Prudent financial management practices among Malaysian youth: the moderating role of financial education on the relationship between financial attitude, parental financial socialisation and financial literacy / Mohd Zamri Abu Bakar

Studies have indicated that the key contributors to heavy financial debt and various
financial problems among youth are the global economic situation with uncertainty of
economic growth, wide access to financial products and services, and sophistication of
the financial environment. Additionally, the market regards youth as a primary lucrative
market and this has led youth to fall into poor financial habits, bad financial behaviours
and widely exposed to bankruptcy. The inability of youth to become financially
sustainable in manoeuvring their expenditure and savings further cemented the notion
that youth are lacking in financial knowledge and financial skills which lead to
indecisive financial actions and negative financial practices. The study aims to
investigate the role of financial education (FE) as a moderator to financial attitudes
(FA), parental financial socialisation (PFS), and financial literacy (FL) to ensure the
success of prudent financial management practices (PFMP) among Malaysian youth.
The study was designed quantitatively and employed self-administered questionnaires
which were adopted from previous studies and distributed to 480 youths in Malaysia. A
pilot study was conducted and Cronbach alpha result was between 0.703 to 0.910. The
data were analysed using Partial Least Squares Structural Equation Modelling (PLSSEM)
to address the research objectives, research questions and hypotheses of the
study. The results showed FA, PFS and FL have significant and positive relationship
with PFMP. However, for moderating interaction of FE, results showed that FE does
not significantly moderate the relationship between FA, PFS and FL with PFMP.
Although several studies found that FE plays important roles for conveying financial
knowledge, improved financial skills and nurturing financial behaviour, the results of
this study were found to go against the statements. The results further highlighted
serious concerns on the effectiveness of FE towards improving youth capability in
managing their financial affairs prudently. This proved that mandated FE prior
graduation has less effect and do not lead to behaviour changes among Malaysian youth.
It shows the challenges faced by country stake holders to strengthen FE, enhance the
effectives and encompass right FE element to ensure current youth are able to apply
what they learned in the classroom into their real life. Nevertheless, the findings may
help to understand how to improve the financial practices of Malaysian youth. Finally,
prudent financial management practices among youth are the results of shared
accountability from various stakeholders such as parents, policymakers, academicians,
economists and financial institutions.