The moderator effect of socioeconomic status on the relationship between parental financial teaching and financial literacy

Abstract

The primary aim of this research was to investigate the potential moderating effect of parental Socioeconomic status (SES) on the association between parental financial education and the financial literacy of young black African individuals. Financial literacy was measured through financial knowledge, financial behaviour, financial attitudes, and financial decision-making. Parental SES was measured by parental income. A quantitative approach was adopted for this study. A self-administered questionnaire was used to collect data from young adults in South Africa. Moderated regression analysis was used to analyse data. The results showed that parental income did not moderate the relationship between parental financial teaching and financial decision-making. Furthermore, the results indicated that parental income moderated the relationship between parental financial teaching and financial knowledge, financial behaviour, and financial attitude. Therefore, the overall results indicated that the relationship between parental financial teaching and financial literacy is moderated by parental SES.  This study represents one of the initial attempts to examine the moderated association between parental financial instruction, financial literacy, and parental socioeconomic status (SES). Government must improve parental SES as it influences parental financial teaching and financial literacy. This study concluded that parental SES is important as it moderates the relationship between parental financial teaching and financial literacy.