A Bit Pricey: Young Adults’ Financial Literacy, Financial Decision-Making Process, and Spending Habits

Abstract

Canadians are making poor financial decisions that leave them with a significant amount of debt and little, if any, savings for the future. This is especially true of young adults in Canada, who appear to lack the financial knowledge and skills needed to avoid these poor financial outcomes. The present study examined young adults’ feelings, thoughts, and uses of their financial resources. A sample of 71 participants from the University of Alberta, ages 18-34, completed a survey about their recent spending behaviours, knowledge of personal finance, and attitudes towards money. Results indicated that young adults spend more on necessities than leisure goods, are relatively well-informed about products prior to making purchases, and gain knowledge through experience. Participants had low levels of financial literacy and numeracy, and most did not receive formal financial education. Moderate attitudes towards credit and low levels of irresponsible credit card usage were found. Implications for the development of a comprehensive measure of financial literacy are discussed.