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The purpose of this study is to examine the influence parents have in reducing the financial strain their children experience as early adults to the extent that financial prudence was modeled in the commonplace routines of home and family life during the child's growing-up years. Using data from students about to graduate from two large U.S. universities (from a southeastern and a western state), financial prudence was examined for its direct effect on the reduction of financial strain and also for two possible indirect effects through debt avoidance and credit card misuse. Financial prudence was found to decrease financial strain directly and also indirectly through debt avoidance and credit card misuse behaviors
Keywords: Children and money, Credit, Economic stress, family finance
Introduction
The purpose of this study is to examine the influence parents have on the financial wellbeing of the next generation. Children are likely to observe and absorb attitudes and behaviors from the prosaic or commonplace financial processes embedded in home and family life such as: spending or saving, making payments late or timely, and wise use or misuse of credit. It is therefore hypothesized that financial practices and behaviors modeled in the family of origin would affect financial outcomes such as the degree of financial strain experienced by children as they reach adulthood.
Widespread sentiments suggest that the lifestyle of early adults during the last century has changed from a focus on production to an obsession with consumption (Cauffman & Steinberg, 1995). Roberts and Jones (2001) warn that the consumer culture is growing at an increasing rate. Consistent with Belk (1988), they defined the consumer culture as "a culture in which the majority of consumers avidly desire, pursue, consume, and display goods and services that are valued for nonutilitarian reasons, such as status, envy provocation, and pleasure seeking (Roberts et al., 2001, p.214)." Droge and Mackoy (1995) reported that the desire to become a member of the consumer culture appears to be nearly universal. As such, Roberts and Sepulveda (1999) assert that compulsive spending is evolving into one of the most powerful forces shaping contemporary society. Credit is an important catalyst in financing a
consumer lifestyle, and this type of lifestyle is being accommodated by a dramatic attitude change from abhorrence for...