Parents' financial socialization or socioeconomic characteristics: which has more influence on Gen-Z's financial wellbeing?

The study addresses how to improve Gen-Z (18–29 years) financial wellbeing in the wake of heightened economic uncertainty post-COVID-19. It investigates which has greater influence—explicit parental financial socialization (purposeful discussions and involvement in finances) or parents' socioeconomic characteristics (education, occupation)—on Gen-Z's financial attitudes, behaviors, and subjective financial wellbeing (SFW). Grounded in family financial socialization theory, the introduction highlights that parents transmit financial knowledge and norms both explicitly (direct instruction, budgeting, saving) and implicitly (role modeling shaped by SES). It also notes culturally specific dynamics in Asia-Pacific developing countries, including differential parental roles of fathers (assets, income) and mothers (household finance, education), and the possibility that these may uniquely shape Gen-Z outcomes in Pakistan. The authors aim to distinguish explicit versus implicit pathways and fill gaps by focusing on Gen-Z in a developing-country context using mixed methods.

Guided by family financial socialization theory (Gudmunson & Danes, 2011), the review distinguishes explicit parental socialization (purposive discussions on budgeting, saving, investing; open family finance conversations) and implicit socialization via modeling daily financial behaviors, values, and SES-related contexts. Prior work suggests both channels matter for youth financial knowledge, behavior, and wellbeing, with cultural gender norms sometimes prompting more financial instruction for daughters due to household finance responsibilities. The review further defines financial wellbeing as comprising objective (income, assets, debt) and subjective dimensions, with SFW linked to financial knowledge, behavior, and stress. Financial behavior spans short-term (cash/debt management) and long-term planning, with stressors (job insecurity, bills) impacting wellbeing. A gap identified is that prior research often combines explicit and implicit parental socialization; few examine their distinct effects on Gen-Z's financial goals, attitudes, behavior, and SFW, particularly in developing countries.

Mixed-method sequential design. Phase 1 (qualitative): Semi-structured interviews with 35 parents of Gen-Z (born 1995–2010) across diverse regions in Pakistan using purposive convenience sampling; inclusion criteria included at least higher secondary education. Interviews (20–40 minutes; mostly in-person, some online) were recorded, transcribed verbatim, and analyzed in NVivo 10 through compilation, disassembly, reassembly, interpretation, and conclusion. A template coding structure from the literature was refined iteratively, yielding a hierarchical coding system covering: parental financial socialization; perceived financial behavior of children; perceived SFW of children; and gender importance in socialization. Phase 2 (quantitative): Cross-sectional online survey (Google Forms) of N=333 Gen-Z participants in Pakistan (purposive convenience sampling). Inclusion: at least higher secondary education, age 15–28, English comprehension. Measures: - Subjective Financial Wellbeing (SFW): 8 items, 5-point Likert (1–5) adapted from Prawitz et al. (2006); reliability α=0.83. - Financial Goals Importance (material aspirations): 9 items, 5-point Likert (1–5) from Kasser & Ryan (1996); α=0.92. - Parental Socioeconomic Characteristics: parental education (1=less than high school to 5=master+); occupation (1=government employee to 5=others), coded separately for fathers and mothers. - Parental Financial Socialization (PFS): involvement in discussions on savings, family spending plans, participant spending, and credit, 5-point scale (Shim et al., 2009). Analytic strategy: Descriptives; Pearson correlations; multiple regression/ANOVA models for effects of parental SES on financial goals, behavior, SFW, and attitude; multicollinearity checks via VIF (<5 indicated acceptable levels). Tested effects of PFS on outcomes via tests of Between-Subject Effects with estimated marginal means. Conceptual framing via a family financial socialization model (Fig. 1).

Qualitative: - Parents use multiple explicit strategies: involving children in household financial discussions (e.g., groceries, bill payments), managing and discussing pocket money, partially allowing independence in purchase decisions, and encouraging or moderating saving habits. - In high-inflation, economically uncertain contexts, some parents prioritize children's immediate happiness over saving during childhood; others encourage saving for specific needs. - Consumption behavior: many children spend pocket money on food; savings often used for higher-value items (mobile, laptop, books). - During crises (e.g., COVID-19), some children took jobs (e.g., online teaching, freelancing) to assist family finances. - Parents often teach daughters more due to expectations that women manage household finances; some endorse equal socialization for both genders. Quantitative: - Strong positive correlation between financial behavior and SFW (r=0.751, p<0.01). - Financial goals importance correlates positively with financial behavior (r=0.293, p<0.01) and SFW (r=0.291, p<0.01). - Parental SES (education, occupation) did not significantly predict Gen-Z's financial goals (R^2=0.018; F=1.486, p>0.05), financial behavior (R^2=0.013; F=1.080, p>0.05), or SFW (R^2=0.011; F=0.872, p>0.05). - Fathers’ education negatively predicted Gen-Z financial attitude (β=-0.121, SE=0.054, t=-2.259, p=0.025), while mothers’ education and parents’ occupations were not significant predictors of attitude. - Parental financial socialization significantly affected financial attitude only (F=1.912, p=0.019); effects on behavior, goals, and SFW were not significant. - Multicollinearity was not a major concern (VIFs generally <2.4).

Distinguishing explicit from implicit parental socialization clarifies that purposive parental financial socialization has a detectable influence primarily on Gen-Z’s financial attitudes, while parents’ socioeconomic characteristics (education, occupation) generally do not explain variance in financial behavior, goals, or SFW. The negative association between fathers’ education and Gen-Z financial attitude may reflect psychological reactance among youth with highly educated fathers. The strong link between financial behavior and SFW underscores behavior’s centrality to wellbeing, yet parental SES alone may not shape these outcomes in a developing-country context. Cultural and technological influences—strong family systems, high inflation, social media exposure, and digital-native behaviors—likely mediate or moderate how parental inputs translate into behavior and wellbeing. Gendered patterns persist, with many parents socializing daughters more for household financial roles, though some advocate equal socialization. Overall, findings support family financial socialization theory and suggest that explicit, dialog-based parental practices are valuable but may be insufficient to shift behavior and wellbeing without addressing broader peer, media, and online influences.

This mixed-method study in Pakistan is among the first to disentangle explicit (purposive) and implicit (socioeconomic) parental financial socialization influences on Gen-Z financial outcomes. Qualitative evidence shows parents employ diverse strategies to involve children in finances, with a tendency to instruct daughters more. Quantitatively, explicit parental financial socialization significantly influences financial attitudes, while parental SES has limited impact on financial behavior, goals, or SFW; fathers’ education is negatively associated with financial attitudes. The study extends family financial socialization theory in a developing-country context, highlighting that shifting attitudes via explicit socialization may not directly translate to behavior or wellbeing given strong external influences (peers, media, internet). Future research should incorporate multi-generational designs, examine digital and social media pathways of financial socialization, and broaden SES measures beyond education/occupation to capture nuanced family financial contexts.

• Sampling: Purposive convenience sampling of 333 Gen-Z participants and 35 parents limits generalizability. - Scope: Parental SES measured only via education and occupation may not capture the full spectrum of implicit socialization. - Design: Cross-sectional survey precludes causal inference; qualitative findings are context-bound. - Sample structure: Parent interviews were not systematically linked to surveyed children. - Unmeasured influences: Peer, media, and internet effects likely confound or mediate relationships; these were not directly modeled. - Future directions: Include multi-generational samples, test social media/internet influences on financial behavior, and expand qualitative exploration across generations in developing countries.