The Influence of Parental Financial Socialisation and Financial Literacy on University Student's Financial Behaviour

Abstract

Children away from their parents while pursuing higher education at universities face new challenges in managing their finances and preparing to be financially independent. This study analysed and compared the effects of parental financial socialisation and financial literacy on Indonesian and Malaysian university students' financial behaviour. In total, 204 students from the Faculty of Human Ecology at IPB University and Universiti Putra Malaysia participated in the study. Data were gathered using a self-reporting questionnaire using the convenience sampling method. The independent sample t-test and multiple regression analysis were performed on the data. The results of the t-test showed that Malaysian students scored significantly higher in parental financial socialisation and financial behaviour but lower in financial literacy than Indonesian students. Moreover, the regression analyses revealed that parental financial socialisation and students' financial literacy were highly significant in influencing the sampled students' financial behaviour. However, by splitting the sample based on the student's country of origin, this study demonstrated that Malaysian students' financial behaviour was only significantly influenced by parental financial socialisation, while Indonesian students' financial behaviour was only significantly determined by financial literacy. These findings implied that Malaysian parents were more involved in shaping their children's financial behaviour or decisions. In contrast, Indonesian students were more independent from their parents, and their financial literacy level predominantly influenced their financial behaviour.