How Financial Socialization Messages Relate to Financial Management, Optimism and Stress: Variations by Race
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ORIGINAL PAPER
How Financial Socialization Messages Relate to Financial Management, Optimism and Stress: Variations by Race Kenneth White1 · Kimberly Watkins2 · Megan McCoy3 · Bertranna Muruthi4 · Jamie Lynn Byram5
© Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract This study explored how explicit family financial socialization as reflected in three types of parental financial messages (messaging about saving, banking, and investing) relate to three financial outcomes (financial management, financial stress, and financial optimism) and how these relationships varied by race. We used cross-sectional data from 14,662 respondents from the 2014 National Student Financial Wellness Survey (NSFWS), a nationally representative dataset inclusive of students from 52 colleges and universities across the United States. Results from this study offer an understanding of how specific financial messages regarding saving, banking, and investing shape college students’ financial management behaviors and attitudes and how race/ethnicity is associated with the specific types of messaging in one’s family of origin. Specifically, results demonstrated that African American students received significantly fewer saving and banking messages and Hispanic students received fewer investing messages compared to other racial/ethnic groups. Across all racial categories, those who received the investing message reported better financial management, higher financial optimism, and experienced less financial stress.
This is one of several papers published together in Journal of Family and Economic Issues on the “Special Issue on Couples, Families, and Finances”. * Kenneth White [email protected] Kimberly Watkins [email protected] Megan McCoy [email protected] Bertranna Muruthi [email protected] Jamie Lynn Byram [email protected] 1
Department of Financial Planning, Housing, and Consumer Economics, University of Georgia, Athens, GA, USA
2
Department of Consumer Sciences, University of Alabama, Tuscaloosa, AL, USA
3
Institute of Personal Financial Planning, College of Health and Human Sciences, Kansas State University, Manhattan, KS, USA
4
Counseling Psychology and Human Services, University of Oregon, Eugene, OR, USA
5
Department of Finance, Insurance, and Business Law, Pamplin College of Business, Virginia Tech, Blacksburg, VA, USA
Financial socialization has been defined as “the process of acquiring and developing values, attitudes, standards, norms, knowledge, and behaviors that contribute to financial viability and individual well-being” (Danes 1994 p. 128). Both intentional and unintentional education by parents have a lifelong influence on their children’s financial attitudes (Gudmunson and Danes 2011), and financial management (Hudson et al. 2017). In addition, Danes and colleagues (2008) wrote that race/ethnicity has created cultural differences that influence the practices of financial socialization. Despite the importance of exploring the impact of culture on financial socialization,
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