further explored in the FFS

framework. Financial socialization was found to influence financial self-efficacy, which the FFS

framework included as a motivating factor of capabilities. While the present study did not find an

association between objective financial knowledge and financial self-efficacy, a different

measurement of objective financial knowledge may yield different results. The relationship

between financial attitudes, knowledge, and capabilities, as well as self-efficacy, should be

examined in more detail to determine how financial socialization influences these constructs

individually, as well as how their direct and indirect relationships may influence financial

behavior and financial well-being, as posited in the FFS framework.

60
 Contributions

This study makes three meaningful contributions to the literature. First, it tests the Family

Financial Socialization conceptual framework developed by Gudmunson and Danes (2011). A

conceptual framework is the first step in theory development. As a conceptual model is tested

over time, its propositions can be justified, and with consistent results, eventually develop into a

mature theory (Danes & Yang, 2014). Research in the field of personal finance often borrows

theory from other disciplines. By testing the FFS conceptual model, this study contributes to the

justification of the framework, and offers support toward theory development in our discipline.

Second, results of this study provide new insight into the relationship between parental

socialization and financial education. The strong, positive association between parental financial

socialization and financial education indicates that children whose parents teach them about

finances are significantly more likely to take a personal finance class or workshop. With the push

to educate more people on personal finance topics, this provides a fresh observation into what

factors might influence a person’s decision to enroll in financial education. While one might

consider parental financial socialization adequate, the results of this study indicate there may be

an interaction effect between parental financial socialization and financial education that leads to

greater financial knowledge. As noted in the discussion section, when financial socialization was

tested as one combined construct that included facets for both parental financial socialization and

financial education, financial socialization was a significant predictor of financial knowledge.

However, in the split model of financial socialization, neither parental socialization nor financial

education were significant predictors of financial knowledge.

Third, this study adds to existing literature by exploring the direct and indirect

relationships between financial socialization, financial knowledge, financial self-efficacy, and

61
financial behavior in college students, using both Structural Equation Modeling and a large,

national dataset. While other studies have explored these relationships directly, few have

explored the indirect effects of financial socialization on self-efficacy through its association

with financial knowledge. Of equal importance, many studies that involve college students are

limited to samples from one or two institutions, making it difficult to generalize the results to

college students throughout the United States. The present study uses data collected by The Ohio

State University from 52 institutions, including two-year public, four-year public, and four-year

private schools. The large number of institutions and participants allows for less bias in the

results and a broader interpretation of the results.

Implications

Findings from this study show strong support for the importance of financial socialization

of children and young adults. Both parental financial socialization and financial education are

equally important in the development of healthy financial behaviors. With the unique finding of

this study showing parental financial socialization to be an important predictor of young adults

participating in formal financial education while in high school or in college, it magnifies the

importance of parents teaching and role modeling positive financial behaviors to their children.

Results of this study indicate there may be an interaction effect between parental financial

socialization and financial education that produces a significant increase in financial knowledge.

Parents should be aware of the financial behaviors they are modeling in front of their children,

and take time to engage in every day conversations pertaining to finances. Providing

opportunities for children to earn an allowance or work a part-time job in high school can

provide children with valuable money experience in a low-stakes environment, before they start

living on their own in college. Successful experiences managing their own spending money can

62
lead to great financial self-efficacy and improved financial behavior in college. Discussing the

importance of saving, investing, and budgeting, are also critical to a child’s development of

financial self-efficacy, as well as their future financial behaviors.

With only 57% of Americans being financially literate (Klapper, Lusardi, & van

Oudheusden, 2015), parents may need community support to learn good financial practices for

themselves, as well as how to instill positive financial behaviors in their children. Financial

institutions, such as banks and credit unions, could present workshops for families and children

to learn about budgeting, saving, and investing, as well as responsible use of credit and ways to

improve credit scores. Research and extension offices may also want to be involved in

developing personal financial education programs for the community. Resources and training

materials should be created and made available for interested parties to easily access for use in

workshops and classrooms.

Currently only five states (i.e., Alabama, Missouri, Tennessee, Utah, and Virginia)

require high school students to participate in at least a half of a year of personal finance

education (Carrns, 2018). With financial education shown to improve financial knowledge

(Lapp, 2010; Shim et al., 2010) and financial behavior (Kaiser & Menkhoff, 2017), policy

makers should push to mandate financial education for all students. The findings in the split

financial socialization model of this study suggest a co-financial socialization approach may

strengthen financial knowledge in young adults. Educators in K-12 may find it useful to inform

parents about the financial curriculum taught in the classroom, in order for the parents to engage

in conversations and experiences at home that coincide with school lessons. By working

together, parents and educators can provide children with the necessary knowledge they need to

63
perform positive financial behaviors, as well as instill a level of self-efficacy in young adults that

they are capable of handling financial matters properly.

Financial counselors, advisors, and therapists have the opportunity to encourage their

clients with children of all ages to provide opportunities for their children to manage an

allowance or earnings from a job, and to engage in regular discussions about savings, budgeting,

investing, and appropriate use of credit with their children. Financial advisors may find that

having a family financial education day with their clients will provide them opportunities to

teach all members of the family about personal finance, as well as establish relationships with

their clients’ young adult children that could carry on into the future. Financial therapists can

discuss ways that parents can interact with their children to establish healthy financial behaviors

at a young age, and avoid troubling family financial patterns that have been established by

previous generations.

Outcomes from this study suggest the FFS conceptual framework may be enhanced by

further exploration of the direct and indirect relationships of financial attitudes, knowledge, and

capabilities, and concepts, such as self-efficacy, that are included in this category. Understanding

how these concepts interact can provide a clearer understanding of how we can improve upon

and develop the necessary attitudes, skills, and capabilities that lead to better financial behavior.

While the FFS conceptual model breaks apart the financial socialization construct into implicit

and explicit financial socialization, this study examined financial socialization as whole, and as a

split construct, examining parental financial socialization and formal financial education

separately. The outcome from splitting financial socialization into these two constructs indicated

there are differences in how parental financial socialization and formal financial education

influence objective financial knowledge, as well as how parental financial socialization is

64
associated with the decision to enroll in formal financial education. The FFS conceptual model

may benefit from further exploration into how these two types of financial socialization interact.

Strengths and Limitations

As with all research, this study faced some limitations. Of primary concern, the

measurement used for objective financial knowledge was mediocre. Consisting of four multiple-

choice items, it was limited in the personal finance topics it tested. A more thorough

measurement for objective financial knowledge may have yielded different results, as there were

some unexpected relationships found in the model, or lack thereof, with objective financial

knowledge. Another concern was the lack of a subjective financial knowledge measurement in

the data. Subjective financial knowledge has been found to have associations with financial self-

efficacy (Lapp, 2010; Serido et al., 2013) and financial behavior (Serido et al.), and the lack of

this variable in the model provides us with limited results.

With the use of SEM, there are some constraints as well. Income had to be measured as a

continuous variable in order for the model to converge in Mplus. Separating income into

categories would have provided more detail into differences between respondents of different

income levels, and may have provided different results. Similarly, parents’ education level had to

be measured as a continuous variable in order for the model to converge in Mplus, which

provided less detail than a categorical measurement on differences in financial socialization

based on parent education level. Use of latent constructs also limits interpretation of results to the

constructs themselves, without much detail as to how the individual indicators influence one

another. Interpretation of how specific financial socialization activities influence other variables

can only be inferred from indicator correlations as to their importance in the financial

socialization construct.

65
 While SEM does limit some types of interpretation, it does allow for examination of the

direct and indirect effects among the variables. By examining indirect relationships, we gain

more knowledge into how and why variables influence one another. This study shows financial

socialization to have a direct influence on financial behavior, as well as an indirect influence

through its association with financial self-efficacy. This indirect relationship heightens financial

self-efficacy’s relevance to financial behavior. Finally, a major strength of this study is its use of

a large, national dataset. By analyzing a larger and more diverse sample of college students, we

can generalize our findings to a larger population. While the data set is not nationally

representative, it does include students from 52 college institutions throughout the United States,

as well as students enrolled at different types of college institutions (two-year public, four-year

public, and four-year private). Most studies are limited to one or two institutions, which restricts

their application to only students in that particular region or institution type. The results of this

study are generalizable to college students with similar demographics as the sample, but is not

limited to a specific institution or region.

Future Research

While this study provides some unique findings, more research is needed to determine the

exact nature of some relationships. Specifically, the association between parental financial

socialization and financial education should be explored more to determine how parental

financial socialization influences participation in formal financial education, as well as how

parental financial socialization and formal financial education interact to influence financial

knowledge and behavior. Future studies should examine how subjective financial knowledge fits

into the FFS conceptual framework, as well as test the relationship between objective financial

knowledge and self-efficacy using a different measure for objective financial knowledge. With

66
the strong association found between financial self-efficacy and positive financial behaviors,

subsequent research should focus on the antecedents of financial self-efficacy. The present study

focuses solely on the impact of financial socialization in college students. A longitudinal

research study would provide greater discernment into the long-term impact of financial

socialization on financial behaviors, beyond just the college years. Finally, it is important to

investigate the disparity in financial socialization between genders and races. With financial

socialization shown to have a strong influence on financial knowledge, self-efficacy, and

behavior, it is essential that people of all races and genders have equal opportunities to learn

about personal finance topics.

67
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satisfaction of college students. Social Indicators Research, 92(1), 53-68.

74
 Appendix A - Supplemental Tables and Figures

Table A.1 Correlation Matrix for All Variables

Variables 1 2 3 4 5 6 7
1. Spend More - .18*** -.01 .06*** .16*** .18*** .05***
2. Purchase Want .18*** - .16*** .15*** 0 -.01 .10***
3. Budget -.01 .16*** - .61*** .10*** .10*** .37***
4. Spending .06*** .15*** .61*** - .16*** .13*** .53***
5. Bills .16*** 0 .10*** .16*** - .28*** .18***
6. Savings .18*** -.01 .10*** .13*** .28*** - .13***
7. Checks .05*** .10*** .37*** .53*** .18*** .13*** -
8. Comfortable Talking .14*** -.04*** -.02* .03** .14*** .15*** .05***
9. Taught Money Mgmt. .13*** -.03** 0.02 .07*** .15*** .16*** .08***
10. Role Model .14*** -.04*** -.03** 0.01 .16*** .17*** .03**
11. Child Allow 0 -.04*** 0 -.01 0.02 .04*** -.02*
12. Teen Allow -.04*** -.06*** 0.02 -.01 -.01 .03** -.01
13. HS Work -.02* -.02* .07*** .03* .03* .03** 0.01
14. Save .11*** -.05*** -.04*** .02* .11*** .15*** 0.02
15. Bank .08*** -.06*** -.03** 0.01 .12*** .12*** 0.01
16. Invest 0.02 -.04*** .03** .03** .05*** .15*** .02*
17. HS Fin Ed .06*** -.01 -.02* 0.01 .05*** .08*** 0.01
18. Coll Fin Ed -.01 0.01 .05*** .03* .02* .05*** .02*
19. Confident .15*** .08*** .21*** .23*** .26*** .26*** .20***
20. Manage Money Well .24*** .16*** .24*** .29*** .27*** .31*** .23***
21. FKQ 1 .04*** .02* -.02 0.01 .06*** 0.02 -.01
22. FKQ 2 .04*** 0.01 -0.01 0.01 .05*** 0.02 0
23. FKQ 3 .02* .03** .04*** .03*** .06*** .02* 0.01
24. FKQ 4 0 0.01 .04*** 0.02 .02* 0.01 0.01
25. Income -.14*** 0.01 .17*** .07*** -.01 .09*** .03**
26. Parent Income .09*** -.11*** -.07*** -.07*** .11*** .11*** -.06***
27. Race -.05*** 0 .02* .02* -.04*** -.04*** .02*
28. Gender 0.02 0 0 -.01 0.01 0 0.01
29. Years Enrolled -.03*** 0.01 .03** 0 0 -.02* -.02
30. GPA .11*** 0.01 -.02* 0.01 .13*** .12*** 0.01
31. Age -.05*** 0.01 .05*** .02* -.03** -.04*** 0.01
32. Parent Ed. .11*** -.06*** -.09*** -.07*** .07*** .09*** -.05***
33. Institution Type -.05*** .07*** .09*** .05*** -.10*** -.02 .04***

75
 Variables 8 9 10 11 12 13 14
8. Comfortable Talking - .72*** .57*** .11*** .10*** -.01 .37***
9. Taught Money Mgmt. .72*** - .68*** .13*** .12*** -.01 .44***
10. Role Model .57*** .68*** - .14*** .15*** -.01 .43***
11. Child Allow .11*** .13*** .14*** - .54*** .03** .13***
12. Teen Allow .10*** .12*** .15*** .54*** - -.05*** .11***
13. HS Work -.01 -.01 -.01 .03** -.05*** - .04***
14. Save .37*** .44*** .43*** .13*** .11*** .04*** -
15. Bank .31*** .034*** .32*** .11*** .08*** .11*** .50***
16. Invest .23*** .28*** .28*** .09*** .09*** .01 .22***
17. HS Fin Ed .09*** .12*** .09*** .02* -.01 .05*** .09***
18. Coll Fin Ed 0.01 0.01 0.01 .03* .02* .03** 0
19. Confident .15*** .17*** .10*** 0.01 0 .06*** .04***
20. Manage Money Well .16*** .20*** .15*** 0.02 -.01 .02* .09***
21. FKQ 1 -.02 -.02** 0 .03** 0.01 .03*** -.02*
22. FKQ 2 0.01 -.01 .02* 0.01 .02* .03** 0.01
23. FKQ 3 -.02* -.04*** -.02* 0 0 .07*** -.02*
24. FKQ 4 -.02* -.02 0 0.01 .02* .07*** -.02*
25. Income -.15*** -.18*** -.17*** .02* 0.01 .18*** -.17***
26. Parent Income .19*** .23*** .36*** .15*** .12*** .06*** .19***
27. Race -.02* -.02** -.04*** -.03*** .02* -.12*** -.01
28. Gender 0.02 0 0.01 -.01 -.02 0 0
29. Years Enrolled -.03** -.04*** -.03** .02* 0 .03** -.03**
30. GPA .06*** .06*** .10*** .04*** 0.01 -.01 .05***
31. Age -.07*** -.07*** -.06*** 0 0 .04*** -.05***
32. Parent Ed. .18*** .20*** .27*** .11*** .08*** -.01 .18***
33. Institution Type -.08*** -.08*** -.09*** 0 .03** 0.01 -.09***

Variables 15 16 17 18 19 20 21
15. Bank - .19*** .09*** 0 .05*** .08*** -.01
16. Invest .19*** - .06*** .05*** .10*** .12*** 0
17. HS Fin Ed .09*** .06*** - .16*** .05*** .06*** .04***
18. Coll Fin Ed 0 .05*** .16*** - .08*** .05*** .07***
19. Confident .05*** .10*** .05*** .08*** - .64*** .08***
20. Manage Money Well .08*** .12*** .06*** .05*** .64*** - .04***
21. FKQ 1 -.01 0 .04*** .07*** .08*** .04*** -
22. FKQ 2 .02* 0 .02* .06*** .08*** .06*** .32***
23. FKQ 3 0.01 -.03** .03** .05*** .10*** .06*** .28***
24. FKQ 4 0 .02* -.03** .03** .05*** .03** .18***
25. Income -.10*** -.03** -.06*** .08*** .17*** .05*** .10***
26. Parent Income .21*** .17*** .04** 0 0.02 .04*** .06***

76
27. Race -.05*** 0.01 -.06*** 0 -.04*** -.04*** -.03***
28. Gender 0 -.01 -.01 -.02* -.01 0.1 -.02
29. Years Enrolled 0.01 -.02* -.02* .03** -.01 -.02* .04***
30. GPA .04*** .02* .02* 0 .08*** .12*** .09***
31. Age -.06*** -.03** -.01 .03** 0.02 -.01 .02**
32. Parent Ed. .19*** .13*** .05*** 0.01 -.03** 0.01 .06***
33. Institution Type -.08*** -.01 -.07*** -.03** .03** 0 -.04***

Variables 22 23 24 25 26 27 28
22. FKQ 2 - .37*** .16*** .10*** .06*** -.02 -.02*
23. FKQ 3 .37*** - .18*** .14*** .05*** -.05*** -.01
24. FKQ 4 .16*** .18*** - .12*** .06*** -.05*** -.04***
25. Income .10*** .14*** .12*** - -.04** -.09*** -.01
26. Parent Income .06*** .05*** .06*** -.04** - -.11*** 0.01
27. Race -.02 -.05*** -.05*** -.09*** -.11*** - -.01
28. Gender -.02* -.01 -.04*** -.01 0.01 -.01 -
29. Years Enrolled .04*** .05*** .02* .13*** 0.02 -.02 -.02
30. GPA .06*** .06*** .03** -.04*** .08*** -.04*** 0.01
31. Age .02* .04*** .04*** .16*** -.03* -.03** -.01
32. Parent Ed. .05*** 0.01 0.01 -.16*** .45*** -.04*** 0
33. Institution Type -.02* -.01 .03** .13*** -.13*** -.01 0.01

Variables 29 30 31 32 33
29. Years Enrolled - -.03** .03** -.01 -.05***
30. GPA -.03** - -.02 .09*** 0.01
31. Age .03** -.02 - -.07*** .05***
32. Parent Ed. -.01 .09*** -.07*** - -.15***
33. Institution Type -.05*** 0.01 .05*** -.15*** -

77
 Table A.2 Split Socialization Model Direct Effects with Financial Behavior (N = 12,598)*
Unstandardized Standardized
Parameter b SE β SE p
Financial Self-Efficacy→Fin. Behavior 1.407 0.02 0.812 0.00 0.00***
Financial Knowledge→Fin. Behavior 0.034 0.03 0.019 0.02 0.18
Financial Socialization→Fin. Behavior 0.051 0.01 0.029 0.01 .00***
Financial Education→Fin. Behavior 0.046 0.01 0.031 0.01 0.00***
Financial Self-Efficacy→Fin. Knowledge -.002 0.01 -.002 0.01 0.88
Financial Self-Efficacy→Fin. Socialization 0.131 0.00 0.131 0.00 0.00***
Financial Self-Efficacy→Fin. Education 0.022 0.00 0.025 0.00 .00***
Financial Knowledge→Fin. Socialization -.001 0.02 -.001 0.02 0.94
Financial Knowledge→Fin. Education 0.031 0.02 0.037 0.02 0.10
Financial Socialization→Fin. Education 0.610 0.01 0.525 0.01 0.00***
Female→Financial Socialization -.001 0.03 0.000 0.01 0.98
Black→Financial Socialization -.76 0.05 -.058 0.01 0.00***
Asian→Financial Socialization -.212 0.05 -.047 0.01 0.00***
Hispanic→Financial Socialization -.151 0.05 -.034 0.01 0.00**
Mixed Race→Financial Socialization -.057 0.05 -.015 0.01 0.24
Other Race→Financial Socialization -.385 0.07 -.047 0.01 .00***
Income→Financial Socialization 0.000 0.00 0.011 0.01 0.44
Parent Education→Financial Socialization 0.011 0.10 0.002 0.02 0.91
Four-Year Private→Fin. Socialization -.020 0.04 -.006 0.01 0.64
Two-Year Public→Fin. Socialization -.005 0.05 -.001 0.01 0.91
Age→Financial Socialization -.013 0.00 -.096 0.01 .00***
GPA→Financial Socialization 0.067 0.03 0.035 0.01 0.01**
First Year Students→Fin. Socialization -.068 0.03 -.026 0.01 .03*
Female→Financial Education -.105 0.04 -.042 0.02 0.01**
Black→Financial Education 0.053 0.06 0.010 0.01 0.36
Asian→Financial Education 0.078 0.08 0.015 0.01 0.30
Hispanic→Financial Education 0.077 0.06 0.015 0.01 0.19
Mixed Race→Financial Education 0.081 0.07 0.019 0.02 0.23
Other Race→Financial Education 0.137 0.13 0.014 0.01 0.30
Income→Financial Education 0.000 0.00 0.008 0.01 0.51
Parent Education→Financial Education 0.015 0.12 0.002 0.02 0.90
Four-Year Private→Financial Education -.030 0.06 -.007 0.01 0.59
Two-Year Public→Financial Education -.046 0.06 -.011 0.01 0.40
Age→Financial Education 0.005 0.00 0.031 0.01 0.01**
GPA→Financial Education -.002 0.03 -.001 0.01 0.95
First Year Students→Financial Education 0.008 0.04 0.003 0.01 0.84

78
R-Squared .67
*Note: *p < .05, **p < .01, ***p < .001 All results were computed with Mplus in delta
parameterization and STDYX standardization.
Overall Model Fit Indices: χ2(226) = 5,917.36, p = <.001; RMSEA = .045, 90% CI [.044, .046],
CFI = .86, TLI = .83.
Reference Groups: male, White, four-year public, students enrolled two or more years

Table A.3 Split Socialization Model Indirect Effects (N = 12,598)*

Unstandardized Standardized
Parameter b SE β SE

Parent Financial Socialization→Financial

Self-Efficacy→Financial Behavior 0.185*** 0.01 0.117*** 0.00

Parent Financial Socialization→Financial

Education→Financial Self-
Efficacy→Financial Behavior .019*** 0.00 .011*** 0.00

Parent Financial Socialization→Financial

Education→Financial Self-Efficacy .031*** 0.01 .021*** 0.00

Financial Education→Financial Self-

Efficacy→Financial Behavior .013*** 0.00 .013*** 0.00
*Note: *p < .05, **p < .01, ***p < .001 All results were computed with Mplus in delta
parameterization and STDYX standardization.

79
 Table A.4 Direct Effects with Financial Behavior without First Year Students (N = 10,302)*
Unstandardized Standardized
Parameter b SE β SE p
Financial Self-Efficacy→Fin. Behavior 2.191 0.04 0.907 0.00 .00***
Financial Knowledge→Fin. Behavior 0.058 0.04 0.024 0.02 0.16
Financial Socialization→Fin. Behavior 0.075 0.01 0.031 0.00 .00***
Financial Self-Efficacy→Fin. Knowledge -.008 0.02 -.008 0.02 0.59
Fin. Self-Efficacy→Fin. Socialization 0.201 0.00 0.200 0.00 .00***
Financial Knowledge→Fin. Socialization 0.025 0.01 0.025 0.01 .03**
Female→Financial Socialization -.028 0.03 -0.013 0.02 0.4
Black→Financial Socialization -.349 0.05 -0.073 0.01 .00***
Asian→Financial Socialization -.132 0.06 -0.029 0.01 .03**
Hispanic→Financial Socialization -.144 0.06 -0.032 0.01 .02**
Mixed Race→Financial Socialization -.042 0.06 -0.011 0.02 0.49
Other Race→Financial Socialization -.476 0.06 -0.060 0.01 .00***
Income→Financial Socialization 0.001 0.00 0.022 0.01 0.11
Parent Education→Fin. Socialization -.024 0.09 -.004 0.01 0.78
Four-Year Private→Fin. Socialization -.023 0.04 -0.007 0.01 0.60
Two-Year Public→Fin. Socialization -.046 0.05 -0.012 0.01 0.34
Age→Financial Socialization -.012 0.00 -.088 0.01 .00***
GPA→Financial Socialization 0.075 0.03 0.037 0.01 .01**
R-Squared .84
*Note: *p < .05, **p < .01, ***p < .001 All results were computed with Mplus in delta parameterization and
STDYX standardization. Overall Model Fit Indices: χ2(204) = 4,234.14, p = <.001; RMSEA = .044, 90% CI [.043,
.045], CFI = .86, TLI = .84.
Reference Groups: male, White, four-year public, students enrolled two or more years

80
 Table A.5 Direct Effect with Financial Behavior for Do Not Know Income (N = 12,598)*
Unstandardized Standardized
Parameter b SE β SE p
Financial Self-Efficacy→Financial Behavior 2.038 0.03 0.897 0.00 .00***
Financial Knowledge→Financial Behavior 0.050 0.04 0.022 0.02 0.23
Financial Socialization→Financial Behavior 0.042 0.01 0.018 0.01 .00***
Financial Self-Efficacy→Financial Knowledge -.002 0.01 -.002 0.01 0.87
Financial Self-Efficacy→Financial Socialization 0.166 0.00 0.165 0.00 .00***
Financial Knowledge→Financial Socialization 0.030 0.01 0.030 0.01 .00**
Female→Financial Socialization -.040 0.03 -.018 0.01 0.17
Black→Financial Socialization -.267 0.04 -.056 0.01 .00***
Asian→Financial Socialization -.201 0.05 -.045 0.01 .00***
Hispanic→Financial Socialization -.150 0.06 -.033 0.01 .01**
Mixed Race→Financial Socialization -.049 0.05 -.013 0.01 0.32
Other Race→Financial Socialization -.379 0.06 -.046 0.01 .00***
Do Not Know Income→Financial Socialization -.151 0.05 -.036 0.01 0.00**
Parent Education→Financial Socialization -.004 0.09 -.001 0.01 0.96
Four-Year Private→Financial Socialization -.032 0.04 -0.009 0.01 0.41
Two-Year Public→Financial Socialization -.019 0.04 -0.005 0.01 0.66
Age→Financial Socialization -.011 0.00 -.084 0.01 .00***
GPA→Financial Socialization 0.082 0.03 0.043 0.01 .00**
First Year Students→Financial Socialization -.070 0.03 -.027 0.01 .02*
R-Squared .81
* Note: *p < .05, **p < .01, ***p < .001 All results were computed with Mplus in delta parameterization and
STDYX standardization. Overall Model Fit Indices: χ2(216) = 4,616.87, p = <.001; RMSEA = .040, 90% CI
[.039, .041], CFI = .87, TLI = .85.
Reference Groups: male, White, know income, four-year public, students enrolled two or more
years

81
 Table A.6 Direct Effects with Financial Behavior for Prefer Not to Answer (N = 12,598)*
Unstandardized Standardized
Parameter b SE β SE p
Financial Self-Efficacy→Financial Behavior 2.011 0.03 0.894 0.00 .00***
Financial Knowledge→Financial Behavior 0.050 0.03 0.022 0.02 0.14
Financial Socialization→Financial Behavior 0.053 0.01 0.023 0.00 .00***
Financial Self-Efficacy→Financial Knowledge -.004 0.01 -.004 0.01 0.78
Financial Self-Efficacy→Financial Socialization 0.164 0.00 0.164 0.00 .00***
Financial Knowledge→Financial Socialization 0.029 0.01 0.030 0.01 .00***
Female→Financial Socialization -.043 0.03 -0.020 0.01 0.12
Black→Financial Socialization -.274 0.05 -0.058 0.01 .00***
Asian→Financial Socialization -.206 0.05 -0.046 0.01 .00***
Hispanic→Financial Socialization -.148 0.06 -0.033 0.01 .01**
Mixed Race→Financial Socialization -.050 0.05 -0.013 0.01 0.31
Other Race→Financial Socialization -.398 0.07 -0.049 0.01 .00***
Prefer Not to Answer Inc.→Fin. Socialization -.013 0.07 -.003 0.02 0.86
Parent Education→Financial Socialization -.011 0.08 -.002 0.01 0.9
Four-Year Private→Financial Socialization -.033 0.04 -0.009 0.01 0.39
Two-Year Public→Financial Socialization -.019 0.04 -0.005 0.01 0.66
Age→Financial Socialization -.011 0.00 -.085 0.01 .00***
GPA→Financial Socialization 0.072 0.02 0.037 0.01 .00**
First Year Students→Financial Socialization -.073 0.03 -.028 0.01 .02*
R-Squared .81
* Note: *p < .05, **p < .01, ***p < .001 All results were computed with Mplus in delta parameterization
and STDYX standardization. Overall Model Fit Indices: χ2(216) = 4,607.70, p = <.001; RMSEA = .040,
90% CI [.039, .041], CFI = .87, TLI = .85.
Reference Groups: male, White, answered income, four-year public, students enrolled two or
more years

82
Table A.7 Glossary

Term Definition Source

Economic self-efficacy Self-confidence pertaining to Lee & Mortimer, 2009
the economic domain

Explicit financial Purposive efforts to teach, Danes & Yang, 2014;

socialization model, and practice financial Gudmunson & Danes,
knowledge and behaviors 2011

Financial behavior Human behavior related to Xiao, 2008

money management

Financial literacy A measure of how well an Huston, 2010

individual can understand and
use personal finance related
information

Financial self-efficacy Confidence in one's ability toLim, Heckman,

manage personal finances Letkiewicz, & Montalto,
2014
Financial socialization The process by which children Danes & Yang, 2014;
acquire and develop financial Gudmunson & Danes,
knowledge, skills, attitudes, 2011
and behaviors over time

Implicit financial Occurs from children Danes & Yang, 2014;

socialization observing parent financial Gudmunson & Danes,
behaviors and daily 2011
interactions

Objective financial A measure of what one Robb, Babiarz,

knowledge actually knows about personal Woodyard, & Seay,
finance determined by correct 2015
responses to questions on
financial topics.

Self-efficacy One's confidence in their Bandura, 1977

ability to produce a desired
result. Considered to be
domain specific.

Subjective financial A measure of what one thinks Robb, Babiarz,

knowledge they know about personal Woodyard, & Seay,
finance determined by self- 2015
assessment

83
Figure A.1 Significant Pathways in Structural Model Predicting Financial Behavior with Split Socialization Construct (N =
12,598)*

84
_____________________________________________________________________________________________________________________
*Note: *p < .05, **p < .01, ***p < .001. Model Fit Indices: χ2(226) = 5,917.36, p = <.001; RMSEA = .045, 90% CI [.044, .046], CFI = .86, TLI =
.83. All results were computed with Mplus in delta parameterization and STDYX standardization. The structural model was estimated with
indicators from the measurement model for the latent variables and controls for gender, age, race, income, parent education, GPA, years enrolled
in school, and institution type.

85
 Appendix B - SAS and Mplus Code

SAS Code
*Financial behaviors;

if spend_credit = 1 then spendmor = 4;

if spend_credit = 2 then spendmor = 3;
if spend_credit = 3 then spendmor = 2;
if spend_credit = 4 then spendmor = 1;
if spend_credit = -99 then spendmore_miss = 1; else spendmore_miss = 0;

if purchasewantvneed = 1 then want=4;

if purchasewantvneed = 2 then want=3;
if purchasewantvneed = 3 then want=2;
if purchasewantvneed = 4 then want=1;
if purchasewantvneed = -99 then want_miss = 1; else want_miss = 0;

if havebudget = 1 then budget = 1;

if havebudget = 2 then budget = 2;
if havebudget = 3 then budget = 3;
if havebudget = 4 then budget = 4;
if havebudget = -99 then budget_miss=1; else budget_miss =0;

if trackspending = 1 then spending =1;

if trackspending = 2 then spending = 2;
if trackspending = 3 then spending = 3;
if trackspending = 4 then spending = 4;
if trackspending =-99 then spending_miss=1; else spending_miss =0;

if paybills = 1 then bills = 1;

if paybills = 2 then bills = 2;
if paybills = 3 then bills = 3;
if paybills = 4 then bills = 4;

86
if paybills = -99 then bills_miss =1; else bills_miss = 0;

if addsavings = 1 then savings = 1;

if addsavings = 2 then savings = 2;
if addsavings = 3 then savings = 3;
if addsavings = 4 then savings =4;
if addsavings = -99 then savings_miss =1; else savings_miss =0;

if trackchecks = 1 then checks = 1;

if trackchecks = 2 then checks = 2;
if trackchecks = 3 then checks = 3;
if trackchecks =4 then checks = 4;
if trackchecks = -99 then checks_miss = 1; else checks_miss = 0;

finbehav= sum (budget + spending + checks + bills + savings + spendmor + want);

accting= (sum(budget + checks + spending)/3);

timely = (sum(bills + savings)/2);
beyond = (sum(want + spendmor)/2);

*Financial Socialization;

if parents_comfortable = 1 then pcomfort = 1;

if parents_comfortable = 2 then pcomfort = 2;
if parents_comfortable =3 then pcomfort = 3;
if parents_comfortable = 4 then pcomfort = 4;
if parents_comfortable = -99 then pcomfort_miss = 1; else pcomfort_miss = 0;
if parents_comfortable = . then delete;

if parents_moneymanagement = 1 then pmoneymg = 1;

if parents_moneymanagement =2 then pmoneymg = 2;
if parents_moneymanagement = 3 then pmoneymg = 3;
if parents_moneymanagement = 4 then pmoneymg = 4;
if parents_moneymanagement = -99 then pmoneymgt_miss = 1; else pmoneymgt_miss = 0;
if parents_moneymanagement = . then delete;

if parents_rolemodel = 1 then pmodel = 1;

87
if parents_rolemodel =2 then pmodel = 2;
if parents_rolemodel = 3 then pmodel = 3;
if parents_rolemodel = 4 then pmodel = 4;
if parents_rolemodel = -99 then pmodel_miss = 1; else pmodel_miss =0;
if parents_rolemodel = . then delete;

if precollege_allowancechild = 1 then childall = 0;

if precollege_allowancechild = 2 then childall = 1;
if precollege_allowancechild = -99 then childallow_miss = 1; else childallow_miss =0;
if precollege_allowancechild = . then delete;

if precollege_allowanceteen = 1 then teenall = 0;

if precollege_allowanceteen = 2 then teenall = 1;
if precollege_allowanceteen = -99 then teenallow_miss = 1; else teenallow_miss = 0;
if precollege_allowanceteen = . then delete;

if precollege_work = 1 then HSwork = 0;

if precollege_work = 2 then HSwork = 1;
if precollege_work = -99 then HSwork_miss = 1; else HSwork_miss=0;
if precollege_work = . then delete;

if precollege_save = 1 then save = 0;

if precollege_save = 2 then save = 1;
if precollege_save = -99 then save_miss = 1; else save_miss =0;
if precollege_save = . then delete;

if precollege_bankaccount = 1 then bank = 0;

if precollege_bankaccount = 2 then bank = 1;
if precollege_bankaccount = -99 then bank_miss = 1; else bank_miss = 0;
if precollege_bankaccount = . then delete;

if precollege_invest = 1 then invest = 0;

if precollege_invest = 2 then invest = 1;
if precollege_invest = -99 then invest_miss = 1; else invest_miss = 0;
if precollege_invest = . then delete;

88
if financeclass_highschool = 1 then HSfin = 1;
if financeclass_highschool = 2 then HSfin = 2;
if financeclass_highschool = 3 then HSfin = 3;
if financeclass_highschool = -99 then HSfin_miss = 1; else HSfin_miss =0;
if financeclass_highschool = . then delete;

if financeclass_college = 1 then Collfin = 1;

if financeclass_college =2 then Collfin = 2;
if financeclass_college = 3 then Collfin = 3;
if financeclass_college = -99 then Collfin_miss = 1; else Collfin_miss =0;
if financeclass_college = . then delete;

impsoc = (sum (pcomfort + pmodel + pmoneymg)/3);

fined = (sum (HSfin + Collfin)/2);
expsoc = (sum(save + bank + invest)/3);
monexp = (sum (childall + teenall + HSwork)/3);
finsoc = (sum(pcomfort + pmodel + pmoneymg + HSfin + Collfin + save + bank + invest + childall + teenall +
HSwork)/11);

* Current annual income;

income=annualincome_self;
if income = 1 then noinc=1; else noinc=0;
if income = 2 then inc2500=1; else inc2500=0;
if income = 3 then inc5000=1; else inc5000=0;
if income = 4 then inc7500=1; else inc7500=0;
if income = 5 then inc10k=1; else inc10k=0;
if income = 6 then inc15k=1; else inc15k=0;
if income = 7 then inc20k=1; else inc20k=0;
if income = 8 then inc25k=1; else inc25k=0;
if income = 9 then inc30k=1; else inc30k=0;
if income = 10 then incGT30K=1; else incGT30K=0;

if income = . then delete;

*income as continuous;

if annualincome_self =1 then inc=1;

89
if annualincome_self = 2 then inc=2;
if annualincome_self = 3 then inc=3;
if annualincome_self=4 then inc=4;
if annualincome_self =5 then inc=5;
if annualincome_self =6 then inc=6;
if annualincome_self =7 then inc=7;
if annualincome_self =8 then inc=8;
if annualincome_self =9 then inc=9;
if annualincome_self = 10 then inc=10;
if annualincome_self = 11 then DKinc=1; else DKinc=0;
if annualincome_self in (-99, 12) then PNAinc=1; else PNAinc=0;
if annualincome_self = . then delete;
* Financial Self Effiacy;
if confidentfinances = 1 then confident =1;
if confidentfinances = 2 then confident = 2;
if confidentfinances = 3 then confident =3;
if confidentfinances = 4 then confident = 4;
if confidentfinances = -99 then confidentfinances_miss =1; else confidentfinances_miss=0;
if confidentfinances = . then delete;

if managemoneywell = 1 then mmwell = 1;

if managemoneywell = 2 then mmwell = 2;
if managemoneywell = 3 then mmwell = 3;
if managemoneywell = 4 then mmwell = 4;
if managemoneywell = -99 then managemoneywell_miss=1; else managemoneywell_miss=0;
if managemoneywell = . then delete;

FSE = (Sum(mmwell + confident)/2);

* financial knowledge;
if finknowledge_SCORE = . then delete;

fin1=finknowledge_1correct ;
fin2=finknowledge_2correct;
fin3=finknowledge_3correct;
fin4=finknowledge_4correct;
fin5=finknowledge_5correct;

90
finknow = (sum(fin1 + fin2 + fin3 +fin4)/4);

* GPA;
if gpa_recode = . then delete;

gpacat = gpa_recode;

* Age;
if age_category = . then delete;

agecat = age_category;

* Gender;

if gender = 1 then male = 1; else male = 0;

if gender = 2 then female =1; else female = 0;
if gender in (3,4,5) then delete;
if gender = . then delete;
if gender = -99 then gender_miss = 1; else gender_miss =0;

* Race;
if race = 1 then white=1; else white =0;
if race = 2 then black = 1; else black =0;
if race = 3 then hispanic = 1; else hispanic = 0;
if race = 4 then asian = 1; else asian = 0;
if race in (5,6,7,9) then other =1; else other = 0;
if race in (-99,10) then race_miss=1; else race_miss= 0;
if race = 8 then mixed=1; else mixed = 0;
if race = . then delete;

*parent education;
if education_mother = 1 then momLTHS=1; else momLTHS=0;
if education_mother = 2 then momHS = 1; else momHS=0;
if education_mother = 3 then momsocol=1; else momsocol =0;
if education_mother = 4 then momassoc = 1; else momassoc =0;
if education_mother = 5 then mombach=1; else mombach=0;

91
if education_mother = 6 then momgrad=1; else momgrad=0;
if education_mother in (7,8) then momprof=1; else momprof=0;
if education_mother = 9 then momDKed =1 ;else momDKed=0;
if education_mother in (., -99) then mother_ed_miss =1; else mother_ed_miss=0;

if education_father = 1 then dadLTHS=1; else dadLTHS=0;

if education_father = 2 then dadHS = 1; else dadHS=0;
if education_father = 3 then dadsocol=1; else dadsocol =0;
if education_father = 4 then dadassoc = 1; else dadassoc =0;
if education_father = 5 then dadbach=1; else dadbach=0;
if education_father = 6 then dadgrad=1; else dadgrad=0;
if education_father in (7,8) then dadprof=1; else dadprof=0;
if education_father = 9 then dadDKed =1 ;else dadDKed=0;
if education_father in (., -99) then father_ed_miss =1; else father_ed_miss=0;

highestEd=max(education_mother, education_father);

if highestEd = 1 then ParLTHS=1; else ParLTHS=0;

if highestEd = 2 then ParHS=1; else ParHS=0;
if highestEd = 3 then Parsocol=1; else Parsocol=0;
if highestEd = 4 then Parassoc=1; else Parassoc=0;
if highestEd = 5 then Parbach=1; else Parbach=0;
if highestEd = 6 then Pargrad=1; else Pargrad=0;
if highestEd in (7,8) then Parprof=1; else Parprof=0;
if highestEd = 9 then parDKed=1; else parDKed=0;
if highestEd in (., -99) then paredmis =1; else paredmis=0;

if highestEd =1 then ParEd=1;

if highestEd=2 then ParEd=2;
if highestEd=3 then ParEd=3;
if highestEd=4 then ParEd=4;
if highestEd=5 then ParEd=5;
if highestEd=6 then ParEd=6;
if highestEd in (7,8) then ParEd=7;
if highestEd in (9,.,-99) then ParEd = -99;
if highestEd = 9 then parDKed=1; else parDKed=0;

* instiution type;

92
 if InstType = 1 then fourpub = 1; else fourpub = 0;
if InstType = 2 then fourpriv = 1; else fourpriv =0;
if InstType = 3 then twopub = 1; else twopub =0;

* number of years enrolled;

if yearsenrolled = 1 then first_year = 1; else first_year=0;

if yearsenrolled in (2:5) then other_cohort = 1; else other_cohort=0;
run;

Mplus Code Full Model

TITLE:
Initial CFA
DATA:
FILE IS C:\Users\Christina Glenn\Dropbox\Dissertation\Data\NSFW2014Mplus.csv;

VARIABLE:
NAMES ARE
studentid instcode InstType race yearsenrolled gpa_value
age
spendmor want budget spending bills savings checks
accting timely beyond
pcomfort pmoneymg
pmodel childall teenall HSwork save bank invest
HSfin Collfin impsoc fined expsoc monexp
inc DKinc PNAinc pinc

93
pDKinc pincPNA
confident mmwell FSE fin1 fin2 fin3 fin4 fin5
finknow
gpacat agecat male female
white black hispanic asian other mixed
parEd parDKed fourpub fourpriv twopub first_year;

!names of variables in the data set

USEVARIABLES = gpa_value
age accting timely beyond
impsoc fined expsoc monexp inc
confident mmwell
fin1 fin2 fin3 fin4 female
black hispanic asian other mixed
parEd fourpriv twopub first_year ;

CATEGORICAL ARE fin1 fin2 fin3 fin4;

MODEL:
Cfinsoc ON female

94
 black
asian
hispanic
mixed
other
inc
pared
fourpriv
twopub
age
gpa_value
first_year;

CFSE BY confident *(L1)

mmwell (L1);

Cfinsoc BY
impsoc*
fined
expsoc
monexp;

95
Cfinbehav BY accting*
timely
beyond;

Cfinknow BY fin1*
fin2
fin3
fin4;

CFSE@1;
Cfinsoc@1;
Cfinbehav@1;
Cfinknow@1;

[CFSE@0];
[Cfinsoc@0];
[Cfinbehav@0];
[Cfinknow@0];

Cfinbehav ON Cfinknow
CFSE

96
 Cfinsoc;

CFSE ON Cfinknow
CFinsoc;

Cfinknow ON Cfinsoc;

! Construc BY race* yearsenrolled

! spendmor want budget spending bills savings checks finbehav
! pcomfort pmoneymg pmodel childall teenall
! HSwork save bank invest HSfin Collfin expsoc impsoc finsoc noinc
! inc2500 inc5000 inc7500 inc10k inc15k inc20k inc25k inc30k incGT30k DKinc PNAinc
! pincLT15k pinc30k pinc40k pinc60k pinc80k pinc100k pinc150k
! pinc200k pincG200 pDKinc pincPNA confident mmwell
! FSE finknow fin1 fin2 fin3 fin4 fin5
! gpacat agecat male female
! white black hispanic asian other mixed momLTHS momHS momsocol momassoc
! mombach momgrad momprof
! momDKed dadLTHS dadHS dadsocol dadassoc dadbach dadgrad dadprof dadDKed
! highestEd parLTHS parHS parsocol parassoc parbach pargrad parprof parDKed
! paredmis fourpub fourpriv;

97
 !BY: define latent variables
! the first factor loading is fixed at 1.0 by default
!: free a parameter
!estimate factor loading of Great, Cheerful, and Happy
[email protected];
!@: fix a parameter at a specific value
!fix the variance of Positive at 1.0

OUTPUT:
modindices
TECH1
!request parameter specifications and starting values
STANDARDIZED;
!request two standardized coefficient
Mplus Code Split Model
TITLE:
Initial CFA
DATA:
FILE IS C:\Users\Christina Glenn\Dropbox\Dissertation\Data\NSFW2014Mplus.csv;

VARIABLE:

98
 NAMES ARE
studentid instcode InstType race yearsenrolled gpa_value
age
spendmor want budget spending bills savings checks
accting timely beyond
pcomfort pmoneymg
pmodel childall teenall HSwork save bank invest
HSfin Collfin impsoc fined expsoc monexp
inc DKinc PNAinc pinc
pDKinc pincPNA
confident mmwell FSE fin1 fin2 fin3 fin4 fin5
finknow
gpacat agecat male female
white black hispanic asian other mixed
parEd parDKed fourpub fourpriv twopub first_year;
!names of variables in the data set
USEVARIABLES = gpa_value age
accting timely beyond HSfin Collfin
impsoc expsoc monexp inc
confident mmwell
fin1 fin2 fin3 fin4 female
black hispanic asian other mixed

99
parEd fourpriv twopub first_year;

CATEGORICAL ARE fin1 fin2 fin3 fin4;

MODEL:
Cfinsoc ON female
black
asian
hispanic
mixed
other
inc

pared
fourpriv
twopub
age
gpa_value
first_year;

100
Cfined ON
female
black
asian
hispanic
mixed
other
inc
pared
fourpriv
twopub
age
gpa_value
first_year;

CFSE BY confident *(L1)

mmwell (L1);

Cfinsoc BY
impsoc*

101
 expsoc
monexp;

Cfined BY
HSfin* (L1)
Collfin (L1);

Cfinbehav BY accting*
timely
beyond;

Cfinknow BY fin1*
fin2
fin3
fin4;

CFSE@1;
Cfinsoc@1;
Cfinbehav@1;
Cfinknow@1;
Cfined@1;

102
[CFSE@0];
[Cfinsoc@0];
[Cfinbehav@0];
[Cfinknow@0];
[Cfined@0];

Cfinbehav ON Cfinknow
CFSE
Cfinsoc
Cfined;

CFSE ON Cfinknow
CFinsoc
Cfined;

Cfinknow ON Cfinsoc
Cfined;

Cfined ON Cfinsoc;

103
! Construc BY race* yearsenrolled
! spendmor want budget spending bills savings checks finbehav
! pcomfort pmoneymg pmodel childall teenall
! HSwork save bank invest HSfin Collfin expsoc impsoc finsoc noinc
! inc2500 inc5000 inc7500 inc10k inc15k inc20k inc25k inc30k incGT30k DKinc PNAinc
! pincLT15k pinc30k pinc40k pinc60k pinc80k pinc100k pinc150k
! pinc200k pincG200 pDKinc pincPNA confident mmwell
! FSE finknow fin1 fin2 fin3 fin4 fin5
! gpacat agecat male female
! white black hispanic asian other mixed momLTHS momHS momsocol momassoc
! mombach momgrad momprof
! momDKed dadLTHS dadHS dadsocol dadassoc dadbach dadgrad dadprof dadDKed
! highestEd parLTHS parHS parsocol parassoc parbach pargrad parprof parDKed
! paredmis fourpub fourpriv;

!BY: define latent variables

! the first factor loading is fixed at 1.0 by default
!: free a parameter
!estimate factor loading of Great, Cheerful, and Happy
[email protected];
!@: fix a parameter at a specific value

104
 !fix the variance of Positive at 1.0

OUTPUT:
modindices
TECH1
!request parameter specifications and starting values
STANDARDIZED;
!request two standardized coefficient

Mplus Code Indirect Effects

TITLE:
Initial CFA
DATA:
FILE IS C:\Users\Christina Glenn\Dropbox\Dissertation\Data\NSFW2014Mplus.csv;

VARIABLE:
NAMES ARE
studentid instcode InstType race yearsenrolled gpa_value
age
spendmor want budget spending bills savings checks
accting timely beyond
pcomfort pmoneymg

105
pmodel childall teenall HSwork save bank invest
HSfin Collfin impsoc fined expsoc monexp
inc DKinc PNAinc pinc
pDKinc pincPNA
confident mmwell FSE fin1 fin2 fin3 fin4 fin5
finknow
gpacat agecat male female
white black hispanic asian other mixed
parEd parDKed fourpub fourpriv twopub first_year;
!names of variables in the data set
USEVARIABLES = gpa_value age
accting timely beyond
impsoc fined expsoc monexp inc
confident mmwell
fin1 fin2 fin3 fin4 female
black hispanic asian other mixed
parEd fourpriv twopub first_year ;

CATEGORICAL ARE fin1 fin2 fin3 fin4;

106
MODEL:
Cfinsoc ON female
black
asian
hispanic
mixed
other
inc
pared
fourpriv
twopub
age
gpa_value
first_year;

CFSE BY confident *(L1)

mmwell (L1);

Cfinsoc BY
impsoc*

107
 expsoc
monexp
fined;

Cfinbehav BY accting*
timely
beyond;

Cfinknow BY fin1*
fin2
fin3
fin4;

CFSE@1;
Cfinsoc@1;
Cfinbehav@1;
Cfinknow@1;

[CFSE@0];
[Cfinsoc@0];

108
 [Cfinbehav@0];
[Cfinknow@0];

Cfinbehav ON Cfinknow
CFSE
Cfinsoc;

CFSE ON Cfinknow
CFinsoc;

Cfinknow ON Cfinsoc;

MODEL INDIRECT:
Cfinbehav IND Cfinknow Cfinsoc;
Cfinbehav IND CFSE Cfinsoc;

! Construc BY race* yearsenrolled

! spendmor want budget spending bills savings checks finbehav

109
! pcomfort pmoneymg pmodel childall teenall
! HSwork save bank invest HSfin Collfin expsoc impsoc finsoc noinc
! inc2500 inc5000 inc7500 inc10k inc15k inc20k inc25k inc30k incGT30k DKinc PNAinc
! pincLT15k pinc30k pinc40k pinc60k pinc80k pinc100k pinc150k
! pinc200k pincG200 pDKinc pincPNA confident mmwell
! FSE finknow fin1 fin2 fin3 fin4 fin5
! gpacat agecat male female
! white black hispanic asian other mixed momLTHS momHS momsocol momassoc
! mombach momgrad momprof
! momDKed dadLTHS dadHS dadsocol dadassoc dadbach dadgrad dadprof dadDKed
! highestEd parLTHS parHS parsocol parassoc parbach pargrad parprof parDKed
! paredmis fourpub fourpriv;

!BY: define latent variables

! the first factor loading is fixed at 1.0 by default
!: free a parameter
!estimate factor loading of Great, Cheerful, and Happy
[email protected];
!@: fix a parameter at a specific value
!fix the variance of Positive at 1.0

110
OUTPUT:
modindices
TECH1
!request parameter specifications and starting values
STANDARDIZED;
!request two standardized coefficient

111