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How Young Adults Can Build Good Financial Habits — and Improve Their Well-being

New research says you aren’t truly “adulting” until you’re in tune with your bank account.

Pormezz / Shutterstock
Pormezz / Shutterstock

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Today’s emerging adults are striving to be independent, self-sufficient individuals in a post-recession economic situation. Achieving adult status is an important developmental marker, yet prior studies have identified a delay in young people achieving this status in the U.S. Finance seems to be a particularly possible explanation for this delay. 

My co-authors and I decided to dive into this research field for these two observations, and to be honest, we are not too surprised that our findings basically fit our theories and hypotheses. 

Yet we are very excited to identify two findings that were somewhat understudied in existing literature. 

The first is the over-time increase in individuals’ own financial behaviors can promote better mental health and, in turn, adult identity. This finding fits the developmental perspective: Individuals’ financial behaviors can change over time (versus being in a static status). In addition to having a strong start (i.e. indicated by more responsible financial behaviors in the fourth year of college), young individuals can achieve better life outcomes if they keep practicing and accumulating responsible financial behaviors.

The second finding is the financial behaviors of individuals’ partners’ can promote better mental health, more satisfying relationships, and in turn a greater sense of adult identity. Illuminated by this finding, we suggest practitioners put the development of emerging adults back in the context of intimate relationships. 

Responsible financial behaviors are not difficult to enact. I included some items we used in our study as indicators for responsible financial behaviors that students can practice in their everyday school life. For example, students can start (if they haven’t done so yet) tracking monthly expenses, paying bills on time, spending within a budget, and saving for emergencies. Meanwhile, students should avoid maxing out their credit card limit, borrowing money from credit cards, or using payday loan services. 

We suggest that recent graduates keep practicing responsible financial behaviors during the school-to-work transition, including spending, budgeting, and investing, to bring favorable life outcomes like lower depressive symptoms and higher adult identity.

At the same time, we suggest greater awareness of one’s partners’ financial behaviors. Individuals are more likely to obtain adult identity when their partners enact more responsible financial behaviors, and our results show that their relationship satisfaction increases as well. 

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More on Mental Health on Campus:

What Campus Mental Health Centers Are Doing to Keep Up With Student Need

If You’re a Student Who’s Struggling With Mental Health, These 7 Tips Will Help

The Hidden Stress of RAs in the Student Mental Health Crisis

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