Financial well-being – A Generation Z perspective using a Structural Equation Modeling approach

Nisha Shankar,Rajashree Kamath,Smitha Vinod

doi:10.21511/imfi.19(1).2022.03

Abstract

The current pandemic situation in the global economy has urged the need to revolutionize the financial services industry with a keen eye on consumers’ financial needs for sound financial decisions, which is necessary for financial well-being. The purpose of the study is to assess the financial well-being of Indian Gen Z students in relation to financial literacy, financial fragility, financial behavior, and financial technology. In addition, the study also tries to determine how Gen Z students’ financial well-being is influenced by other factors such as gender, age, parental education, employment status, and monthly income in India. The study uses the scientific data analysis approach, Partial Least Squares-SEM model to estimate, predict, and assess the hypotheses. A sample of 271 University students from India was surveyed using a self-administered structured questionnaire. Questions were incorporated to understand the effect of financial literacy, technology, fragility, behavior, demographic and parental characteristics on financial well-being. The results indicate that financial behavior is positively related to financial well-being, while financial fragility is negatively associated. However, financial literacy and financial technology do not significantly affect financial well-being. The results also show that financial well-being is significantly influenced by gender, parental education, employment status, and monthly income change. Understanding Indian Gen Z student financial well-being will expand the students’ understanding of the importance of financial literacy for well-planned financial behavior and informed decisions, hence high levels of financial well-being. Government and financial institutions can more effectively identify gaps and deficiencies in student financial well-being.

Highlights

Economic conditions are fast-changing, and external shocks occur more often, resulting in increased growing financial instability (Orthner et al, 2004)
The results show that financial well-being is significantly influenced by gender, parental education, employment status, and monthly income change
The main purpose of this study was to find out the factors that are important for determining the financial well-being among Gen Z students

Summary

Introduction

Economic conditions are fast-changing, and external shocks occur more often, resulting in increased growing financial instability (Orthner et al, 2004). The context of the pandemic creates uncertainty and stress It heightens the need for sound financial decisions, which is necessary for financial well-being that would lead to a safety net and financial protection for individuals. During their college years, students began intense independent monetary planning and management without the supervision of parents (Gutter et al, 2010). Students’ financial well-being is crucial since it has a substantial effect on their financial well-being after graduation and overall life satisfaction (Shim et al, 2009). Financial well-being, often known as financial wellness, is a critical issue that affects individuals throughout their different phases of life (Parcia & Estimo, 2017)

Objectives

Results

Conclusion