A Conceptual Framework of Financial Advice-Seeking and Short- and Long-Term Financial Behaviors: An Age Comparison
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ORIGINAL PAPER
A Conceptual Framework of Financial Advice‑Seeking and Short‑ and Long‑Term Financial Behaviors: An Age Comparison Lu Fan1 Accepted: 8 October 2020 © Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract The purpose of this study is to construct a conceptual framework and examine the relationships between perceived financial capability, financial stressors, financial advice-seeking behavior, and short-and long-term financial behaviors. Furthermore, this study examines whether there exists an age difference in these relationships. Using the 2012 National Financial Capability Study, this paper suggests that perceived financial capability is positively associated with advice-seeking behavior, and short- and long-term desired financial behaviors. Further, financial stressors are negatively associated with financial behaviors, but positively associated with financial advice-seeking behavior. Seeking professional advice is positively associated with short- and long-term financial behavior and mediates the relationship between financial stressors and financial behaviors. A positive association is observed between short-term and long-term financial practice. Moreover, socio-demographic characteristics are also examined, including observations about age differences in the proposed relationships. Implications for consumers, financial practitioners, and policymakers are also discussed. Keywords Perceived financial capability · Financial stressors · Financial advice-seeking · Financial behavior · Coping behavior · Age effect
Introduction Financial behavior is considered one of the key determinants of overall financial well-being. Financial behavior can be affected by many factors, such as financial knowledge, financial ability and skills, financial self-efficacy, psychological factors, decision context, and overall social/economic environment (CFPB 2015). According to the Consumer Financial Protection Bureau (CFPB), financial behaviors can be related to routine money management (such as using credit cards prudently, managing debt, and being frugal) and can also be related to goal-setting and long-term planning (such as budgeting, building financial plans, saving, and investing). A recent Federal Research (2019) report on U.S. households’ economic well-being showed that, in 2018, although the majority of households reported an above average level of financial security and well-being, financial fragility was still persistent across the country, especially for the minoritized * Lu Fan [email protected] 1
Department of Personal Financial Planning, University of Missouri, 239 Stanley Hall, Columbia, MO 65211, USA
and less educated population. This report also indicated that around 40% of U.S. adults reported not being able to cover the unexpected expenses, or struggled to cover monthly bills, while simultaneously dealing with such expenses. Moreover, around 27% of young adults aged 18–29 received financial support, most likely from parents, other family members, and friends, in order
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