Parents' Influence On Youth's Money Management in Ghana
Research shows that parents influence their children’s financial literacy, attitudes, and behaviors (American Savings Education Council, 1999; Bowen, 2002; Danes, 1994; Moschis, 1985; Serido, Shim, Mishra, & Tang, 2010; Shim, Barber, Card, Xiao, & Serido, 2010). However, little evidence is documented concerning the financial behaviors and socialization experiences of youth in Ghana and other Sub-Saharan Africa (SSA) countries. Efforts to promote financial education and inclusion of youth in SSA may account for the role that parents play in shaping youth’s financial behaviors. This study examined the association between receiving explanations from parents about financial decisions and youth’s financial behaviors.
This study uses baseline data from the YouthSave Questionnaire for Youth (YSQ-Y), which was administered to middle school students (N=6,252) in eight out of 10 regions of Ghana in May 2011 by researchers from the Institute of Statistical Social and Economic Research of the University of Ghana as part of the impact assessment of YouthSave, a four country youth savings demonstration project. Exploratory factor analyses were conducted on money management indicators from the YSQ. Robust standard error estimation was used to adjust for clustering effects in schools. A subsample (N=1,661) comprised of students and a matched parent was used to run multivariate analyses modeling receipt of parent financial decision explanation as a predictor of students’ self-reported money management behaviors (monitoring spending, price comparison, having a plan, following a plan) using covariance control with demographic variables and prior receipt of school-based financial education. To triangulate data, both youth and parent perceptions of parent financial decision explanation were modeled as predictors.
A four-item scale measuring self-reported money management behaviors on five-point likert response scales was identified from exploratory factor analyses and had good reliability (α=.79). Unadjusted mean differences on composite scores of the four-item money management subscale showed significantly (t=12.09, p<.0001) higher scores among youth who received parent financial explanations (M=16.05) compared to youth who did not (M=13.73). Regression analyses showed that parent financial explanations were a significant predictor for both the youth (β=2.16, p<.001) and parent (β=1.69, p<.001) perceived models, controlling for covariates. Youths’ receipt of earned income was also a significant predictors for both the youth (β=1.12, p<.001) and parent (β=1.54, p<.001) models.
Conclusions and Implications
Parents who explain their financial decisions to their children appears to be a strong predictor of youth’s money management behaviors. This was true from the perspective of both youth and their parents. In addition, having earned income seems to be a strong predictor of money management behaviors among youth. Amidst the global enthusiasm to improve the financial literacy of youth and promote their financial inclusion, practitioners and policy makers may consider targeting parents in addition to youth to help them financially socialize their children in a positive way. Practitioners and policy makers may also consider the practical value of youth receiving and handling modest amounts of earned income to form an experiential basis for promoting financial literacy and inclusion.