Does Type of Financial Learning Matter for Young Adults' Objective Financial Knowledge and Financial Behaviors? A Longitudinal and Mediation Analysis

We examined whether various types of financial learning activities affect young adults' objective financial knowledge and financial behavior and if so, whether different types of such activities lead to different outcomes. Using three waves of longitudinal data collected from the same participants over 5 years, we assessed financial behaviors as well as associations with objective financial knowledge and various sources of financial learning among 640 young adults. We empirically evaluated direct and mediation effects between financial learning activities and financial behaviors. The results from our multilevel mediation regression model revealed significant differences in financial behaviors depending on the type of financial learning activity a participant experienced. Meeting with a financial advisor; reading personal finance books, magazines, and websites; having parents as financial role models; and gaining objective financial knowledge were all associated with positive financial behaviors. In contrast, attending workshops and seminars was associated with negative financial behaviors. Formal classroom learning in college had no effect on financial behaviors. Our analysis further indicated that financial knowledge played an important role in improving financial behaviors, significantly mediating the association between voluntary learning or nonvoluntary learning activities and financial behaviors.