Sustainable Debt Behaviour and Well-Being of Young Adults: The Role of Parental Financial Socialisation Process

Andrzej Cwynar,Moises Betancort,Wiktor Cwynar,Monika Baryła-Matejczuk

doi:10.3390/su11247210

Andrzej Cwynar, Moises Betancort + Show 2 more

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https://doi.org/10.3390/su11247210

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Abstract

Literature shows that parental financial socialisation plays an important role in attaining financial literacy as well as in shaping sustainable financial behaviours and that both translate into increased well-being indicators and financial security on micro- and macroeconomic levels. However, debt literacy and debt behaviour seem to be unique. Very little is known about the childhood financial socialisation process through which adults’ sustainable debt behaviour is shaped and how debt behaviour may affect well-being. This study tests a hierarchical model of childhood financial socialisation consisting of five levels: the anticipatory parental socialisation, and later life financial learning outcomes (particularly, debt literacy levels), financial attitudes, debt behaviour, and well-being. Using data collected from a purposive sample of young adult Poles (N = 600) during the period from 10 to 13 November 2018 and employing structural equation modelling, we have found evidence confirming the hierarchical relationship of literacy–attitude–behaviour. Our data do not support, however, either the hypothesised positive relationship between parental socialisation and objectively measured debt literacy or the assumed relationships between debt behaviour and well-being indicators. We posit that country-specific factors related to generational differences entailed by system-wide transition and the specificity of debt behaviour, respectively, are key for explaining these empirical deviations from the assumed conceptual framework. Finally, we found no significant differences between the models estimated separately for maternally conditioned and paternally conditioned respondents.

Highlights

Introduction and BackgroundIn ‘David Copperfield’, Wilkins Micawber, one of the most recognised debtors, equated living without debts with happiness
The goal of this article is to check whether sustainable debt behaviour of young adults is modelled by parental socialisation processes in childhood and whether their well-being, both financial and overall, relates to this debt behaviour
We found that financial learning outcomes predict in large part attitudinal indicators, and, secondly, that these indicators predict debt behaviours

Summary

Introduction

Introduction and BackgroundIn ‘David Copperfield’, Wilkins Micawber, one of the most recognised debtors, equated living without debts with happiness. After the ‘deleveraging’ period, which followed the latest global (sub-prime mortgage) crisis, household sectors worldwide show a rise in debt levels again, including the level of debt to gross domestic product (see, e.g., [1,2,3]). From the economic perspective, borrowing mistakes may lead to excessive charges related to debt, exaggerated debt loads, payback problems, and, delinquency and personal bankruptcy [4]. Debt creates opportunities for abuses leading to scandals and causes social tensions Debt— excessive debt—has an adverse effect on health, both mental and physical [9,10,11,12,13], and eventually on financial well-being and overall life satisfaction [14,15,16]

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