Linking financial socialization to financial well-being: A dual-stage SEM-ANN approach in India

The present research focuses on the impact of financial socialization on the financial well-being within the framework of an emerging economy, i.e., India, with particular attention to individuals navigating the early stages of financial independence. The study is carried out by adopting two stages of analysis using data from a survey conducted among 375 respondents. The hypothesized relationships were first examined using Partial Least Squares Structural Equation Modelling (PLS-SEM), and then an Artificial Neural Network (ANN) was used to validate the findings and assess the relative significance of the predictors. The results indicate that financial socialization plays an important role in increasing financial well-being. The role of the parents and peers is an important factor of socialization, and it is crucial to highlight the importance of informal ways of financial education when formal sources of financial education are not available. The ANN analysis also further validated the results, in which the financial behavior was the most reliable predictor of the financial well-being. This study has made significant contributions to the literature in two ways: It has introduced the concept of financial socialization into the Indian context and it has demonstrated the value of combining SEM and ANN as a methodology. Given the predominance of young, unmarried respondents and students, the findings provide contextually bounded evidence concerning financial well-being during the early stages of financial independence and should not be interpreted as representative of the broader adult population. The results can be applied by policy makers, financial educators and counsellors to design inclusive programs that leverage families, peers and community networks to increase financial capacity and improve well-being.