Muhammad Ilham Pakawaru, Mohammad Iqbal Bakry, Muliati, Yuldi Mile, Andi Ainil Mufidah Tanra

The Role of Financial Literacy in Moderating the Influence of Digital Payments and Lifestyle on Financial Management Behavior of Generation Z in Palu City

Introduction

The role of financial literacy in moderating the influence of digital payments and lifestyle on financial management behavior of generation z in palu city. Discover how financial literacy moderates the influence of digital payments and lifestyle on Generation Z's financial management behavior in Palu City. Essential for financial well-being.

Abstract

Purpose – This study aims to examine the role of financial literacy in moderating the influence of digital payments and lifestyle on the financial management behaviour of Generation Z in Palu City. Design/methodology/approach – The sample consisted of 210 Generation Z respondents residing in Palu who use digital or non-cash payment methods in their transactions. Data were analysed using WarpPLS 7.0. Originality - These findings highlight that good financial literacy helps individuals recognise the impact of lifestyle on their finances and take appropriate steps to manage expenditures more effectively as a form of self-control. Findings and Discussion – The results show that digital payments have a direct influence on the financial management behaviour of Generation Z in Palu City, while lifestyle has no direct effect. Financial literacy weakens the impact of lifestyle on financial management behaviour, but strengthens the impact of digital payments on financial management behaviour. The adoption of digital payments reflects Generation Z’s adaptation to technological developments that increasingly promote non-cash transactions in Palu and Indonesia in general, providing convenience in payment processes. Conclusion – This study implies that financial literacy can serve as a controlling factor (a tangible form of perceived behavioural control), bridging the gap between consumptive intentions and actual behaviour. For this reason, the government and financial institutions may employ financial literacy as a preventive strategy to mitigate debt-related issues, particularly among younger generations with digital and consumptive lifestyles.

Review

This study provides a timely and relevant investigation into the intricate dynamics shaping the financial management behavior of Generation Z, a demographic increasingly central to economic discourse. By focusing on Palu City, the research offers a localized yet insightful perspective on how digital payments and lifestyle choices interact with financial literacy to influence the financial habits of young adults. The core objective of exploring financial literacy's moderating role is particularly pertinent, as it addresses a critical gap in understanding how educational interventions can empower individuals amidst a rapidly evolving financial landscape characterized by technological advancements and shifting consumption patterns. The methodology employed, utilizing WarpPLS 7.0 with a sample of 210 Gen Z respondents, appears appropriate for the quantitative examination of these complex relationships. The findings reveal compelling insights: while digital payments directly impact financial management, lifestyle surprisingly shows no direct effect. Crucially, financial literacy emerges as a significant moderator, demonstrating a dual role by weakening the negative impact of lifestyle and strengthening the positive influence of digital payments. This nuanced understanding of financial literacy's moderating effects underscores its importance as a self-control mechanism, enabling Gen Z to better recognize and mitigate the financial implications of their lifestyle choices and harness the conveniences of digital payments responsibly. Despite its valuable contributions, the study's generalizability might be constrained by its focus on a single city, Palu, suggesting a need for replication in broader or diverse geographical contexts to confirm the universality of these findings. While the originality highlights financial literacy's role in self-control, the abstract could benefit from further elaboration on how lifestyle was conceptualized and measured within the study, given its pivotal role as an independent variable. Nevertheless, the implications are significant, positioning financial literacy as a vital tool for policymakers and financial institutions to proactively address potential debt issues among younger generations. Future research could explore qualitative aspects of Gen Z's financial decision-making or investigate long-term behavioral changes resulting from enhanced financial literacy programs.

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