Personal financial decision-making: An experiential model

Date of Completion

January 1999


Economics, Finance|Education, Adult and Continuing




Poor financial decision making, and resulting financial problems, is evident throughout the American population. Even well educated young professionals have not been trained to make good personal financial decisions. Because schools have failed to adequately prepare young professionals to make good personal financial decisions, educators and advisors are faced with the need to upgrade adults' personal financial decision making. Addressing this problem can begin by considering “How do young business professionals make personal financial decisions, and how can educators facilitate improvement in adults' personal financial decision-making?” ^ This research explores the steps that young business professionals use to make personal financial decisions. In addition, the study examines the roles of three variables, experience, expectations, and goals, in the decision-making processes of participants in the study. Finally, this research examines how the variables experience, expectations, and goals, relate to the evaluation of the personal financial decision. ^ The sample consisted of young business professionals (n = 70) near completion of their graduate degrees in business. The repertory grid, an instrument associated with personal construct psychology, was used to identify the significant steps in the financial decision-making process. Grid data were analyzed using manual focusing and principal components analysis. An open-ended questionnaire concerning the roles of experience, expectations, and goals, supplemented the grid data. Data from the questionnaire were examined using standard content analysis procedures that included identifying themes and statistically testing for independence among themes and variables. ^ Findings confirmed that each of the independent variables, experience, expectations, and goals, plays a significant role in the personal financial decision-making processes of participants in this study. A model representing the relationships among the variables in the study was presented. Finally, a model of the personal financial decision-making process of participants in the study was constructed based on the key findings. ^ Clarifying the links between learning theory and financial decision-making can improve understanding of adults' personal financial decision-making processes. This information can provide implications for educators and advisors seeking to facilitate improvement in learners' personal financial decision-making. ^