The Determinants of Perceived Saving and Spending Decisions Among Working Youth in Pakistan

The purpose of this study is to understand the saving and spending decisions of Pakistan's working youth. The study mainly investigated whether factors such as family background, peer role, and financial stress play an important role in saving and spending decisions by working youth in Pakistan. Furthermore, this study examined the impact of financial literacy as a mediator in the relationship between independent and dependent variables. The respondents in this study are working youth in various organizations in Pakistan during May 2019 to September 2019. Stratified random sampling technique was employed to determine the sample and 309 questionnaires were analyzed using Structural Equation Modeling (SEM) with Smart PLS3. The findings show that financial stress significantly affects financial literacy, saving, and spending decisions. Meanwhile, family background also significantly affects saving decisions and financial literacy in the spending model. In both models, peer role has a significant effect on financial literacy. Financial literacy significantly affects saving and spending decisions but peer role does not. Besides, family background does not significantly affect spending decisions and financial literacy in the saving model. The results also show that financial literacy, as mediating variable, significantly affects the relationship between all independent and dependent variables. Financial literacy is shown as a significant factor in saving and spending decisions among Pakistan's working youth. Therefore, policymakers and the government can work together to implement initiatives to increase financial literacy, among youth, in order to assist them in making sound financial decisions. This study provides important implications for theory and practice, and recommendations for future research.