Unpacking financial (dis)engagement of young adults transitioning into the workforce: An investigation of financial habit clusters

We cluster 519 young Australian adults entering the full-time workforce across financial habits associated with an individual's investment activity, credit use, and savings ability. We identified three distinct groups: Financial Explorers , who engage broadly with an array of financial habits; Habitual Savers , who report traditional saving practices but avoid investing and using debt; and the Disengaged , who show little engagement with their finances beyond comparing prices when making a purchase. Results indicate that these groupings are influenced by more than financial literacy alone. Drawing on the Theory of Planned Behavior, we find that normative beliefs and perceived behavioral control are important mediators between personality traits, financial stress, and financial habits. These findings suggest that financial interventions should be tailored to different behavioral patterns. • Cluster analysis of young adults' financial habits reveals that individuals are either “ Habitual Savers ”, “ Financial Explorers ”, or “ Disengaged ”. • Normative beliefs and perceived behavioral control partially mediate how personality traits and financial stress influence financial habits. • Findings inform targeted financial health interventions , such as low-cost, incentivized interventions for the Disengaged , investment-focused guidance for Habitual Savers , and tech-focused advice for Financial Explorers . • Healthy financial habits are generally associated with better financial outcomes.