Using the Expectancy-Value Theory to Understand Young Adult’s Financial Behavior and Financial Well-Being

Abstract

The current study seeks to understand how young adults navigate the university-to-work transition while experiencing financial and employment instability. Using the Expectancy Value Theory (EVT) as a foundation, the purpose of this study is to examine the independent direct effects of both early parental and personal expectations and values on young adults’ later financial behaviors and in turn the concurrent association between financial behavior and financial wellbeing using longitudinal data. The study used data from a subset of participants (N=754) in the Arizona Pathways to Life Success (APLUS) project collected at two time points five years apart. Results from a series of hierarchical linear ordinary least squares (OLS) regressions showed that early personal expectations significantly predicted later financial behavior and financial well-being. Parental expectations remained important for financial well-being, but not for financial behavior. Additionally, the study also considered whether employment status moderated the relationship between financial behaviors and one’s perception of financial well-being. Although a significant predictor, employment status did not have a moderating effect on the association between financial behavior and financial well-being. Implications for further study and limitations are discussed.