Money Lessons That Stick

Abstract

Adult New Zealanders with comparable household incomes, ages, and education levels nonetheless report subjective financial wellbeing scores that span almost the full unit interval, and the residual variance after demographic controls is too large to attribute to measurement error alone. Household-finance researchers have converged on **family financial socialization** — the transmission of money-management dispositions, discussion habits, and behavioural modelling from parents to children — as the most plausible explanation for the within-stratum dispersion.

This paper investigates **financial parenting**, operationalised through the Family Financial Socialization Theory's three proximal channels (modelling, discussion, experiential learning), as the behavioural construct driving the transmission to adult capability and downstream wellbeing. The applied question is whether these three FFST channels operate independently in producing adult financial capability, and whether the resulting capability mediates the transmission to adult financial wellbeing.

The empirical setting is the ANZ Financial Wellbeing Survey (New Zealand) NZ-representative survey, the only NZ instrument that fields the full validated financial-parenting battery alongside subjective financial wellbeing, financial capability, and adult-demographic controls. The existing analysis applies structural equation modelling to anchor the FFST path coefficients, probit estimation for binary financial-distress outcomes, and OLS regression for the wellbeing composite. The SEM results recover the expected proximal-channel transmission pattern.

We propose extending the existing analysis with two ML layers: a latent-class analysis that would recover heterogeneous parenting-style typologies (high-discussion / balanced / instructional-only profiles are the conceptual hypothesis) that the parametric SEM specification suppresses, and an Imai–Keele debiased-ML mediation decomposition that would identify the share of the parenting effect operating through the financial-capability channel versus through direct mechanisms. The proposed extensions, once implemented, would supply a profile-targeted screening rule for parental financial-education curriculum design and identify which transmission channel is the largest policy lever for adult-wellbeing improvement.

Data & Methods