For decades, researchers, financial counselors, financial planners, educationists, economists have been interested in investigating the methods to improve the quality of life by exploring the potential sources of well-being (Porter and Garman, 1993; Muffels and Headey, 2009; Shim et al., 2009a; Serido et al., 2010; Brüggen et al., 2017; Abrantes-Braga and Veludo-de-Oliveira, 2019). Well-being is also considered vital as it overcomes interpersonal, family, and health problems (McLellan, 2017). Despite the importance of well-being, there is no consensus over the definition, measures, and factors affecting well-being (Rea, 2017). The individual’s well-being consists of social, psychological, physical, and financial well-being (Zemtsov and Osipova, 2016). In addition to this, Netemeyer et al. (2018) depicted that financial well-being is the fundamental predictor of the well-being of the adults.

Financial Well-being (FWB) is a relatively new concept in personal financial management. Although there is a growing interest of scholars on the FWB, there is no consensus over the definition, measures, and factors affecting financial well-being (Rea, 2017). According to Shim et al. (2009a), FWB is the overall satisfaction with one’s financial situation. While Drever et al. (2015) explained FWB is the ability to have control over one’s daily and monthly finances, the capacity to handle financial uncertainties, meet financial goals, and have the financial freedom to make choices that allow one to enjoy life. Definition by Shim et al. (2009a) explained FWB as the outcomes of financial management, while Drever et al. (2015) explained it as capabilities to manage finances. FWB can be objective or subjective. Danes and Yang (2014) explained that objective measures of FWB are income adequacy, net worth, e.g., Shim et al. (2009a) explained overall satisfaction as a subjective indicator of FWB. By following Shim et al. (2009a), we have considered FWB as satisfaction with one’s financial situation.

Achieving financial well-being (FWB) is essential for adults as it can affect physical, psychological, and social health, which results in unsatisfactory job performance, inability to concentrate, lower productivity, and absenteeism. Nowadays, the majority of young adults encounter considerable threats to their FWB, while most of the adults anticipate to manage these threats and to attain financial well-being but fail to do so. The resources and opportunities that individuals have played a vital role in the success or failure of FWB. Regardless of the differences in resources and opportunities that lead to differences in financial well-being, certain behaviors can enrich FWB across individuals. These behaviors facilitate in making informed financial decisions through better future planning and managing resources effectively. The prevailing literature advocates that a variety of socio-economic characteristics, as well as a diverse set of personal attributes, guide about these behaviors (Gutter and Copur, 2011; Sabri, 2011; Danes and Yang, 2014; Strömbäck et al., 2017; Fan et al., 2018).

In determining the financial well-being, studies have identified different contributing factors, i.e., proficiency in financial skills (Kim and Chatterjee, 2013; Xiao et al., 2013); marital status, physical health, income (Cox et al., 2009); interaction with parents, attitudes toward knowledge (Bornstein, 2005; Serido et al., 2010; Mohamed, 2017); financial knowledge, interaction with socialization agents and early childhood consumer experiences (Sabri and MacDonald, 2010; Sabri, 2011); positive financial behaviors (Shim et al., 2009a); parent-child communication and parents expectations (Bornstein, 2005; Serido et al., 2010; Drever et al., 2015; Gudmunson et al., 2015). The present study is an attempt to answer the question of what are the relevant factors that contribute to an individual’s financial well-being.

Financial Socialization (FS) can have an impact on the FWB. FS, as explained by Danes (1994), is the process of learning and advancing values, knowledge, norms, standards, attitudes, and behaviors which promote well-being, financial viability among the individuals. Although FS is vital for understanding the financial behaviors of young adults, literature is silent about the FS process from the perceptions of young adults. Most often, due to the lack of observational and qualitative data, the understanding of these behaviors is ignored (Rea, 2017). Previous studies suggest that children learn financial socialization processes at a young age from their families, thus influencing their future financial behaviors and FWB, e.g., (Shim et al., 2009a; Gudmunson and Danes, 2011; Kim and Chatterjee, 2013; Gudmunson et al., 2015). Based on the literature, we have included financial socialization as a potential indicator of financial well-being.

The empirical research on FWB also highlighted the importance of Early Childhood Consumer Experiences (ECCE) in explaining financial well-being. ECCE is included in the model because of its relevance, as suggested by the theory of life span (Baltes, 1987). The theory of life-span offered a viewpoint to examine both the constancy and the variations in the behaviors at the different stages of an individual’s life span. Results of developmental studies have demonstrated that ECCE has a positive influence on the financial management skills of the adults (Sabri and MacDonald, 2010). The present study is an attempt to examine the effect of ECCE on the financial well-being of the adults.

For the last few decades, the researchers are trying to employ Locus of Control (LOC) in the field of personal finance and economics (Prawitz and Cohart, 2016). LOC is the belief of individuals that they are in control of their future. LOC has an impact on the behaviors as well as financial and non-financial preferences of the individuals (Onkvisit and Shaw, 1987; Shim et al., 2009a; Prawitz and Cohart, 2016). LOC is also associated with the financial satisfaction of individuals (Sumarwan and Hira, 1993). In this way, we can say that LOC can influence the FWB of adults. Although locus of control is not a new phenomenon, only a few studies are available on the locus of control (Rotter, 1966; Ajzen, 2002; Norvilitis et al., 2003; Griffin, 2014; Furnham and Cheng, 2017). The underlying intention of the present study is to examine locus of control and its mediating effect between FS, ECCE, and FWB.

This study attempts to add to our existing knowledge about personal attributes as well as the financial socialization process that improves an individual’s FWB. To do so, we have offered a model of FS and early childhood consumer experience on the financial locus of control, and their association with financial well-being. Although developmental studies have observed these factors (Shim et al., 2009b; Gerrans et al., 2013; Rea, 2017; Ponchio et al., 2019; Sabri and Anthony, 2019), they have used other sets of variables to study financial well-being.

The present study is conducted on the adults of Pakistan. Pakistan is included in the six most populous countries in the world. In addition to this, Pakistan is also included in the countries where there is the highest level of population growth rate. The majority (around 60% are of 30 year age) of the population of Pakistan are adults. However, due to instability in the political system, unfortunate financial situation of the country, poor health and educational system, increasing unemployment rate, and high population growth rate, the country is unable to take benefit this youth. A recent report published by the UNDP shows that Pakistan is ranked in the 152nd position out of 189 countries in the Human Development Index (HDI). The risk of mental health problems like depression is higher among the unemployed than among the employed. All this is related to the quality of life, and one way to improve the quality of life is to improve the financial well-being of the adults. That is why the present study is necessary for Pakistan as it will guide about factors that are related to the financial well-being of the adults that will ultimately enhance the quality of life of the adults.

It consists of various sections including (a) Population, sampling, and collection of data, (b) Questionnaire design, and (c) Procedure for statistical data analysis.

The researchers have collected 1500 responses. After deleting responses having missing values, unengaged responses, and outliers, there were only 1130 valid remaining responses. Table 1 reports the demographics of these 1130 respondents. The analysis results showed that the majority of the respondents were male (72%) having age group 25–30 years (40%). Moreover, the majority of the respondents were single (60%) having a master’s education (73%), and they belong to urban areas of the country. In addition to this, almost 85% of the population was having less than 10-year job experience.

Hair et al. (2017) recommended that, before applying a path modeling technique, the researcher should check data for normality and missing values. To compute path modeling technique, Hair et al. (2017) proposed a two-step process, that is:

To evaluate the measurement model, researchers need to determine reliability and validity (concerning the content, convergent, and discriminant) of the instruments (Hair et al., 2017).

The present study is an attempt to develop and test a conceptual model of FWB based on FS and ECCE. The present study is among the few pioneer studies that try to explore the link between FS, ECCE, and FWB among the adults of Pakistan. The results of the research provided support for our theoretical framework. The theory of consumer socialization, the theory of life-span development, and the theory of planned behaviors provided the basis for the theoretical model of the study.

The results of the present study partially supported the notation that through the financial socialization (FS) process as well as early childhood consumer experiences, adults can improve their FWB. Contrary to the previous studies (Shim et al., 2009a,b; Sabri and MacDonald, 2010; Serido et al., 2010; Sabri et al., 2012), our study showed that FS through peers exhibited a negative effect on the FWB of the individuals. That shows the FWB of the adults reduces who discusses and observes the financial behaviors of the peers. Usually, people who try to follow and observe the financial pattern of their peers often face difficulties in managing their financials. These difficulties arise due to the lack of confidence and lack of peer support at the time of stress. Schofield and Hotulainen (2004) showed that adults who receive no specific support from peers perform better than their control group, where individuals get peer support. Beshears et al. (2015) also showed the negative effect of peer information support on the savings. Based on this, we can say that the results of the present study are in line with (Schofield and Hotulainen, 2004; Beshears et al., 2015) that a high level of association with peers impaired decision-making process that results in a low level of financial well-being among the adults.

The results also revealed that financial socialization through teachers and parents have no direct effect on the FWB of adults. Parents are important socialization agents that help in improving financial decision making among adults (Drever et al., 2015). There are two possible explanations for this. The first is the lack of knowledge among the parents. Table 1 reports that only 14% of parents had a Master’s degree or above qualification. If parents have limited knowledge about the financials, then they cannot guide their children. In Pakistan, financial literacy programs were started in the early 1990s. That is the reason that parents have a low level of financial proficiency. Furthermore, they are unable to discuss it with their children. However, parents helped children in building locus of control that results in higher level FWB. Our study also supports this relationship.

Early childhood consumer experiences (ECCE) were having a direct effect on the FWB of adults. Consistent with Sabri et al. (2012), the present study supports the hypothesis that the adults having bank accounts or other saving mechanisms in childhood have a positive effect on the financial decisions made in adulthood. ECCE provides confidence to the adults that they can manage their finance in a batter way. Proper management of financials helps in achieving FWB during adulthood. Peng et al. (2007) also argued that experiences help more in making sound investments and saving decisions than financial education.

The results of the study revealed that locus of control mediates the relationship between FS through parents, teachers, and FWB, which confirms that FWB for the adults will be higher for those who discuss and observe financial behaviors with parents and teachers and have belief in their own. Individuals having an internal LOC are more likely to work hard to achieve their goals. Discussions with the parents and teachers on financial matters and observation of parents and teachers give confidence as well as knowledge to manage their finances. These improvements, along with internal LOC, results in better financial decisions. It ultimately leads to improvement in the FWB among the adults. LOC does not work for socialization through Peer and Early Childhood consumer experiences. The result of the present study is confirmatory (Prawitz and Cohart, 2016).

The financial decisions of the individuals are likely to be influenced by those with whom they interact. Peoples in their adulthoods usually spend more time with their parents and teachers and follow their decision patterns. The findings of the study supported this argument. That means that parents and teachers are in a better position to guide adults about financial decisions. For the results, we found support from the study (Oaten and Cheng, 2007). The discussion with the parents and teachers enables self- governing skills in individuals. It enables adults to face financial difficulties more confidently due to the confidence they gained by discussing and observing their parents on financial matters. In other words, due to the belief that they can control what is happening around, adults can handle the financial problems they face and can achieve financial well-being. The results suggested that individuals who discuss and observe the financial decision making patterns of their parents, as well as have LOC, improve their FWB.

Based on the result of the present study, we can say that there should be awareness programs for the teachers as well as parents and children as well. These programs should highlight the importance of sharing and practicing positive financial practices at homes and schools. In addition to this, these programs should be part of early education at school’s levels to motivate children to save and invest in their childhood. The contents should focus on experience-based, practical learning rather than the theoretical views about the management of financials. Through all these practices, children will learn about money-related activities and improve their financial well-being in adulthoods. The other important thing is that individuals’ parents, teachers, and peers should give confidence to the children that they can control things on their own. Although it is difficult for someone to develop it still, adults in their childhood were in a better position to learn new things and boost their confidence level. Parents and teachers can play a critical role in giving confidence to the children. That will help them to make in making better financial decisions and adjust themselves to the changing environment.

Although the present study has some important implications for the individuals, parents, teachers, society, and government, it has some limitations. In this study, self-administrated questionnaires were used to get data from the population-based on their judgments. Multiple sources of information should be utilized to collect more accurate data. By using the cross-sectional data, we cannot adequately explore the causal relationship among variables. Longitudinal data are required to test the causal connection. Some other financial behaviors should be considered while developing a model of FWB.

The datasets used in this study is not readily available because this paper is a part of the Ph.D. thesis of SU. Before of Ph.D. requirements, the data cannot be shared with anyone. However, individuals can forward their requests to access the datasets to Saifullah271@yahoo.com.

Ethical review and approval was not required for the study on human participants in accordance with the local legislation and institutional requirements. The patients/participants provided their written informed consent to participate in this study.

SU was involved in all the steps and procedures followed in this study, and the present study is a part of his Ph.D. thesis. SU was involved in conceptualization, reviewing the literature, finalizing research methodology, data collection and analysis, writing, and reviewing the original draft. KY was Ph.D. supervisor of SU at Jiangsu University of Zhenjiang. KY supervised this project and supported in all the steps followed in this study and played a supporting role in the conceptualization, reviewing the draft. Both authors contributed to the article and approved the submitted version.

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.