Moderating effects of parental income on the relationship between parental financial discussions and financial literacy of young adults

Abstract

Purpose – The moderating effect of parental income on parental financial discussions and financial literacy is increasingly becoming important. The objective of this study was to determine whether the relationship between parental financial discussions of young adults and their financial literacy is moderated by parental income. Design/methodology/approach – This study adopted quantitative research approach and used self-administered questionnaire to collect data from young adults in South Africa. Financial literacy was measured through financial knowledge, financial behaviour, financial attitudes and financial decision-making. Moderated regression analysis was used to analyse data. Findings – The results showed that parental income moderated the relationship of parental financial discussions with financial knowledge, financial behaviour and financial attitude. Furthermore, the results indicated that parental income did not moderate the relationship of parental financial discussions and financial decision-making. Therefore, the overall results indicated that the relationship between parental financial discussions and financial literacy is moderated by parental income. Practical implications – Parental income is important in parental financial discussions and financial literacy and it must be understood better so that it does not hinder financial discussions between parents and children. The government of South Africa must come up with initiatives to address and improve parental income. Originality/value – This study contributes to the existing body of knowledge by empirically testing whether the relationship between parental financial discussions of young adults and their financial literacy is moderated by parental income. There is no study that has been conducted before in South Africa. Peer review – The peer review history for this article is available at https://publons.com/publon/10.1108/IJSE-07-2024-0622