Does parental financial assistance assist young adults to be financially healthy? Effects of parent-child relationship qualities on financial outcomes and happiness

Authors

Ji Hyun Kim, University of Nebraska-LincolnFollow
Julia C. Torquati, University of Nebraska-LincolnFollow

ORCID IDs

Julia C. Torquati

Date of this Version

2016

Citation

International Journal of Home Economics, Vol 9 No 2 (2016), pp 40-55

Abstract

Many parents provide financial support for young adult children (Padilla-Walker, 2012). This financial support could help or hinder young adults' financial wellbeing. This current study investigates young adults' financial outcomes (e.g., financial responsibility, money management behavior and worry about money) as mediators of the associations between qualities of parent-child relationships (e.g., closeness with father, closeness with mother, spending time with father, and spending time with mother) and young adults' overall happiness. The role of parental financial support was tested as a moderator of all significant pathways.

Data from the Transition into Adulthood data set of the 2011 Panel Study of Income Dynamics (PSID 2011), a nationally representative US sample were analyzed for this study. The respondents included in the analysis ranged from 17 to 27 years of age (N = 1,907). Structural Equation Modeling (SEM) was used with M-plus software to test the model comparing young adults who received parental financial assistance to those who did not.

The results indicate that financial behaviors mediated the associations between the quality of young adults' relationships with their parents and overall happiness. In particular, less worry about money and close relationships with their fathers significantly affected young adults' overall happiness regardless of receiving financial support from their parents. In addition, the SEM model is significantly different depending on whether or not young adults receive financial support from their parents. Young adults' money management behaviors affected overall happiness only when they did not receive financial support from their parents. Young adults who had close relationships with their mothers showed less worry about money only when they did not receive parental financial assistance. Results from this study provide insight that the parents' financial assistance may not help young adults strive for financial well-being arising from their own financial behaviors.