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Although researchers have suggested that financial socialization is a lifelong process that should be studied using a life course approach, they have offered inadequate theories and research frameworks for studying financial socialization over time. This article offers the life course paradigm (LCP) as a multitheoretical conceptual research framework within which socialization research in multiple disciplines has been integrated in recent decades. It derives a financial socialization model from the general conceptual LCP and develops a set of propositions to illustrate the life course approach as a blueprint for future research.
Previous investigations and literature reviews underscore three important research directions needed to advance knowledge in the field of personal finance. First, studies on financial behavior should use an interdisciplinary or multidisciplinary approach (e.g., Hershey et al., 2010). Second, research is needed on mechanisms that link demographic variables to financial behaviors (Gudmunson & Danes, 2011). Third, these investigations conclude that future studies of personal finance should use a life course approach because financial behaviors develop and change during the person’s entire lifespan (e.g., Hershey & Henkens, 2014; Prakitsuwan et al., 2022).
In spite of these views and suggestions for future research on personal finance, relatively little progress has been made in advancing research along these conceptual directions. Models of financial behavior have common themes that highlight the assumptions of a recently developed multidisciplinary approach to research, known as “life course paradigm” (LCP; Moschis, 2019). For example, Hershey and Henkens (2014) recognize the LCP as an appropriate and promising framework for studying the changes that take place as a result of the retirement transition, including changes in financial resources that could affect a person’s well-being. Similarly, Gudmunson and Danes (2011) propose a conceptual model of financial socialization that is embedded in the LCP. These investigators emphasize the processes that link sociodemographic characteristics to financial outcomes and events that change family contexts and processes over a person’s life, and they consider financial socialization as a lifelong process, “especially in times of change” (Gudmunson & Danes, 2011, p. 645), with changing sociodemographic contexts in the form of life events throughout the life course intimately linked to financial matters. They conclude that “although research on children’s socialization is concentrated on children’s socialization, financial socialization occurs throughout life” (emphasis theirs; p. 662) because socialization evolves from changing adult roles and resource levels. With respect to the role and influence of family, these authors note that “the continued effects of family socialization occur over the life course” (p. 663). More recent research also suggests that financial socialization is a lifelong process, with different socialization agents likely affecting adults at different stages in life (Gibson et al., 2022; Kim et al., 2022; LeBaron-Black et al., 2023; Prakitsuwan et al., 2022).
However, studies of financial socialization continue to focus almost exclusively on young persons, emphasizing the effects of family as a socialization agent (e.g., LeBaron & Kelley, 2021). Personal finance researchers are yet to benefit from recent theoretical and methodological developments in behavioral and social sciences that have advanced the LCP as the leading research framework (e.g., Colby, 1998; Elder et al., 2003; George, 2003; Mayer & Tuma, 1990) that is considered “one of the most important achievements of social science in the second half of the 20th century” (Colby, 1998, p. x). Gudmunson and Danes’s (2011) review reveals that “the presence of life course investigations of personal finance are absent in finance literature” (p. 662). In addition, although their proposed model of family financial socialization is very useful, it is confined to family influences, and it has not benefited from the tenets and paradigmatic principles of the LCP that have helped researchers integrate family socialization and life cycle models into, or replace them with, this research framework (Elder, 1994; Moschis, 2021).
To summarize, socialization research in several disciplines has been integrated within, or replaced by, the LCP. Consequently, models of family financial socialization (e.g., Gudmunson and Danes 2011) and consumer finance that uses models such as life cycle (e.g., Goyal & Kumar, 2023) can benefit from the integration into the LCP (Moschis, 2019). In addition, although researchers in the field of personal finance have recognized the importance of studying financial behaviors using the LCP, there is a lack of studies that attempt to incorporate financial behavior and financial socialization into the life course conceptual framework.
The present article attempts to fill these gaps in the field of personal finance by showing how researchers can improve their efforts to study financial socialization by employing the life course conceptual research framework. To help the reader understand the multitheoretical LCP, it first briefly presents a general conceptual life course model that is based on elements and assumptions of the LCP and has been used in dozens of consumer studies in recent years. Next, the article develops a conceptual model of financial socialization that is embedded in the general conceptual life course model, showing how researchers could benefit by studying financial socialization using the LCP as an overarching multitheoretical framework. Lastly, the article suggests directions for further research using the life course approach as a conceptual framework.
Financial Socialization in Life Course Context
A Conceptual Life Course Model
The general life course conceptual model, which is shown in Figure 1, attempts to conceptualize the main components of the LCP and serves as a blueprint for deriving the financial socialization model used in the proposed empirical studies. The variables that are frequently included in life course studies in various disciplines are grouped into two broad categories. The first category forms the core of the LCP, consisting of three main types of variables. Events experienced by individuals, both expected or anticipated (e.g., employment) and unexpected (e.g., accident or chronic disease), at a specific stage or time (T1) in their lives are the first type of variables. Three interdependent adaptation processes that are triggered by life events or changes represent the second type of variables in the LCP. They refer to the processes by which people develop and change their mental and behavioral patterns in response to biological, psychosocial, and environmental demands in specific contexts and times during their lives. These adaptations are in the form of specific socialization processes (e.g., rearing practices), stress processes (both chronic and acute stress) and various types of coping responses, and changes (development or growth and decline) in human capital in the form of mastery and knowledge. Outcomes in the form of events or changes in thoughts and actions that happen at later points in time (T2) represent the third type of variables. Events (T1) and outcomes (T2) may be in the form of simple choices or changes in mental states (e.g., self-concept) and behaviors, both abrupt and gradual, and they may also consist of patterns of thoughts and actions (e.g., materialism and compulsive buying). Many such life events and associated adaptation processes are mutually dependent because the occurrence of one event or process increases or decreases the probability of another happening (cf. Moschis, 2019).
The second category of elements included in the LCP consists of three types of contextual factors. These contextual factors collectively define the various circumstances in which people are embedded and may include (a) the times at which they experience specific events (usually defined by the age at which one experiences them) and time (duration or length of experiences, measured in various units of time) (Ts); (b) human agency-related factors in the form of attributes and earlier-in-life experiences (at T−1), including previously experienced events/changes, sociocultural contexts, choices, and states; and (c) structural factors defined at different levels of aggregation and stability relevant to the T1–T2 time frame, such as family structure, socioeconomic status (SES), and economic conditions.
According to the main premise of the LCP, development, changes, and stability in patterns of consumer behaviors do not occur in a vacuum or randomly but are systematically connected to changing life conditions or choices (viewed as events). These life events, which are in the form of expected and unexpected changes in biological, psychosocial, and environmental states, create the need for adaptation to new life conditions and affect one’s thoughts and actions. Adaptation is needed because changes are stressful requiring coping and often socialization to new roles as well as the creation of human capital (Moschis, 2019). In addition, adaptation to new life conditions tends to affect one’s mental states and actions, while the nonoccurrence of such life events tends to promote stability in one’s thoughts and behaviors (Elder & Kirkpatrick, 2002). The way people experience, interpret, and respond to these life events or changes in life at a given point in time (T1) and adapt to them over time (T1–T2) depends on their contextual circumstances, that is, timing and duration of events, their individual characteristics, and earlier-in-life circumstances (at T−1) and the structural contexts in which they are situated during specific time periods (i.e., during T1–T2). People are also assumed to shape their life courses by making choices (e.g., employment and marriage) and responding to events that they experience (at T1) according to individual constraints (e.g., biological and financial) and structural factors (e.g., market conditions). They adapt to changes on a continuing basis and develop throughout their lives, and they interact with changing environments to produce behavioral outcomes and social changes.
Life Course Perspectives on Financial Socialization
The life course conceptual model has been employed in dozens of recent studies to address a wide variety of research questions in business and social sciences (e.g., Mathur, 2019, 2020; Moschis, 2019, 2021; Prakitsuwan et al., 2022; Suttharattanagul et al., 2022). In applying life course notions to the field of financial behavior in general and financial socialization in particular, the assumptions relevant to the study of a person’s adaptation to life events over the course of her or his life could be applied to the study of financial socialization to new roles and circumstances, such as becoming a homeowner and an investor. Consumers adapt to different states much in the same way that they adapt to other changing life conditions. Development, continuity, and change in patterns of financial thoughts and actions thus likely result from responses and adaptations to changing life conditions (life events and roles) over the course of that consumer’s life.
In order to show how researchers can use the life course approach to study financial socialization, we select variables from each category of the general conceptual model (Figure 1) and develop propositions based on previous theory and research. Because socialization research has been recently integrated within the LCP, we show how researchers can study financial socialization within the general conceptual life course framework that represents LCP’s elements, tenets, and what is known as “paradigmatic principles,” and we do so to show that the effects of socialization are not only direct, as most socialization studies have traditionally assumed (e.g., Gudmunson & Danes, 2011; Moschis, 1987), but also indirect by affecting other adaptation processes. Our propositions focus on a limited number of financial behaviors of interest to researchers as well as on explanatory factors derived from theoretical perspectives of the LCP and supportive research from the field of personal finance.
Within the broad landscape of the general conceptual life course model (Figure 1), we confine our main focus on socialization processes, both their antecedents and direct as well as indirect consequences on select financial orientations that have implications for financial well-being because they affect one’s financial behaviors. In addition, because socialization theory and research suggest that financial-related knowledge and habits are acquired throughout life (Gudmunson & Danes, 2011; Hershey & Henkens, 2014; Hershey et al., 2010; Serido et al., 2015), we consider the individual’s perceived influence of three types of socialization agents on the person’s financial behavior: informal (e.g., family and peers), formal (e.g., school), and commercial (e.g., financial advisors, media, and internet), expecting each of these types of agents to affect the person’s financial behavior.
Briefly, we posit that a person’s experience of life events that signify transitions into new roles triggers socialization into these roles that entail the development and changes of the person’s financial knowledge, attitudes, and skills, not only directly but also indirectly by affecting the development of financial knowledge and behaviors that serve as coping responses to chronic or role-related stress, and these processes collectively promote the development of financial behaviors that have implications for financial well-being.
Financial behaviors have been defined broadly to include both desirable and undesirable cognitive and behavioral orientations with respect to the handling of finances. The onset of or change in these behaviors can be viewed as “events” in life course research (e.g., Joo & Grable, 2000). Some behaviors are viewed as desirable from a society’s standpoint and are often labeled “responsible financial behaviors” because, in part, they have a positive effect on the person’s well-being (e.g., Serido et al., 2015). They include activities such as budgeting and spending within a budget, paying bills on time, saving for emergencies, and other financial goals such as investing for retirement. Although it is important to identify behaviors that lead to financial health, it is equally important to identify behaviors that can sabotage one’s financial well-being. Such undesirable orientations refer to cognitive and behavioral activities that have been found to have negative effects on the person’s well-being, such as compulsive buying and materialistic values (e.g., Hershey & Mowen, 2000), although they may be viewed as desirable from the person’s point of view. For example, Klontz et al. (2012) identify a wide variety of disordered money behaviors that may impede progress to financial solvency and have adverse effects on the person’s well-being. In line with previous research, we use two variables as outcomes of financial socialization: (a) financial competence, which refers to the person’s propensity to engage in effectual financial behaviors and avoid undesirable financial behaviors, also known as “disordered” (Klontz et al., 2012) and “irrational” (Ntalianis & Wise, 2010), and (b) savings orientation in the form of actions and lifestyles (Netemeyer et al., 2018).
Propositions
The Effects of Life Events
As every event or change is considered stressful in stress research (Moschis, 2007b), including events that signify role transitions, both experienced and anticipated, we consider events that are likely to affect financial behavior either because they define transitions (socialization) into or out of roles or because they are stressful and demand coping responses or require a person to perform activities he or she has had little experience performing, forcing the development of new skills, that is, human capital (Elder et al., 1996). Although it is likely that individuals may react to the same event differently, the mere change (positive or negative) is assumed to be the cause of subsequent behavioral and attitudinal changes in life course research (e.g., Elder et al., 1996; Moschis, 2019). Thus, for example, the effects of a life event such as divorce can be considered as a transition into the role of a divorcee, which entails the development of a new identity and change in patterns of consumption (role enactment); a stressful experience that leads to the initiation or intensification of certain consumption activities (i.e., coping responses); and a source of intellectual growth or human capital (e.g., learning new consumer skills) that emerges from the crises and demands of this new role, such as learning to managing one’s finances (McAlexander et al., 1993).
Thus, experiencing an event that places a person in a new role, such as marriage that signifies a transition from bachelorhood to a spousal role, is a role transition event. Gudmunson and Danes’s (2011) review of family socialization studies also suggests that throughout life, as individuals take on new family roles and identities, they tend to enact their new roles and identities by changing their monetary resources to fit the newly acquired roles. Stress may induce people to engage in financial choices that can serve as coping strategies and enhance well-being, such as putting aside funds for emergencies and starting a retirement savings program to alleviate the stress that is the result of inadequate planning for retirement (Ferraro & Su, 1999).
P1: The number of role-transition events experienced is positively related to the person’s perceived influence of (a) informal, (b) formal, and (c) commercial socialization agents on their financial behavior.
P2: The number of reasons for which a person saves and invests is positively related to the number of role-transition events he or she has experienced.
P3: The number of role-transition events experienced is positively related to financial knowledge.
Anticipated Events and Transitions
Previous studies report changes in consumer behavior as a result of the anticipation of event occurrence or transitions into new roles, such as changes in investments upon experiencing or in anticipation of a transition into widowhood (George, 1994; O’Bryant & Morgan, 1989) or reduced clothing expenditures in anticipation of retirement (Wagner & Hanna, 1983). These changes may be the result of the three adaptation mechanisms: socialization to a new or anticipatory role, such as by taking on various consumption roles previously assumed by a late spouse (O’Bryant & Morgan, 1989); stress and coping responses (e.g., Lee et al., 2012; Mathur et al., 2008) because anticipating an event or role transition can be stressful, independent of its desirability (Murrell et al., 1988; Wheaton, 1990); and increased human capital because anticipation of an event or transition likely stimulates cognitive activity relevant to its consequences, such as anticipating illness or widowhood affects an aging person’s need to understand new investment tools and methods for financial planning (George, 1994).
P4: The number of role-transition events anticipated is positively related to the person’s perceived influence of (a) informal (b) formal, and (c) commercial socialization agents on their financial behavior.
P5: The number of reasons for which a person saves and invests is positively related to the number of anticipated role-transition events he or she expects to experience.
P6: The number of role-transition events a person expects to experience is positively related to his or her level of financial knowledge.
The Effects of Adaptation Processes
The three adaptation processes are the core assumptions of three main theoretical perspectives on adaptation: normative, stress, and human capital; they are complementary rather than competing or mutually exclusive notions (Pearlin & Skaff, 1996; Sherrod & Brim, 1986). Displaced theories and previous findings in the field of personal finance can be integrated within these life course adaptation perspectives. We use the term “perspective” instead of “theory” to acknowledge that each adaptation perspective encompasses more than one theory of adaptation.
The normative perspective assumes that certain life events such as marriage, divorce, and retirement serve as markers of transition into important life roles (e.g., spouse, parent, and retiree). Individuals are socialized to these roles by acquiring socially desirable skills, attitudes, and behaviors compatible with the roles they enact. The socialization process is rather predictable, with socialization changing in response to socializers or adapting to the requirements of the environment (Mortimer & Simmons, 1978). The review of family socialization literature by Gudmunson and Danes (2011) suggests that events that result in changing adult roles (e.g., becoming a parent and retirement) and resource levels (e.g., marriage and divorce) throughout life affect a person’s financial behavior as one works to enact newly acquired roles and identities (e.g., spouse, parent, and retiree) and new financial needs associated with these roles.
P7: The level of financial competence increases as a function of the person’s perceived influence of (a) informal, (b) formal, and (c) commercial socialization agents on his or her financial behaviors.
P8: There is a positive relationship between a person’s savings orientation and his or her perceived influence of (a) informal, (b) formal, and (c) commercial socialization agents.
The Stress Perspective
The stress perspective contends that environmental, social, or internal demands (often known as “stressors”) experienced or anticipated (at T1) create disruptions of previously more or less balanced (homeostatic) states and a generalized demand for readjustment or coping (Thoits, 1995). Coping includes “any cognitive or behavioral effort to manage stress, regardless of how well or badly it works” (Lazarus & Folkman, 1984, p. 141). Thoughts and behaviors that are effective in reducing stress during a particular time span in the life course tend to develop into individualized sets of strategies over the life course (Vaillant, 1977). Control theory offers a framework for understanding the use of specific strategies by human agency to gain control over life outcomes (Heckhausen & Schulz, 1995).
Moschis (2007b) reports studies that have uncovered a wide variety of consumer behaviors that are the result of coping with stressors and, over time, reflect adaptations to certain life conditions. Several of them affect the person’s financial well-being because they either promote or impede upon the person’s financial well-being. To the extent saving and investing can be viewed as coping responses to stressful transitions that require financial resources, we can expect the reasons for financial decisions a person has to make in the form of saving and investing for the purpose of alleviating stress to promote financial competence and stronger orientation toward saving and investing.
P9: The greater the number of reasons a person saves and invests, (a) the greater the person’s level of financial competence and (b) the stronger the person’s savings orientation.
Human Capital
Human capital refers to the resources, qualifications, skills, and knowledge that people acquire. Theories of human capital development—mechanistic, organismic, and dialectic (e.g., Moschis, 2007a)—acknowledge that outcomes and processes are likely to shift and may include maladaptive or deviant behaviors (e.g., excessive and compulsive) (Mortimer & Simmons, 1978), compared with the normative perspective that views the outcomes of socialization as impervious to change. Mechanistic theories view humans as reactive; they contend that knowledge development that promotes adaptation directly reflects the external environment (Figure 1). This view of human capital development is supported by results of financial socialization studies (e.g., Gudmunson & Danes, 2011; Ntalianis & Wise, 2010; Serido et al., 2015). Similarly, Von Gaudecker (2015) has shown that financial advice leads to asset diversification, suggesting that an increase in financial knowledge leads to changes in financial behaviors. Furthermore, acquired knowledge about finances likely affects the extent a person uses financial strategies to cope with chronic stress, which is present in the enactment of already assumed and anticipated roles (Moschis, 2007b), as in the case of a divorce (McAlexander et al., 1993).
In contrast, organismic theories, which view humans as active constructors of knowledge and meaning within their biological and environmental constraints, suggest that human capital increases with the person’s interaction with his or her environment, as in the case of financial knowledge development as a function of hands-on investing experience (for studies, see Hershey et al., 2010). Similarly, Peng et al. (2007) report that a child’s experiences owning investments at a young age is associated with higher savings rates several years after college. Based on these theoretical notions and supportive research, we propose that:
P10: A person’s financial knowledge is positively associated with one’s (a) number of reasons for saving and investing, (b) level of financial competence, and (c) savings orientation.
Indirect Effects of Socialization
Life course research suggests that events and adaptation processes tend to be interdependent (Mayer & Tuma, 1990). An adaptation process may affect other adaptation processes (Figure 1). For example, research shows that financial knowledge can increase as a function of intervention by formal socialization agents (Hershey et al., 2010), and experience gained from successful resolution of a stressful event in the form of knowledge can affect the level of employment of certain coping strategies (Turner & Avison, 1992). Therefore, socialization agents may help increase the person’s financial knowledge and promote the importance of saving and investing behaviors as coping strategies for present and future changes in life conditions.
P11: The number of reasons one invests and saves is positively related to his or her perceived influence of (a) informal, (b) formal, and (c) commercial socialization agents on the person’s financial behavior.
P12: A person’s level of financial knowledge is positively related to one’s perceived influence of (a) informal, (b) formal, and (c) commercial socialization agents on his or her financial behavior.
Financial Well-Being
Of interest in the present investigation are financial behaviors that likely enhance a person’s well-being both in the short run and in the long run. Previous research by Woodyard and Robb (2012) suggests a variety of measures of financial well-being, including one’s objective status (e.g., income and assets), financial satisfaction, financial behaviors (several types of financial habits), and subjective perceptions (e.g., financial attitudes and financial knowledge). Another review of the literature by Gudmunson and Danes (2011) classifies the various forms of financial behaviors into two interrelated types: (a) a pattern of action over time (e.g., saving and spending) and (b) behaviors that are more “event like” and include initiation and termination of passive financial processes such as setting up a 401(k) account. The same authors consider several indicators as objective measures of financial well-being, such as income, savings levels, and ownership of goods, and they consider as subjective measures a person’s financial satisfaction, income adequacy, and pressure.
In line with these investigations, we define a person’s financial well-being based on both objective and subjective criteria, that is, financial solvency and financial satisfaction, respectively. Within the landscape of personal finance literature, which includes findings showing several factors that affect a person’s financial well-being (e.g., Moschis, 2019), one finds studies that suggest the positive impact of the person’s financial competency and savings attitudes on his or her financial well-being as defined by one’s level of financial solvency and financial satisfaction (Hershey et al., 2007; Mathur & Kasper, 2019; Prakitsuwan et al., 2022; Woodyard & Robb, 2012).
P13: A person’s level of financial satisfaction is positively related to one’s level of (a) financial competence and (b) savings orientation.
P14: A person’s level of financial solvency is positively related to his or her level of (a) financial competence and (b) savings orientation.
The Role of Contextual Factors
Contextual variables play an important role in life course research in general and financial studies in particular because behavior is driven by agency and structure (Denton et al., 2004; Hershey et al., 2007). These factors have different effects on adaptation processes and the way the individual (human agency) experiences an event, responds to it, or initiates change (e.g., Giele & Elder, 1998). Although contextual factors are often treated as control variables in studies of financial behavior (e.g., Gonyea, 2007; Gudmunson & Danes, 2011; Hershey et al., 2013; Murphy, 2013; Serido et al., 2015), they can be viewed as causal and moderating variables of events, adaptation processes, and outcomes (Figure 1). In a parallel vein, the adaptation processes responsible for changes in a person’s mental, emotional, and behavioral states that are set in motion by events (T1 in Figure 1) have different durations and, therefore, have different effects (Hetherington & Baltes, 1988). Thus, adaptation processes are also states of varying durations, during which alterations are experienced. In turn, they have developmental implications because the duration of these states (e.g., stress and coping and socialization) can lead to mental and behavioral adaptations (Featherman & Lerner, 1985; Hetherington & Baltes, 1988) that affect the formation of consumption patterns (Moschis, 2019). Thus, longer durations of adaptation mechanisms promote the continuity of existing behaviors. We assume that the duration of adaptation mechanisms is proportional to the length of time a person has occupied a new role or state marked by his or her length of experience of role transition events. Time refers to chronological interval; it is captured by the length of time or duration of event occurrence (or nonoccurrence) or a state.
P15: Longer durations in roles increase the person’s likelihood of perceptions of the influence of (a) informal, (b) formal, and (c) commercial socialization agents.
In this article, we focus on selecting contextual variables that may affect the socialization processes and moderate their influence on other hypothesized factors. We include family-rearing practices, gender, and SES. With respect to gender, the available evidence points to differences in financial knowledge and financial preparation for retirement, with males displaying higher levels of financial knowledge and financial retirement preparation than females (Hershey et al., 2013; Woodyard & Robb, 2012). These findings suggest that males are also more likely to be influenced by socialization agents about financial matters and exhibit greater levels of general financial knowledge, financial competence, and attitudes toward saving. These differences may be explained by family and role theories where the socially prescribed male role includes the belief that males are expected to be financial providers and allocators (Jacobs-Lawson et al., 2004; White & Klein, 2002; Woodyard & Robb, 2012). Gudmunson and Danes (2011) are more explicit in asserting that gender role differences are due to gender socialization, suggesting that socialization agents have stronger effects on men’s than on women’s financial behaviors.
P16: Men are more likely than women to perceive the influence of (a) informal, (b) formal, and (c) commercial socialization agents on their financial behavior, and they are more likely to have (d) higher levels of financial competency and (e) stronger savings orientation.
Earlier-in-Life Factors
Earlier-in-life factors take various forms (e.g., events, individual attributes, and conditions; Figure 1). In previous research, earlier-in-life factors in the form of early socialization experiences, specific demographic characteristics, personality, cognitive, and motivational factors were directly linked to financial planning, saving, and investing (e.g., Gudmunson & Danes, 2011; Hershey et al., 2007; Jacobs-Lawson & Hershey, 2005; Sundarasen et al., 2016). Gutierrez and Hershey (2014) find retrospective measures of family influence on savings during formative years to have a positive relationship with the level of savings in later life. With respect to specific measures of parenting, theory and research suggest that children who are brought up in families where parents encourage their offspring to make their own decisions—the so-called “concept-oriented family communication structure”—develop better consumer skills that persist throughout life (Moschis, 1985).
P17: A person’s experience of a concept-oriented family communication structure during formative years is positively associated with his or her level of (a) financial knowledge and (b) financial competence in adulthood years.
Structural Factors
Structural factors take the form of nested, hierarchical, and interrelated social structures (Figure 1), ranging from distal (macrolevel) settings (e.g., culture and class) to those located proximally (e.g., family and work). Within a specific time frame (e.g., T1–T2), the macrosystem defines the character, structure, and function of proximal settings, which include the environment with which the person is in contact and can interact directly (e.g., family members and peers), that constitute “the vehicles of behavior change and individual development” (Bolger et al., 1989, p. 2). Life course and socialization researchers suggest that favorable socioeconomic conditions promote financial competencies (e.g., Moschis & Churchill, 1978; Moschis, 2019).
P18: Compared to adults in lower socioeconomic status (SES) households, those in upper SES households are more likely to have a larger number of reasons for saving and greater financial knowledge.
Implications
In the next few decades, most industrialized countries of the world are likely to experience a larger number of people entering retirement, spending a longer time as retirees, and having greater responsibility for financial planning. One cannot address issues of quality of life of present and future generations within the constraints of scarce resources without considering the human agency. People need to assume a greater responsibility for their own well-being and the well-being of future generations. Accomplishing such a daunting task requires the understanding of people as consumers of financial services, educating and motivating them to behave in a way that deters overconsumption and enhances their well-being and that of future generations over a longer lifespan. This argument is central to the successful aging perspective (e.g., Human Capital Initiative Coordinating Committee, 1996; Human Capital Initiative, 1993; Rowe & Kahn, 1998), which advances the notion that one can enhance the quality of life in old age by making thoughtful life-planning decisions during early and middle stages of adulthood. These developments and trends underscore the importance of financial socialization for consumer well-being throughout life.
The issue of financial preparedness becomes even of greater relevance in light of additional demographic and economic trends. Retirement age and savings rates in the United States have been on a decline for decades (Adams & Rau, 2011; Hershey et al., 2007), while the length of time a person spends in retirement has been increasing globally (Arias et al., 2022; Ntalianis & Wise, 2010). Furthermore, there has been a gradual shift globally from the use of defined benefit retirement plans to the use of defined contribution retirement plans, which require individuals to make their own investment choices (e.g., Adams & Rau, 2011; Gonyea, 2007; Murphy, 2013; National Seniors Productive Ageing Centre, 2013; Ntalianis & Wise, 2010), when their skills are not sufficient to deal with the increasingly complex financial planning process (Adams & Rau, 2011).
The present article cannot provide detailed information on LCP and methods appropriate for life course research. Such information is available elsewhere for interested readers (e.g., George, 2003; Giele & Elder, 1998; Mayer & Tuma, 1990; Moschis, 2019; Shanahan et al., 2016). The present article has merely demonstrated how future researchers can study financial socialization within the LCP, and it has provided a blueprint for future research. The LCP is a broad conceptual research framework within which previously proposed models of personal finance can be integrated. For example, variables in the model proposed by Hershey et al. (2010) can be cast within the life course model shown herein. By demonstrating how researchers can employ the LCP to study financial socialization, it is hoped that the present research, albeit confined to offering conceptual directions in the form of propositions, can serve as a blueprint for further studies in this area.
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