TABLE OF CONTENTS ACKNOWLEDGEMENT TABLE OF CONTENTS LIST OF TABLES LIST OF FIGURES ABSTRACT .1 Background to the Research.2 Statement of the Problem .3 Research Objective and Research Questions .4 Scope of the Research .5 Significance of the Research. 7 CHAPTER 2 LITERATURE REVIEW .2 Development of Research Hypotheses .1 Financial well-being. 20 CHAPTER 3 RESEARCH METHODOLOGY. 29 TIEU LUAN MOI download : skknchat@gmail.3 Data collection method .4 Data analysis techniques .2 Exploratory factor analysis .3 Confirmatory factor analysis .4 Structural equation model.
32 CHAPTER 4 DATA ANALYSIS AND RESULTS .3 Exploratory Factor Analysis (EFA) .4 Confirmatory Factor Analysis (CFA) .6 Discussion of the Results .3 Limitations and Recommendations for Further Research. 53 APPENDIX TIEU LUAN MOI download : skknchat@gmail.com LIST OF TABLES Table 3.2 Findings of qualitative research .4 Cronbach’s Alpha coefficients .5 KMO and Bartlett’s Test .6 EFA for all variables .7 Relationship between constructs .8 Result of hypothesis testing. 43 TIEU LUAN MOI download : skknchat@gmail.com LIST OF FIGURES Figure 2. Deacon and Firebaugh’s Family Resource Management Model (1988).
CFA for financial behavior. Structural model result. 44 TIEU LUAN MOI download : skknchat@gmail.com ABSTRACT Recognizing the negative influences of low personal financial well-being on life satisfaction, personal health, and even on their family and their organization, there have been more and more studies on financial well-being, especially among young adults who associate with the most financial problems and financial distress. This research examines the factors affecting personal financial well-being of young adults in the Vietnamese context; among them are financial behaviors, financial literacy and financial socialization.
The research model was developed based on the Family Resource Management System Model developed by Deacon and Firebaugh (1988) and the Social Learning Theory developed by Bandura (1986). The refined questionnaire through the pilot study was distributed to target respondents aged 22 to 30 living in Ho Chi Minh City. The data from 264 valid completed questionnaires then were used to test the measurement scale by Cronbach’s alpha, exploratory factor analysis and confirmatory factor analysis before used to test the theoretical model and hypotheses by the structural equation modeling. The research indicated that all hypotheses were supported.
The direct effect of financial behaviors; the both direct and indirect effect of financial literacy, where indirect effect was mediated by financial behaviors; and the indirect effect of financial socialization with the mediating role of financial behaviors and financial literacy on financial well-being were all supported in this study. These findings are matching the previous researches. The recommendation for individuals, family, managers, education institutions and government agencies are thereby suggested to improve personal financial well-being of young adults. However, the future research should consider the limitations of the current study about the data collection method and the measurement scales to improve the results and findings.
1 TIEU LUAN MOI download : skknchat@gmail.com CHAPTER 1 INTRODUCTION 1.1 Background to the Research Even in the United States, one of the most advanced countries, three quarters of the population are stressed about financial problems and a quarter face with intense ones (CNBC, 2015). This reality was also confirmed in O'Neill, Sorhaindo, Xiao & Garman (2005) that personal financial issues affect millions of U. These issues have become the biggest concern because of what they bring about. Financial distress or low financial well-being has great effect not only on personal health but also on their family and organization (Prawitz et al.
Personal finances and health are proved to be interrelated in various ways. Bagwell (2000), Drentea and Lavrakas (2000), Kim, Garman, and Sorhaindo (2003) found that people with high financial well-being have better health and less physical impairment than others (as cited in O'Neill et al. Experiencing these problems, people tend to frequently feel disappointed, anxious, and guilty or even encounter difficulty in sleep. They could not support their hospital fees and conduct periodic health check as well.
Moreover, their loved ones are involved in their problems. Parents might be angry at their children unreasonably. Couples are easy to intensely argue minor issues which they are supposed to talk about and give comments for gently. Parrotta and Johnson (1998) stated that dissatisfaction with one’s financial status could lead them to their marital conflicts.
People who experience financial matters even bring them to work, which does reduce their job effectiveness. According to Kim and Garman (2003), financial stress was examined to have positive relationship with absenteeism and make employees less committed to their organizations. Both of these problems have been got much attention because they are obviously expensive for the employers. 2 TIEU LUAN MOI download : skknchat@gmail.com Due to these consequences, there have been growing and growing researches about personal financial well-being, especially among young adults.
Young adults or emerging adults are specified by many researches as the subject attached to the most financial problems as well as followed by financial distress (summarized in Chan, Chau & Chan, 2012). People in this period are who have just started experiencing their independent lives and managing their finances by themselves, therefore also took more responsibility of their financial status. According to Peterson and Leffert (1995), young adulthood is highlighted by significant changes in life (as cited in Gutter and Copur, 2011) and associated with more “risk-taking behaviors related to poor financial decision making” (Worthy, Jonkman, & Blinn-pike, 2010, p. Financial distress could discourage students from focusing on their learning, workers from focusing on their job.
Mental health might be affected negatively by this stress. The relationship inside family becomes strained and tense when both spouses must always find the ways to solve or be obsessed by their financial problems. Employers suffer the decreased labor productivity due to the again and again absence as well as less commitment of their employees. Therefore, understanding financial well-being and factors influencing it is extremely considerable.
According to the World Happiness Report 2013, the well-being level which includes financial well-being of Asians is lower than North Americans, Latin Americans and Western European (Asian Century Institute, 2014). This status makes financial well-being even more worthy to be studied in Vietnam. Although there are some researches about financial management, it seems that personal financial well- being has been sparsely studied under Vietnamese context. At International School of Business, University of Economics, Ho Chi Minh City, there was one 2014 thesis examining factors affecting financial management behaviors.
To go further, this thesis studies in depth the personal financial well-being and factors affecting it including financial behaviors among Vietnamese young adults. 3 TIEU LUAN MOI download : skknchat@gmail.2 Statement of the Problem As mentioned, given unexpected impact of financial distress, personal financial well-being has been interested by many researchers around the world. A variety of factors have been taken into consideration and determined to have some certain relationship with this satisfaction. Emerging among these determinants are financial management behavior, financial literacy, and financial socialization (Chan et al., 2012; Joo and Grable, 2004; Mohamad, Cook and Gundmunson, 2012; Serido, Shim, Mishra and Tang, 2010; Taft, Hosein, Mehrizi, and Roshan, 2013).
The first factor which must be relative to financial well-being and must be examined is financial management behavior. Financial behavior represents item “throughput” and financial well-being represents item “output” in the Family Resource Management System Model, which explains how people attain what they want from available resources. Financial behavior as throughput is the transformation of the model and has a direct impact on the well-being (Gutter and Coper, 2011). According to Kinhte Saigon Online (2014), MasterCard revealed that young Vietnamese (aging from 18 to 29) showed a low level of financial literacy.
The survey is conducted in 16 countries across Asia Pacific, in which Vietnam is placed at 14th with an overall score of 58. MasterCard recognized the crucial role of financial literacy in obtaining financial well-being and their Financial Literacy Index is for evaluating the progress of financial well-being. This index in 2014 expressed that this progress was still postponed among these countries (MasterCard, 2015). Indeed, there are a lot of research confirming the positive relationship between financial literacy and financial well-being such as Taft et al.
(2013), Mohamad et al. However, some studies found the different or contrary conclusions. Mugenda, Hira and Fanslow (1990) determined a negative instead of positive one; some defined direct influence while some found indirect one (as cited in Joo and Grable, 2004). All the above arguments indicate a high interest level of this construct, financial literacy.
4 TIEU LUAN MOI download : skknchat@gmail.com Family is considered as the root of the society (Tuoi Tre, 2015). In addition, in Vietnam, where the Feudalistic ideology and the Confucianism have been remained their power, the role and power of this entity are much larger. For most of Vietnamese, family is extremely important as it is the very first place the socialization of their children takes place. In the process of individual socialization, the communication, upbringing and instruction of parents and other members in family, even the observation of the parents’ actions are the sources which help their children to attain knowledge, skills, values and form attitudes and behaviors later.
All these contribute to children’s human foundation. It is the same to a specific case, financial socialization. This socialization has great impact when the knowledge and attitude formed by it are the first ones which are difficult to change and associated with children over their lifetime. In a family where parents always spend financial stress, children could be influenced and find it hard to get their financial satisfaction in the future (Jorgensen and Savla, 2010).
Furthermore, parental financial socialization was also examined by many researchers for its relationship to financial well-being (Mohamad et al, 2012; Serido et al. Being aware of the significance of this construct in Vietnamese society, the thesis takes it into research. Beside parents, peers, schools and media are also considered. In summary, this thesis examines and identifies factors which have impacts on personal financial well-being among Vietnamese young adults namely financial socialization, financial literacy and financial behavior so that individuals, family, organization and society could be fully aware of this area then proceed with appropriate activities and programs to improve personal financial well-being and prevent people from harmful effects of financial distress.3 Research Objective and Research Questions The objective of this thesis is to determine factors affecting personal financial well- being of young adults, namely financial socialization, financial literacy and financial behavior.
The proposed questions are as follows: 5 TIEU LUAN MOI download : skknchat@gmail. Is there any relationship between financial behavior and financial well-being among young adults? 2. Is there any relationship between financial literacy and financial well-being among young adults? 3. Is there any relationship between financial literacy and financial behavior among young adults? 4.
Is there any relationship between financial socialization and financial behavior among young adults? 5. Is there any relationship between financial socialization and financial literacy among young adults? 1.4 Scope of the Research This study examines the determinants of personal financial well-being in the context of Ho Chi Minh City, Vietnam. One more important point is that the subject of the research is young adults. Also according to Vietnam’s Youth Law no.
53/2005/QH11, young people are citizens aged between sixteen and thirty years old. However, as clarified in the background, financial well-being of young adults are much considered since the people in this period of life seem to face more financial problems when they have just started to manage their finance completely by themselves. Students in most advanced countries such as America and Europe must pay for their college therefore they have managed their finances since very early point of lifetime at about 18 years old or even earlier when they started their college life. In Vietnam, a little differently from them, the majority of students still live based on allowances from their family but not work any job even part-time ones.
They also depend on their parents’ decisions but not manage their finance by themselves.