Exploring the moderating role of parental income on the link between parental financial communication and financial literacy of young adults

Abstract

The moderating effect of parental income on parental financial communication and financial literacy is increasingly becoming important. The objective of this study was to determine whether the relationship between parental financial communication of young adults and their financial literacy is moderated by parental income. Financial literacy was measured through financial knowledge, financial behaviour, financial attitudes, and financial decision-making. Quantitative research approach was adopted for this study. Self-administered questionnaire was used to collect data among young adults in South Africa. Moderated regression analysis was used to analyse data. Four hypotheses were tested. The results showed that parental income moderated the relationship between parental financial communication with financial knowledge, financial behaviour, financial attitude, and financial decision-making. Therefore, the overall results indicated that the relationship between parental financial communication and financial literacy is moderated by parental income.  This study is amongst the first to investigate whether the relationship between parental financial communication and financial literacy is moderated by parental income. This study concluded by providing recommendations and suggestions for future research.