Adolescent financial literacy: viewing peers as good financial role models

Purpose This study aims to develop a peer financial modelling scale to ascertain any correlations between the role modelling of peers and the financial literacy of adolescents. The theoretical foundation for this aim lies in Social Learning Theory. This study also examines the reliability of the recently developed short and minimal versions of the Parent Financial Socialisation Scale. Design/methodology/approach Using a survey administered through Qualtrics, data were collected from a sample of 382 15- to 19-year-olds. Confirmatory factor analysis was used to measure model fit of any proposed scale, with Cronbach's alpha calculated to assess for internal consistency reliability. An ordinary least squares regression was then run to assess any correlation between the scale developed and financial literacy, incorporating control variables for gender and socioeconomic status. Findings A Peer Financial Modelling Scale is developed and found to be negatively correlated with financial literacy levels. Adolescents with lower financial literacy are more likely to view their peers as good financial role models. All three versions of the Parent Financial Socialisation Scale were found to be positively correlated with financial literacy knowledge. Research limitations/implications Limitations include the lack of a general cognitive ability measure and personality measure in the ordinary least squares regressions. Practical implications A previously undiscovered advantage of higher financial literacy levels among adolescents is a lower likelihood to see peers as appropriate financial role models. Originality/value To the best of the authors' knowledge, this study is the first to develop a scale to capture the socialising effect of peers in the context of financial literacy.