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The current study investigates the association between childhood financial socialization and financial practices and asset choices of young adults, using a nationally representative dataset. Results revealed that childhood financial socialization experiences were positively associated with the beneficial financial practices and financial asset ownership of respondents in young adulthood. Financial outcomes were found to vary by types of parental socialization. Respondents who owned bank accounts and had their spending monitored by parents in childhood were more likely to own financial assets and had more positive attitudes toward personal finance as young adults.
Key Words: asset ownership, financial competence, parental financial socialization, transitioning adulthood
Introduction
Researchers, educators and policymakers are working on strategies to improve the financial literacy of young Americans who often enter adulthood with a limited knowledge of credit, insurance, and other financial products, and have little experience managing their personal finances (Danes & Hira, 1987; Lusardi, Mitchell, & Curto, 2010). The effect of factors, such as employment, financial education, and socioeconomic status, on the financial practices of transitioning adults, have been extensively studied (Asinof & Chaker, 2002; Baek & Hong, 2004; Baum & O'Malley, 2003; Joo, Grable, & Bagwell, 2001; Lyons, 2004; Shenk, 1997), and socialization theories have also been applied to financial socialization. However, limited information is available about the process of financial socialization. A few studies determined different effects of socialization domains on the financial attitudes and behaviors of individuals (Jorgensen & Salva, 2010; Kim, LaTaillade, & Kim, 2011). Financial socialization is how these young adults develop their financial values, attitudes and behaviors that foster their financial independence and subsequently facilitate their successful transition into adulthood. Several previous studies have relied on surveys of college students and have focused on the career and educational consequences of financial socialization of young adults (Asinof & Chaker, 2002; Jorgensen & Salva, 2010; Lyons, 2004; Shenk, 1997). This paper extends the literature by using a nationally representative dataset, collected over two years, of young adults transitioning to adulthood to empirically examine the various factors leading to financial socialization and its related financial outcomes for young adults. The current study includes the general population of young adults between 18 and 21 who may or may not be attending college. In addition, previous literature has primarily focused...