Talk is cheap: Parent financial socialization and emerging adult financial well‐being

• Published date: 01 July 2023
• Author: Ashley B. LeBaron‐Black,Melissa A. Curran,E. Jeffrey Hill,Russell B. Toomey,Katherine E. Speirs,Margaret E. Freeh
• Date: 01 July 2023
• DOI: http://doi.org/10.1111/fare.12751

RESEARCH

Talk is cheap: Parent financial socialization and

emerging adult financial well-being

Ashley B. LeBaron-Black

1

|Melissa A. Curran

2

|

E. Jeffrey Hill

1

|Russell B. Toomey

2

|Katherine E. Speirs

2

|

Margaret E. Freeh

2

1

School of Family Life, Brigham Young

University, Provo, UT

2

Family Studies and Human Development,

University of Arizona, Tucson, AZ

Correspondence Ashley B. LeBaron-Black,

2065 JFSB, Provo, UT 84602, USA.

Email: lebaronashley@gmail.com

Funding information

This project was funded by a grant from the

National Endowment for Financial

Education (NEFE).

Abstract

Objective: We test how three main methods of family

financial socialization (retrospectively reported) are

uniquely associated with three indicators of financial well-

being, and whether financial self-efficacy and financial

management behaviors mediate these associations.

Background: Although the link between family financial

socialization and financial well-being in emerging adult-

hood is well established, no previous study has differenti-

ated between the three main socialization methods nor

tested their unique pathways. We expand on family finan-

cial socialization theory to begin addressing this gap.

Method: We utilize reliable and valid measures of parent

financial socializationand data from4,182 U.S. emerging

adults.

Results: Structural equation modeling revealed that

(a) parent financial modeling was directly associated with

financial behaviors and financial satisfaction and indi-

rectly associated with all three financial outcomes through

financial behaviors, (b) experiential learning was directly

associated with financial self-efficacy and indirectly associ-

ated with all three financial outcomes through financial

self-efficacy, and (c) parent–child financial discussion had

zero direct or indirect associations.

Conclusion: To prepare children and adolescents for future

financial well-being, parents should focus on modeling

financial behaviors and providing experiential learning

opportunities rather than lecturing.

Implications: To improve the financial well-being of

emerging adults, educators should promote parent finan-

cial modeling and experiential learning.

Received: 23 September 2021Revised: 20 May 2022Accepted: 27 May 2022

DOI: 10.1111/fare.12751

© 2022 National Council on Family Relations.

Family Relations. 2023;72:1201–1219. wileyonlinelibrary.com/journal/fare 1201

KEYWORDS

emerging adulthood, family financial socialization theory, financial

behaviors, financial self-efficacy, financial well-being, parent financial

socialization

The purpose of this paper is to understand in a more nuanced way the links between parent

financial socialization during childhood and adolescence and financial well-being during emerg-

ing adulthood. We test how emerging adults’retrospective perceptions of three methods of fam-

ily financial socialization (i.e., parent financial modeling, parent–child financial discussion, and

experiential learning of finances) experienced during childhood and adolescence (i.e., until age

18) are uniquely associated with outcomes related to financial well-being (i.e., financial distress,

financial satisfaction, and financial independence), and whether financial self-efficacy and

financial management behaviors mediate these associations. We use theoretically-grounded,

psychometrically reliable and valid measures of parent financial socialization (LeBaron-Black

et al., 2021) and reports from 4,182 U.S. emerging adults (i.e., age 18–30 years).

Although parent–child financial discussion and parent financial modeling have been the pri-

mary foci in family financial socialization theory and research (LeBaron & Kelley, 2021;

Serido & Deenanath, 2016), the accuracy of the informal designation they have received as the

prime methods for optimizing financial outcomes has never been established. Indeed, no

research has yet tested how other methods of financial socialization (e.g., experiential learning;

LeBaron et al., 2019) compare against discussion and modeling in their association with out-

comes. To do so, researchers must test associations with these diverse methods of financial

socialization together in one model, which is the purpose of the current study.

The resulting information may be critical in identifying which methods of socialization are

most important for financial and family life educators to teach parents in order to optimize chil-

dren’s future well-being (LeBaron & Kelley, 2021). Further, testing these associations with

diverse financial outcomes (e.g., financial self-efficacy, financial behaviors, financial distress,

financial satisfaction, financial independence) will provide detailed information regarding which

socialization methods are linked with each respective outcome—information that will be rele-

vant as educators design curricula targeted at specific outcomes (Totenhagen et al., 2015). In

sum, to continue to progress and be useful, the field of family financial socialization needs to

more accurately understand how financial socialization functions within families and is linked

with outcomes. In the current study, we seek to contribute to this need.

LITERATURE REVIEW

Family financial socialization theory

Although financial socialization is received from various sources and continues after adoles-

cence (Serido et al., 2020), the financial socialization that individuals receive from their parents

during childhood and adolescence is strongly associated with the development of financial

knowledge and behaviors and ultimately future financial well-being (Allsop et al., 2021;

Damian et al., 2020; Jorgensen et al., 2017). In their influential paper, Gudmunson and Danes

(2011) presented a conceptual model for how family socialization processes predict financial

socialization outcomes. According to their model, personal and family characteristics predict

family interaction and relationships and purposive financial socialization. Family interaction

and relationships also predict purposive financial socialization, both of which predict financial

attitudes, knowledge, and capabilities. Financial attitudes, knowledge, and capabilities subse-

quently predict financial behavior, both of which predict financial well-being. In this model,

1202 FAMILY RELATIONS