Time Will Tell—A Longitudinal Study of Consideration of Future Consequences and Financial Behavior in Young Adults

Abstract

Young adults need to adopt responsible financial behaviors in order to protect themselves as consumers. While much about the factors that influence financial behavior is known from cross-sectional and panel studies of mixed samples of younger and older individuals, relatively few studies have focused on young adults and even fewer have applied a longitudinal design. The present study analyzed 862 people 16–28 years old in Croatia at two time points at least 12 months apart using a multilevel, mixed-effects model based on the new theoretical framework of financial capability. Changes were analyzed in the participants' consideration of future consequences (CFC) and in numerous variables related to responsible financial behavior. Changes in CFC over time showed significant associations with changes in responsible consumer behavior, financial planning, impulsive consumption, and investing engagement, but not with digital banking use or saving experience. These results associate changes in rational thinking disposition, here measured as CFC, with changes in financial behaviors among young adults. These findings may guide future research to clarify the drivers of financial behavior as well as design effective educational interventions.