Spending Model under Financial Literacy

Aims: The study attempted to assess how family background, and peer role affect the spending decisions of working youth in Pakistan. Current study also tested effect of financial literacy as mediator between relationship of peer role and family back ground with spending decisions of working youth.

Study Design: Cross sectional survey research (Quantitative)

Place and Duration of Study: Different organization in Pakistan, between May- September-2019

Methodology: Working youth among different organizations with total of 309 responses were usable out of total sample 574from Pakistan through stratified random sampling Structural equation modeling was applied through Smart PLS3.

Results: The study found that the insignificant effect of peer role on spending, and significant effect on financial literacy. On other side family background shown insignificant effect on spending decisions but significant effect on financial literacy. Furthermore this study also found significant effect of financial literacy on spending decisions. Additionally this research also shown significant mediating effect of family background and peer role on spending decisions through financial literacy.

Conclusion: Findings of this study shaded the light that how family background, peer role have influenced spending decisions under umbrella of relative income hypothesis and life cycle hypothesis, directly and indirectly through mediation by financial literacy. Further policy makers could design policies and arranging training workshops for financial literacy awareness among working youth.