Financial Education Mandates and Financial Wellbeing of Young Adults: Examining Financial Capability Factors as Mediators

Abstract

This study creates a framework to examine the interrelationship between financial education mandates and the financial wellbeing of young adults and the intermediary roles played by financial capability factors. This study extends a widely used framework of financial capability to include independent financial decision-making. Using a multi-year, multi-source, cross-sectional database in the US and structural equation modeling, this study examined the direct effects and mediated pathways between financial education mandates, the mediators, and financial wellness. The results demonstrated that implementing education mandates directly and positively related to young adults' financial knowledge and indirectly enhanced financial access, healthy financial practices, and financial wellbeing. Healthy financial behaviors were closely linked to improved financial wellness, while financial access showed an indirect positive association. However, independent financial decision-making was negatively associated with financial wellbeing. This study offers significant insights for policymakers, financial educators, financial service institutions, and young consumers.