Does Locus of Control Mediate the Relationship Between Financial Knowledge and Income within Financial Management Behaviour? Evidence from Productive-Aged People in West Sumatera Indonesia

Abstract

Financial management behaviour is a significant issue. This is related to the phenomenon of consumptive behaviour that occurs among productive-aged people in Indonesia, including West Sumatera. The aim of this study was to analyse the personal financial management behaviour of productive-aged people. The population of people aged 18-55 in West Sumatera is 2,845,734. This study used a snowball sampling technique with a total of 400 respondents as the sample group. The data used were primary data obtained via questionnaires. The data were analysed using Structural Equation Modeling (SEM) by way of AMOS 24. The results indicated that an internal locus of control could be improved by increasing financial knowledge and income. Meanwhile, to create good personal financial management behaviour for productive-aged people, financial knowledge and income was the only increase required. Without a locus of control, they still could achieve financial prosperity and surmount their financial problems.