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:
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