This study proposes a developmental model of financial capability to understand the process by which young adults acquire the financial knowledge and behaviors needed to manage full-time adult social roles and responsibilities. The model integrates financial knowledge, financial self-beliefs, financial behavior, and well-being into a single financial decision-making process. With two-time longitudinal survey data from college students (N = 1,511; aged 18-23 years at Wave 1 and 21-26 years at Wave 2), the findings provide support for a pattern of co-occurring change: changing knowledge about personal finances associated with changing self-beliefs about finances; changing self-beliefs associated with changing financial behaviors; and changing financial behaviors ultimately associated with changes in financial and overall well-being. We discuss the findings in the context of facilitating a positive transition to adulthood during widespread economic uncertainty.
Bibliographical noteFunding Information:
Funding for this research was provided by The National Endowment for Financial Education (NEFE), the Citi Foundation and the Take Charge America Institute at the University of Arizona.
- American university students
- independent self
- individual development
- longitudinal study
- mechanisms of change