Mediating Effect of Financial Behaviour on the Relationship Between Perceived Financial Wellbeing and Its Factors Among Low-Income Young Adults in Malaysia

Mohamad Fazli Sabri; Rozita Wahab; Nurul Shahnaz Mahdzan; Amirah Shazana Magli; Husniyah Abd Rahim

doi:10.3389/fpsyg.2022.858630

Mediating Effect of Financial Behaviour on the Relationship Between Perceived Financial Wellbeing and Its Factors Among Low-Income Young Adults in Malaysia

Front Psychol. 2022 May 19:13:858630. doi: 10.3389/fpsyg.2022.858630. eCollection 2022.

Authors

Mohamad Fazli Sabri¹, Rozita Wahab², Nurul Shahnaz Mahdzan³, Amirah Shazana Magli¹, Husniyah Abd Rahim¹

Affiliations

¹ Department of Resource Management and Consumer Studies, Faculty of Human Ecology, Universiti Putra Malaysia, Serdang, Malaysia.
² Department of Human Development and Family Studies, Faculty of Human Ecology, Universiti Putra Malaysia, Serdang, Malaysia.
³ Department of Finance, Faculty of Business and Economics, University of Malaya, Kuala Lumpur, Malaysia.

Abstract

The main objective of this study is to investigate the associations between financial knowledge, locus of control (LOC) and perceived financial wellbeing (FWB) with financial behaviour as a mediator among young adults from low-income households in Malaysia, controlling for education and income. The sample of this study consisted of 482 young adults from five different zones in Peninsular and East Malaysia, which were selected using a multi-stage sampling technique. Data were collected using a set of questionnaire-based surveys. The data were then analysed using Covariance Based Structural Equation Modelling (SEM). The study found that financial knowledge and external LOC as well as financial behaviour were significantly correlated with the perceived FWB of low-income young adults in Malaysia. The results also revealed that financial behaviour mediates the influence by financial knowledge and internal LOC on perceived FWB controlling for education and income. The findings of this study provide insights into the factors of perceived FWB of low-income young adults in Peninsular and East Malaysia. Policymakers, government and non-government organisations may utilise this study to develop new policies, financial programmes or campaigns to enhance the FWB of low-income young adults in Malaysia.

Keywords: financial behaviour; financial knowledge; financial wellbeing; locus of control; mediating effect; young adults.