It’s not just about Money. It’s about Life · 6/18/2014  · APLUS Project Recap 1st Year Wave 1 Data: 2008 Economic Crisis Wave 1.5 2009 4th Year Wave 2 Data: 2010 6th Year ...

Soyeon Shim, Dean

School of Human Ecology

UW-Madison

Young Adults’ Financial Well-being It’s not just about Money. It’s about Life

June 18, 2014

Presented to:

Young Adults’ Financial Well-being It’s not just about Money. It’s about Life

Guiding Research Questions for APLUS

• Why some were managing their finances well, while more and more of them were failing to do?

• Why this was so and what distinguished the good managers from the bad?

?

Early financial behaviors, attitudes, & knowledge that

drive lifetime returns?

DEFINING GENERATIONS How I prefer to communicate with you

Generation Age I prefer….

Millennials 25 Facebook/Tweet to me

Y 30 Text me

X 35 Send me an email

Boomers 50 Call me on my cell Traditionalists 60 Let’s have a conversation

APLUS Project Recap

1st Year Wave 1 Data: 2008

Economic Crisis

Wave 1.5 2009

4th Year Wave 2 Data: 2010

6th Year Wave 3 Data: 2013

N=2000+ N=1,500+ N=1,100+

Final Report President’s Advisory Council on Financial

Capability January 29. 2013

President’s Advisory

Council – established by

Bush (2008) and

continued by Obama

Selected Wave 1 Findings

• In the transition to college:

– Early financial socialization strengthens college students’ financial behaviors.

– Parental communication and expectations matter more than parental finances (e.g. SES).

The Recession Hits College Campuses It could be a “turning point” in how much it costs to attend college By Kim Clark Posted January 27, 2009

chicagotribune.com

First jobs are hard to find for many college grads

Last year's graduates were dreading U.S. job market,

2009 may be twice as bad.

By Marcia Heroux Pounds and Scott Travis

South Florida Sun-Sentinel

Recession Harder on Men Than

Women, Study Says

Wednesday, March 11, 2009

Overall White Black Native Hispanic Asian

Wave 1 $95 $72 $81 $127 $147 $161

Wave 1.5 $152 $118 $258 $197 $302 $123

$0

$50

$100

$150

$200

$250

$300

$350

Changes in Credit Card Debt

+60%

+64%

Tripled

+55%

Doubled

-24%

The Model of Happiness

Lyubomirsky, Sheldon, & Schkade (2005). Pursuing happiness: The architecture of

Sustainable change. Review of General Psychology, 9(2), 111-131.

3.Attitude

4. Parental

Norm

5. Perceived

Control

6. Planning Horizon

2.Past Financial

Well-being

1. Past Sense of Overall Well-

being

7. Behavioral Intention

8. Actual Saving

Behaviors

Current Financial

Well-being

Current Sense of Overall Well-being

Wave 1 Wave 1.5

9. Financial

Crisis (moderator)

Control variables:

Gender

Ethnicity

Parental SES

Perceived impact of economic crisis

Wave 2

Three years and one financial crisis later

Effects of Cumulative Financial Education

3% +

11% +

14% +

Wisconsin

Wave 2 - Emerging Financial Identity

One’s understanding and expression of who one is in relation to managing and practicing personal finance

Emerging Financial Styles

Pathfinder

(31%)

Follower

(39%)

Drifter (30%)

Financial Style and Capability

1

2

3

4

5

SubjectiveKnowledge

ObjectiveKnowledge

Financial Behavior

Followers

Pathfinders

Drifters

High

Low

Shim, Serido, & Tang (2013). Financial Identity-processing styles among young adults.

Journal of Consumer Affairs

Wave 3

Life After College: Drivers for Young Adult Success

L

49%

20%

6%

9%

9%

7%

Fig.1 Employment Status Two Years Out of College

FTE PTE/Self-Employed Unemployed Grad School/PTE Grad School/Not Working Late Launchers

FTE = 49%

PTE =20%

How Self-Sufficient are Today’s (College Graduated) Young Adults ?

• 32% - Self-Sufficient

• 51% - Helped by Family Members

• 17% - Borrowing Elsewhere

Even 50% of Full-Time Employed Adults relying on some support from parents

No or little SES differences

3

3.5

4

Physical well-being

Psychologicalwell-being

Life satisfaction Financial well-being

Fig. 18: Debt & Well-Being

No Debt Debt

Impact of Employment x Debt: on Overall Well-being

A > C >B >D

No Debt Debt

Full-Time No Job Full-Time No-Job

Well-being?

A B C D

12%

61%

26%

Fig. 24: Young Adult Financial Behavior Categories

High Functioning Rebounding Struggling

High Functioning

12%

• The most progress toward adult self-sufficiency

• Highest career status

• A head-start and a competitive advantage

Normative progress

Normative career status

Wake-up call &Trajectory rising

Rebounding 61%

Struggling 26%

Least progress

Lowest career status

Transition to adulthood may be drawn out

Competitive disadvantage – risk factor

Higher Parental Expectation

More Financial Education

More Positive Financial Attitude Higher

Perceived Control

STRUGGLING

HIGH FUNCTIONING

What Can You Do?

Just-in-Time Financial Parenting (and grand-parenting)!

• Be intentional in your interactions

• Engage in adult dialogue about financial matters - “Why” not just “Facts”

• Expect more…do less

• Model positive financial behaviors, especially ongoing learning

• Help them become a path finder and/or a follower (not a drifter)

What can we do at UW?

So

HE B

ig Id

ea

#1

21st Century Citizen

Initiative – Financial

Capabilities for Life

Success

School of Human Ecology

Center for Financial Security

UW Credit Union – UW-Madison Partnership for Financial Capability Initiative

Thank you!

Your are cordially invited to

The School of Human Ecology

for a Fellowship Lunch hosted by

Majid Sarmadi & Soyeon Shim

Wednesday, July 9th, 2014