Regulatory Focus, Money Attitudes and Financial Literacy: Evidence from Portuguese Young Adults

This paper proposes that the type of an individual's motivational forces underlies his/her willingness and ability to acquire financial literacy (FL), whose outcomes ultimately shape consumers' well-being. Specifically, we study the FL of young adults, relying on regulatory focus (RF) theory, which considers two motivational systems, namely, a prevention and a promotion system. Using a sample of 682 students from a Portuguese public university, we examine the relationship between RF and FL, considering the mediating effect of money attitudes (MA). To test the research hypotheses, we rely on structural equation modelling. The results provide support for our predictions. Prevention is negatively related to FL, and promotion is positively related to it. Moreover, prevention positively relates to power-prestige, distrust, and anxiety, and relates negatively to retention-time, whereas promotion is positively associated with retention-time and negatively with distrust. The relationship between RF and FL is partially mediated by MA. Hence, this study tests a number of novel relationships, yielding relevant policy implications.