MATERIALISM IN FINANCE,ORIGINALITY, PRACTICAL IMPLICATIONS

 Definition

Materialism, in a financial context, is the belief that material possessions are central to a person's well-being and that acquiring them is a primary goal in life. 

Originality/value

The paper integrates two well-established theoretical frameworks, the theory of planned behavior and materialism, to provide a comprehensive understanding of consumer credit card usage. This integration allows for a more nuanced analysis of the factors influencing credit card behavior. By utilizing data from the 2016 National Financial Well-Being Survey and employing Structural Equation Modeling (SEM), the paper conducts a robust empirical investigation. This adds credibility to the findings and allows for the testing of hypotheses derived from the theoretical frameworks. The findings of the paper have practical implications for policymakers, financial institutions, and consumer advocates.

Purpose

This study aims to utilize the theory of planned behavior, integrating materialism, financial socialization, and perceived financial capability, to explore the psychological determinants influencing credit card repayment behaviors.

Research limitations/implications

Employing Structural Equation Modeling, the study investigated whether materialism, financial socialization, and perceived financial capability indirectly influenced credit card repayment behaviors through their impact on financial intention.

Design/methodology/approach

The data for this research was sourced from the 2016 National Financial Well-Being Survey. Employing Structural Equation Modeling, this study investigated whether materialism, financial socialization, and perceived financial capability influenced credit card repayment behaviors through their impact on financial intention.

Findings

The analysis suggests significant associations between materialism, financial socialization, and perceived financial capability with credit card repayment behaviors. Furthermore, the results highlight the substantial mediating role of financial intention in shaping the relationship between materialism, financial socialization, perceived financial capability, and credit card repayment behaviors.

Social implications

Policy makers can also use these findings to develop regulations and consumer protection measures to promote responsible credit card use. For instance, they can introduce laws that require credit card companies to disclose the full cost of credit, including interest rates, fees, and charges, in a clear and transparent manner. They can also promote financial education programs to help individuals with high levels of materialism manage their credit card usage and debt.

Practical implications

The findings of this study underscore the importance of considering credit card utilization and leverage used by average consumers. Supporting community-based financial education programs might be useful for reaching individuals and families at the grassroots level and educating participants about the deleterious effects of maintaining high credit card balances and the perils of pursuing their materialistic desires by leveraging these purchases through the utilization of credit cards. Credit card companies can use these findings to inform their marketing strategies and design credit products that cater to the needs of different segments of customers. From a policy standpoint, it is extremely important to develop programs that protect those individuals who are most vulnerable and need the most help with managing their money.

In finance, materialism refers to the importance an individual places on acquiring and possessing material goods as a means to achieve happiness and life satisfaction.  It is a set of values that places an emphasis on the possessions that define success and happiness, frequently resulting in an emphasis on acquiring wealth and status symbols. • A more in-depth explanation is provided below: 

•      Financial Literacy

Research suggests that materialistic individuals may also have lower levels of financial literacy and be less adept at managing their finances effectively. 

 • Dual Nature of Materialism

According to some research, materialism has a dual nature, with some people using possessions to avoid scarcity and others to project status. 

• Impact on Financial Behavior

 People who are highly materialistic may be more likely to spend impulsively, accumulate debt, and place material goals ahead of financial security. 

• Consumption that stands out

Materialism is often linked to conspicuous consumption, where individuals purchase and display expensive items to signal social status and wealth. 

 • Not Always About Income

 It's important to note that materialism is not solely determined by income level.  Materialistic tendencies can exist even in those with lower incomes. 

•      Negative Repercussions 

The pursuit of material possessions can lead to financial problems, stress, and a decreased sense of overall well-being.