Predictors of Financial Identity Development in Emerging Adulthood

To explore how emerging adults grapple with the increasing demands of fiscal responsibility, the present study tests a model of identity formation in the domain of finance. We draw on Erikson’s theory of identity formation as operationalized by Marcia’s identity status model, which details four identity statuses: achieved, foreclosed, moratorium, and diffused. A sample of college students (N = 1,511) were surveyed at two time points: in their first (ages 18–21, T1) and fourth (ages 21–24, T2) years of college. Primarily, we find evidence for financial identity stability, although we found some evidence for financial identity regression from moratorium to foreclosed status. After controlling for T1 financial identity, T1 variables were most predictive of changes in T2 foreclosure: Increases in foreclosure were predicted by measures of perceived parental socioeconomic status, parental communication, financial education, and subjective norms at T1.