Understanding Financial Behavior Among Youth: The Roles of Self-Esteem, Emotional Intelligence, and Risk Tolerance

Rini Triani; Santi Novani

doi:10.55227/ijhess.v5i1.1790

Authors

Rini Triani School of Business and Management Bandung Institute of Technology
Santi Novani School of Business and Management, Bandung Institute of Technology, Bandung

DOI:

https://doi.org/10.55227/ijhess.v5i1.1790

Keywords:

Financial behavior, Self-esteem, Emotional intelligence, Risk tolerance

Abstract

This study investigates the psychological determinants of financial behavior among Indonesian youth, a demographic navigating early transitions into independence and professional life amid economic challenges and social pressures. Specifically, it examines the roles of self-esteem, emotional intelligence, and risk tolerance in shaping financial decision making. A quantitative approach was employed, with data collected from 306 respondents aged 18 to 30 through an online survey targeting youth in the Jabodetabek area, an urban region often seen as representative of broader Indonesian society. The data were analyzed using Partial Least Squares Structural Equation Modeling (PLS SEM) to assess the relationships among the variables. The findings reveal that self-esteem (β = 0.558, p < 0.001), emotional intelligence (β = 0.386, p < 0.001), and risk tolerance (β = 0.063, p = 0.015) all exert significant and positive effects on financial behavior. The model explains 80.3 percent of the variance in financial behavior (R² = 0.803), indicating strong predictive power. However, risk tolerance does not significantly mediate the relationship between either self-esteem or emotional intelligence and financial behavior (p > 0.05). These results highlight the critical importance of psychological traits, particularly self-esteem and emotional intelligence, in promoting sound financial practices. Enhancing these internal factors may offer a strategic pathway to improving financial well being among Indonesia’s younger generation.

References

Adiandari, A. M., & Okvitawanli. (2023). The Relevance of Financial Literacy to Indonesian Millennials' Behavior, Awareness, and Financial Independence. Majalah Ilmiah Bijak, 20(1), 97 - 107.

Aisjah, S., Djazuli, A., & Nurmasari, N. D. (2024). The Interaction Of Emotional Intelligence And Financial Literacy On Investment Decisions: A Mediation Study Of Risk Tolerance And Risk Perception. (p. 4th International Conference of Humanitis and Social Science). Surakarta: Universitas Sebelas Maret.

Alter, A. L., & Hershfield, H. E. (2014). People search for meaning when they approach a new decade in chronological age. PNAS Proceedings of the National Academy of Sciences of the United States of America, 111. doi:https://doi.org/10.1073/pnas.1415086111

Bian, W., Cong, L. W., & Ji, Y. (2023). The Rise of E-Wallets and Buy-Now-Pay-Later: Payment Competition, Credit Expansion, and Consumer Behavior. NBER Working Paper Series, 1-56. doi:10.3386/w31202

Bykova, S., Zhylin, M., Bulavina, O., Artemchuk, M., & Purhani, S. H. (2024). The Role of Emotional Intelligence in Making Successful Financial Decisions. Theoretical and Practical Research in Economic Fields. doi: https://doi.org/10.14505/tpref.v15.1(29).14

Cavalheiro, E. A., Vieira, K. M., & Ceretta, P. S. (2012). The determinants of risk tolerance: A behavioral analysis. Corporate Ownership & Control, 9(2), 476-485.

Chatterjee, S., Finke, M., & Harness, N. (2008). Self-esteem and Individual Wealth. Munich Personal RePEc Archive.

Creswell, J. W. (2014). Research design: Qualitative, quantitative, and mixed methods approaches (4th ed.). SAGE Publications.

Fraenkel, J. R., Wallen, N. E., & Hyun, H. H. (2012). How to design and evaluate research in education (8th ed.). McGraw-Hill.

Grable, J. E., & Joo, S. H. (2004). Environmental and biophysical factors associated with financial risk tolerance. Journal of Financial Counseling and Planning, 15(1), 73-82.

Indrawati, N. K., Muljaningsih, S., Juwita, H. A., Jazuli, A. M., Nurmasari, N. D., & Fahlevi, M. (2025). The mediator role of risk tolerance and risk perception in the relationship between financial literacy and financing decision. Cogent Business & Management, 12(1). doi:https://doi.org/10.1080/23311975.2025.2468877

Irandoust, M. (2017). Factors Associated With Financial Risk Tolerance Based. Journal of Financial Counseling and Planning,, 155–164. doi:http://dx.doi.org/10.1891/1052-3073.28.1.155

Kour, M., & Rajinder, K. (2020). Impact of Social Media Marketing on Consumer Buying Behaviour: An Empirical Study. International Journal of Advanced Science and Technology, 975 - 984.

KSEI. (2025, January). Statistik Pasar Modal Indonesia. Retrieved from Kustodian Sentra Efek Indonesia: https://www.ksei.co.id/files/Statistik_Publik_Januari_2025_final.pdf

Loewenstein, G. F., Weber, E. U., Hsee, C. K., & Welch, N. (2001). Risk as feelings. Psychological bulletin, 127(2).

Lusardi, A., & Mitchell, O. S. (2023). The Importance of Financial Literacy: Opening a New Field. NBER Working Paper Series, 1-33. doi:10.3386/w31145

Nofsinger, J. R. (2005). Social mood and financial economics. The Journal of Behavioral Finance, 144-160.

Nokhiz, P., Ruwanpathirana, A. K., Bhaskara, A., & Venkatasubramanian, S. (2025). Counting Hours, Counting Losses: The Toll of Unpredictable Work Schedules on Financial Security. Cornell University. doi:https://doi.org/10.48550/arXiv.2504.07719

OJK. (2024, November). Statistik P2P Lending Periode September 2024. Retrieved from Otoritas Jasa Keuangan: https://ojk.go.id/id/kanal/iknb/data-dan-statistik/fintech/Pages/Statistik-P2P-Lending-Periode-September2024.aspx:contentReference[oaicite:1]{index=1}

OJK, I. (2025, May). FINANCIAL LITERACY AND INCLUSION INDEX OF THE PUBLIC INCREASES. Retrieved from OJK International Information Hub: https://iru.ojk.go.id/iru/news/detailnews/13688/ojk-and-bps-announce-the-results-of-the-2025-national-survey-on-financial-literacy-and-inclusion-snlik

Prims, J. P., & Moore, D. A. (2017). Overconfidence over the lifespan. Judgment and Decision Making, 29–41. doi:https://doi.org/10.1017/S1930297500005222

Rahayu, R., Ali, S., Aulia, A., & Hidayah, R. (2022). The Current Digital Financial Literacy and Financial Behavior in Indonesian Millennial Generation. Journal of Accounting and Investment, 23 (1), 23(1), 78–94. doi:https://doi.org/10.18196/jai.v23i1.13205

Roszkowski, M. J., & Davey, G. (2010). Risk Perception and Risk Tolerance Changes Attributable to the 2008 Economic Crisis: A Subtle but Critical Difference. Journal of Financial Service Professionals.

Serido, J., Shim, S., & Tang, C. (2013). A developmental model of financial capability: A framework for promoting a successful transition to adulthood. International Journal of Behavioral Development, 37(4), 287–297.

Sharma, P. (2025). Unveiling investment behavior: through emotional intelligence, social stigma, financial literacy and risk tolerance. International Journal of Social Economics, 52(1), 16-32. doi:https://doi.org/10.1108/IJSE-08-2023-0626

Song, C. L., Pan, D., Ayub, A., & Cai, B. (2023). The interplay between financial literacy, financial risk tolerance, and financial behaviour: The moderator effect of emotional intelligence. Psychology Research and Behavior Management, 535–548. doi:https://doi.org/10.2147/PRBM.S398450

Tang, N., & Baker, A. (2016). Self-esteem, financial knowledge and financial behavior. Journal of Economic Psychology, 164-176. doi:https://doi.org/10.1016/j.joep.2016.04.005

Todaro, M. P., & Smith, S. C. (2015). Economic Development (Thirdteen ed.). United Kingdom: PEARSON EDUCATION LIMITED. Retrieved from https://students.aiu.edu/submissions/profiles/resources/onlineBook/F5v9e6_Economic%20Development-2020.pdf

Wahyu, V. D., & Firmialy, S. D. (2024). Analysis of financial literacy and overconfidence on investment decision with risk tolerance mediation and gender as moderator (Case study of Generation Z investors in Bandung City). Journal of Economics, Finance and Management Studies, 7(8). doi:https://doi.org/10.47191/jefms/v7-i8-63

Yuliani, Y., Taufik, T., Mukhtaruddin, M., & Saputri, N. D. (2021). Assessing model of financial satisfaction predictors: The mediating effect of financial risk tolerance and financial behavior. Journal of Accounting Research, Organization and Economics, 140–152.