Digital financial literacy, current behavior of saving and spending and its future foresight

ABSTRACT

This paper investigates the relationship among digital financial literacy (DFL), current saving behavior, current spending behavior, and foresight of future spending and saving behavior among Indonesian millennials. This research uses structural equation modeling to estimate the relationship among the variables. The research surveyed millennials in the 25–40 age group in several urban areas of Java island. The survey collected information of the indicators constructing the latent variables. The results indicate that DFL is influenced by social-economic standing. DFL also positively affects the current saving and spending behavior. Moreover, the current saving and spending behavior contribute to the future saving and spending foresight. This research suggests policymaker to provide knowledge about DFL to the millennials.

KEYWORDS:

• Digital financial literacy
• saving behavior
• spending behavior
• millennial

JEL Classification:

• O33
• O35
• G21
• G51
• G53

Acknowledgments

This research is supported by a Research Grant Bank Indonesia (RGBI) Program 2019. This research also has facility supports from Padjadjaran University and PDUPT-Dikti 2020. We thank Dr. Reza, Dr. Solikin M. Juhro, Dr. Ali, Dr. Ascarya and fellow researchers from Bank Indonesia Institute and Padjadjaran University for extremely useful suggestions. We are also indebted to the anonymous referees for providing insightful comments to improve this paper. All remaining errors are ours.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

1 Data from Indonesian Bureau of Central Statistics (2018) reported that about 57% of the Indonesian population of 266.1 million was projected to inhabit in Java Island in 2019.

2 For example, this research dropped indicators of DFA1, DFS3 and DFE4 in the dimension of digital financial literacy. Also, the indicators of BSA1 and BSA2 were dropped from the dimension of saving behavior because the loading factors were <0.4.