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Rated Mature for All Audiences: Is Financial Identity 18+?

As an emerging adult (ages 18-30), I can confidently say I do not actually feel like an adult. I still rely on my parents for car insurance, and regularly find myself asking what the difference between a Roth and Traditional IRA account is (many apologies to my family finance teachers, you really did your best to educate me). Many emerging adults find themselves in the same boat. With an economy that seems to require more and more of you to become a “fully fledged” adult with a house, car, and steady income stream, it can be difficult to identify as an adult on your 18th birthday.

In a longitudinal study following a group of emerging adults in the US, researchers Joyce Serido and colleagues found that there is in fact a link between a sense of financial identity and financial self-sufficiency in emerging adulthood. This to say that as emerging adults became financially self sufficient, they were more likely to identify as an adult. This makes sense, as many emerging adults consider financial self-reliance an important step in achieving adult status.[1]

woman hiking in the mountains

This study was the first to find evidence over time that financial identity is a predictor of adult status. A cohort of US college students (from the same university) were followed for 8 years in their formative years—including the transition to and from college as well as the transition into a career. The researchers were able to separate this cohort into three separate groups of financial identity: Pathfinders, Followers, and Drifters.

Types of Identity

Pathfinders: This group represented a high level of exploration of various types of financial management styles, which led to high commitment to a current financial plan and approach to managing finances. This group is comparable to Saxey’s[2] Intergenerational Financial Flourishers group—individuals whose parents were positive financial models for them growing up, which led to positive financial behaviors as an adult. However, in contrast, the Pathfinder group did not necessarily require a positive financial model in their youth.

Followers: Individuals in this group followed their parents’ example of financial behavior. This group along with the Pathfinders was found to have higher levels of financial capability than the following group.

Drifters: These individuals could have had either high or low levels of financial exploration but failed to commit to a certain financial management plan or identity. Similar to Saxey’s Financial Flounderers, these individuals may not feel that they manage money well.

Interestingly, over time the number of participants classified as followers declined, and the number of pathfinders increased. This may be due to participants becoming more solidified in their financial approach and because individuals usually learn more about finances as time goes on.

This study also found that financial management had a direct association with feelings of adulthood, while feelings of adulthood did not affect financial management. This may suggest that financial identity promotes people to adult status, rather than adult status leading to financial identity.


1. Financially educate children, youth, and emerging adults. Financial identity established in emerging adulthood tends to last throughout adulthood, so it’s important to educate emerging adults financially. Having a positive view of their financial identity will likely help them think of themselves as a capable adult. Financial education may include family-focused financial education, including slowly encouraging youth to become more self reliant over time, leading to a smooth transition into becoming a financially self-reliant adult. For example, parents may have children wait for a phone plan until they are able to work a part-time job to pay for that phone plan, teaching the value of budgeting and the cost of living expenses.

2. Parents should lead the way. Parents, be a positive financial model and educate your child on various approaches to finances. Some children may manage money exactly as their parents did and find that method works well for them (followers), while others need to search for a more individualized approach to handling money. Either way, parents can be supportive of their children by providing experiences to practice managing money in the home as well as exploring other financial techniques and learning together through financial media, classes, and/or financial advisors.


[1] Arnett, J. J. (2000). Emerging adulthood: A theory of development from the late teens through the twenties. American psychologist, 55(5), 469.

[2] Pistritto, M., Yi, M., McRae, K., Lindman, M., Cavalcante, I., Barros, J., Saxey, M. T., & LeBaron-Black, A. B. (2023, April). Rise from the ashes: The modeling-compensation hypothesis applied to parent financial socialization. Paper presented at the annual conference of the Utah Council on Family Relations held in Provo, UT.