The Factors that Influencing Financial Behavior: A Survey of Undergraduate Students in Indonesia

Abstract

At the university level, most of students will face their first independence life. It brings challenges for a lot of young people, where they have to learn to manage their own needs, especially for those who are not under family control. Since undergraduate students have learned about the financial instrument formally and informally, it gives some influences towards financial behavior. The interaction with others -peer or community- also can influence people's behavior. However, selfmotivation also should be considered as the factor in determining people's behavior, including financial behavior. Financial behavior will be classified into four financial activities, which are budgeting, saving, spending, and investing. The aim of this research was to find the best approaches for undergraduate students to improve their financial behavior, by finding the most significant factor towards each financial activity. The selected dependent variables are financial education, family influence, peer influence, and self-motivation. The data was collected by numbers of 400 respondents from undergraduate students in Indonesia. It was analyzed by Structural Equation Modeling (SEM) and dependent t-test. The result is financial education and family has significant influence in financial behavior of undergraduate students. There is different behavior that occured between students who had experience in financial education and who had no experience in financial education as well as between students who lived with their parents and who lived separately from their parents.