Emerging Adults’ Financial Well-being: A Scoping Review

Adolescent Res Rev (2017) 2:255–292 DOI 10.1007/s40894-016-0052-x SYSTEMATIC REVIEW Emerging Adults’ Financial Well-being: A Scoping Review Angela Sorgente1 · Margherita Lanz1 Received: 10 November 2016 / Accepted: 31 December 2016 / Published online: 23 January 2017 © Springer International Publishing 2017 Abstract The financial crisis of 2008 has led to an increase in the number of studies on the financial condition of the younger generations. The current review maps the literature on the financial well-being of emerging adults in different disciplines (i.e., Economics, Sociology, Psychology) to systematically summarize and organize the scientific knowledge about their financial well-being by identifying this construct’s definition, components, predictors, and outcomes. Electronic databases were searched for Englishlanguage studies that measured the financial well-being (or its synonyms) variable and referred to emerging adults (18– 29 years). A total of 44 records were found eligible. The mapping of the coded data was organized into five sections: (1) publication, (2) research aim, (3) the financial wellbeing construct, (4) data collection, and (5) the relationships among variables. The collected information revealed that financial well-being is a complex and multidimensional construct, as emphasized in financial well-being’s definition and components. The hierarchical relationship between financial well-being, financial wellness, financial health, financial satisfaction, and income satisfaction was clarified. The predictors of financial well-being were organized into 10 different categories and located in 4 quadrants generated by two axes: level (individual vs contextual) and domain (financial vs non-financial). Finally, research gaps and future research directions were described. Electronic supplementary material The online version of this article (doi:10.1007/s40894-016-0052-x) contains supplementary material, which is available to authorized users. * Angela Sorgente 1 Department of Psychology, Università Cattolica del Sacro Cuore, Largo Gemelli, 1, 20123 Milan, Italy Keywords Financial well-being · Economic wellbeing · Financial wellness · Financial health · Financial satisfaction · Emerging adulthood Introduction In the last decades, financial well-being has become a new focus of research and stimulated social and political attention. Before the Easterlin paradox (1974), which suggests that happiness does not increase as a country’s income rises, financial well-being was synonymous with income, as it was considered as an adequate financial factor to make people happy. People nowadays hold the notion that a positive financial condition is something different, something that goes beyond a high income. The first problem then becomes defining what financial well-being is in order to help people achieve it (CFPB 2015). Specifically, the complexity increases when the financial well-being of young people is considered, given that their financial condition is recognized as critical (Verick 2009). Indeed, in this case, the life challenges stemming from the specificity of their stage of life and their financial environment need to be considered (Van Campen et al. 2010). Many researchers as well as financial educators, coaches, and other practitioners are working toward understanding specifically how the youth can achieve a better state of financial well-being (Drever et al. 2015; Shim et al. 2009). In order to build a systematic understanding of financial well-being and its specific characteristics and influences during youth, the present study maps the literature related to the financial well-being of emerging adults. It collected and synthetized studies that investigated financial wellbeing during emerging adulthood (people aged between 18 and 29; Jensen and Arnett 2012). Studying financial 13 Vol.:(0123456789) 256 well-being during this stage of life is an important issue for two main reasons. First, the financial well-being of emerging adults cannot be considered to be the same as that of either adolescents or adults. Adolescents (10–18 years old; Jensen and Arnett 2012) generally are not very concerned about their own financial well-being, as social norms do not require adolescents to be economically independent from their family of origin. In contrast, it is a major concern for adults because economic independence is among the characteristics of adulthood (Arnett 1998). For emerging adults, the matter is more complex, because they are in-between adolescence and adulthood (Arnett 2004). Emerging adults can spend their years being students or student-workers, workers, or at times, being neither students nor workers (NEET, Not in Education, Employment, or Training; Bynner and Parsons 2002). Further, they can live at or outside their parental house. Overall, their financial well-being can depend on their parents in different ways and to different degrees. This specific in-between condition requires an examination using methodologies and variables that can detect the specificities of the developmental phase (e.g., Does the emerging adult receive money from parents? How do emerging adults manage the first contact with the bank?). The second reason to study financial well-being specifically during emerging adulthood is that several emerging adults have been strongly hurt by the economic crisis of 2008 (Shim and Serido 2010), as reflected by rising unemployment rates. Consequently, present-day policymakers should be interested in factors enhancing emerging adults’ financial well-being (Verick 2009). In order to identify these factors, financial well-being and its specific characteristics during emerging adulthood have to be identified and defined. The scientific community usually defines financial (or economic) well-being as a construct that has an objective and a subjective side (Xiao et al. 2009). The objective side is the total of the subject’s material resources, while the subjective side is a self-report evaluation of one’s financial condition (Arber et al. 2014). However, a clear and univocal definition continues to be missing. Lack of clarity partially stems from concepts similar, or near-synonymous, to financial well-being: financial (or income) satisfaction, and financial wellness (or health). Financial satisfaction corresponds to the subjective sub-dimension of financial well-being (Xiao et al. 2009). Financial wellness is a multidimensional concept involving financial satisfaction, objective status of financial situation, financial attitudes, and behavior (Joo 2008). In the existing literature on the topic, there are cases where these labels (financial well-being, financial satisfaction, financial wellness) are used synonymously (e.g., Gutter and Copur 2011; Joo and Grable 2004).We argue that, even if these three constructs overlap, they do not coincide. Through this review, we aim to 13 Adolescent Res Rev (2017) 2:255–292 identify the specifici (...truncated)