Article Preview
TopIntroduction
Money Management Behavior (MMB) includes a wide set of actions related to the administration of a budget, such as spending, saving and investing. This behavior is influenced by several economic and socio-psychological factors, which reflect priorities, preferences and personality traits of individuals. Studies on MMB are built on several theoretical approaches which explain and predict it, but that also seek to find new methods to improve it. Achieving improvement of MMB is of particular importance, since financial well-being is a key predictor of the overall well-being of individuals (Xiao et al., 2009; Netemeyer et al., 2018). In addition, the absence of an integrated model to include all its factors of influence makes controversial the results of research studies in this field.
Some authors (Livingstone & Lunt, 1992) explained that overspending and indebtedness is a direct consequence of the attitude towards credit, locus of control, coping strategies in difficult situations and consumer pleasure. A study that examined MMB of college students found that their intention to maintain a financial budget is influenced by their attitude, past behavior and perceived behavioral control (Kidwell & Turrisi, 2004). Moreover, McNair et al. (2016) suggested that spending can be predicted by external locus of control and spendthrift tendencies while borrowing behavior is predicted by external locus of control, emotional and denial coping. In the same direction of the influence of psychological factors on MMB, other authors considered that people with higher levels of distrust and lower levels of anxiety are more prone to save regularly (Hayhoe et al., 2012).
An important factor of influence, often included in MMB studies, is linked to the materialistic values of the individuals. Materialistic people are more prone to obtain high incomes and they give more priority to financial security (Richins, 2011). In terms of MMB, materialistic people are more disposed to have debts, even having a positive attitude towards the habit of borrowing (Richins & Dawson, 1992). People with higher levels of materialism are less active money managers (McNair et al., 2016). Donnelly et al. (2012) analyzed the relationship between money management, materialism and the Big Five personality traits (extroversion, agreeableness, openness, conscientiousness and neuroticism). They found that highly conscientious persons tend to manage more carefully their money, because they are future-oriented, whereas those who believe that material possessions are a source of happiness give little attention to money management.
Analyzing the behavior of young adults, Tang et al. (2015) proposed a conceptual framework that incorporated cognitive level influence (expressed as financial knowledge), social level influence, (manifested through the parental influence) and psychological level influence (measured through self-discipline and thoroughness) as the main determinants of the independent variable - financial behavior. The authors of this study consider that financial knowledge and thoroughness do not influence financial behaviors, while parental influence and self-discipline influence financial behaviors positively.
Another factor that influences people's financial decisions and daily consumer choices is their level of aspirations. Karlsson et al. (2004) showed that consumer satisfaction increases with consumption expansion, but it decreases as consumption aspirations become higher. Kappes et al. (2020) argues that people's level of spending is influenced by the meaning they attribute to the act of purchase, but especially by their perception of the link between spending and welfare. Assuming that people, in general, want to become richer, the authors have shown that individuals often, unconsciously, imitate the consumption habits of the rich people as they observe them. Although this strategy may work on the short term and, sometimes with positive effects due to a preferential attitude on the part of others (Nelissen & Meijers, 2011), on the long run the consequences are often unpleasant due to financial difficulties that inevitably arise.