THE IMPACT OF PERSONAL FINANCIAL PLANNING TOWARDS FINANCIAL BEHAVIOR MEDIATED BY PERSONAL FINANCIAL MANAGEMENT: The Case of Millennials in Jakarta, Indonesia

Abstract

Generation Y or called as Millennials (born in 1980-1994) are predicted to become the most important generation in the future of finance which they will reshape the economy by their unique experiences that will change the ways to buy and sell. However, research found out that Millennials are more consumtive in spending, pragmatic and would like everything done instantaneously. This contrasts with the behavior of previous generations which were more appreciative with financial processes. In fact, the way of Millennials do the personal financial planning and management is not supporting them to have a good financial behavior since they consider the personal financial planning and management as less important thing. Then, from the running phenomenon above, this thesis research aims to test the impact of personal financial planning towards financial behavior mediated by personal financial management. So that, the result can be used for improving Millennials’ financial behavior. This research used 280 sample size of Millennials in Jakarta which the data was gathered using non-probability sampling technique (purposive and quota sampling) and analyzed by Structural Equation Modeling (SEM). The result found out that all of the hypotheses are accepted which are Personal Financial Planning has a significant impact towards Personal Financial Management; Personal Financial Planning has a significant impact towards Financial Behavior; and Personal Financial Management has a significant impact towards Financial Behavior. Eventually, it is recommended for all parties such as government and educational institutions to increase people’s awareness towards the usage of personal financial planning and its benefits, also for each individual to start using personal financial planning in their daily life.