Financial well-being among college students: The role of financial literacy and financial coping behavior

Abstract

College students are in a transition phase from financial dependence to financial independence. Current phenomena, however, show that college students have low levels of financial literacy and tend to be impulsive buyers. The first objective of this present study was to examine all possible financial socialization agents that have the potential to affect financial literacy. The link between financial literacy and financial well-being has obtained very limited attention. Lower financial well-being/high financial distress affects health and is related to absenteeism and loss of productivity which means that students miss classes and have poor academic performance. However, the mechanism to improve financial well-being in adolescents is not yet clear, thus providing an opportunity for researchers to identify appropriate strategies to improve financial well-being in adolescents. The second objective of this present study was to understand the effects of financial literacy and well-being through coping behavior. This study included the responses of 206 students from public and private universities who joined a financial seminar held by the Financial Services Authority. Hypothesis testing used a structural equation modeling with Partial Least Squares (PLS). Based on the results of the factor analysis test, financial socialization agents affecting financial literacy were parents and family, teachers, financial professionals and formal education. The results support the hypothesis that financial literacy is positively associated with financial well-being and that financial literacy significantly influences financial well-being directly as well as through coping behaviors. Implications and suggestions for future research are proposed.