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Abstract

This study aims to examine the dynamics from financial knowledge, financial attitudes, and financial behaviors to economic self-sufficiency using data of economically disadvantaged youths aged 15 to 39 receiving public assistance. The study hypothesizes and empirically investigates the pathways from financial knowledge and attitudes to economic self-sufficiency mediated by financial behaviors based on the knowledge, attitude, and behaviors model. The findings from 866 Korean economically disadvantaged youths suggest that financial knowledge and attitude initiate financial behavior and eventually contribute to economic self-sufficiency. These results reveal that financial knowledge and proper financial attitude are crucial for economic self-sufficiency when accompanied by behaviors.

Plain Language Summary

How Financial Habits Help Struggling Young People in Korea Become Self-Reliant

Many young people in South Korea face serious financial difficulties, including unstable jobs and limited savings. This study looked at how financial literacy—which includes what people know, how they feel, and how they act about money—can help low-income youth become more financially independent. Using survey data from 866 young people receiving government support, the study found that knowing about money and having a positive attitude toward finances only lead to better outcomes when they are followed by real financial actions—like budgeting or saving. In other words, action matters. The study suggests that programs aiming to help young people should go beyond teaching financial facts. They should also help young people develop good money habits. The findings offer useful ideas for improving policies and programs in South Korea and other countries where young adults are struggling to achieve financial independence.

Keywords

the knowledge attitude and behaviors model financial literacy financial knowledge financial attitude financial behaviors self-sufficiency youths

Introduction

South Korea’s economic transformation from one of the world’s poorest nations in 1950s to the 14th largest economy by nominal GDP (IMF, 2024) represents a remarkable development success story. However, this national prosperity has not translated into economic security for all segments of society, particularly for young adults. The latest employment statistics reveal an even more severe picture of youth economic hardship, highlighting the growing paradox between national economic growth and individual youth prosperity. Current youth employment data demonstrates alarming trends. Youth unemployment in Korea stands at 8.1% compared to the OECD average of 6.2%, while the youth poverty rate reaches 10.2%—significantly higher than the OECD average of 7.8% (OECD, 2024). More concerning is the growing number of young people receiving public assistance and NEET youths. The share of public assistance recipients aged 20 to 39 rose from 1.1% in 2011 to 1.9% in 2022 (Statistics Korea, 2011, 2022; Ministry of Health and Welfare, 2011, 2022) and Korea’s NEET youth rate reaches 18%, exceeding the OECD average of 14% (OECD, 2022). These phenomena extend beyond individual hardship, creating intergenerational poverty cycles and imposing social burden and substantial social costs through increased welfare dependency and reduced human capital development (Choi et al., 2019).

The persistence of youth poverty in Korea reflects deeper structural challenges beyond immediate economic indicators. Youth poverty is not merely a financial condition but a multidimensional phenomenon encompassing limited access to opportunities, social exclusion, and reduced life prospects (Brady & Parolin, 2019; Sen, 1999). In the Korean context, youth poverty has become particularly problematic due to labor market dualization, where secure employment is concentrated in large corporations while young workers predominantly access precarious jobs in small and medium enterprises (Hwang & Cho, 2023; Lee et al., 2017). The stark differences in wages and benefits between regular and non-regular workers, combined with high employment protection levels for regular workers, suppress corporate recruitment and limit non-regular workers’ transition to regular employment, thereby exacerbating youth unemployment.

While the Korean government recognized these challenges youths face and enacted the Youth Basic Law in 202, limited effectiveness has been reported in promoting self-sufficiency among youth populations. Current approaches primarily focus on immediate income support rather than addressing capabilities that enable long-term economic independence (Kim et al., 2021). This gap highlights the need for evidence-based policies and interventions that can enhance youths’ capacity for self-sufficiency.

Emerging research suggests that financial literacy—encompassing financial knowledge, attitudes, and behaviors—may serve as a critical pathway to economic self-sufficiency among general populations (Kaiser & Menkhoff, 2017; Lusardi & Mitchell, 2014), the disadvantaged (Hong et al., 2022), and youths (Vosylis & Negru-Subtirica, 2025). The current study lies the theoretical foundation for the relationship in the Knowledge-Attitude-Behavior (KAB) model where knowledge and attitudes promote consequential change through behaviors (Ajzen, 1991; Xiao et al., 2015).

There has been increasing interest in financial literacy. However, research on youths, vulnerable populations, and non-Western countries is rarely found. Most financial literacy research has been conducted on general adult populations in Western countries (Bernheim et al., 2001; Fernandes et al., 2014). Additionally, it does not comprehensively address the knowledge, attitudes, and behavioral components that constitute financial literacy (Potrich, Vieira, & Kirch, 2016). This study empirically verifies the pathways from financial knowledge and attitude to economic self-sufficiency via financial behaviors among the impoverished Korean youths receiving public assistance. This study holds significance in that it verifies pathways by comprehensively including all three components of financial literacy and performs a cultural extension to non-Western countries. Additionally, it is meaningful in that the study subjects—young public assistance recipients—represent the group most in need of achieving self-sufficiency. Empirical research on the relationship between financial literacy and economic self-sufficiency among young public assistance recipients is expected to provide both policy implications and academic significance.

Theoretical Background

Youth Poverty

International evidence demonstrate the vulnerabilities and challenges young adults face across diverse economic contexts. Fahmy (2017) analyzed the trends of poverty among British youths during 1999 to 2012 and revealed a dramatic increase in poverty over this period among youths in UK. Hawkins (2019) found that the poverty rate among youths aged 18 to 24 has been continuously rising since the 1970s and are poorer than children and the elderly in the United States using IPUMS-CPS data. Mendola et al. (2011) suggested that analyzing the duration of poverty spells, rather than merely poverty rates, provides more comprehensive insights into youth economic vulnerability. Their analysis using European Community Household Panel (ECHP) data revealed that youths in Mediterranean countries (Greece, Italy, Spain), followed by Liberal (UK, Ireland), Conservative (Germany, France, Belgium, Netherlands), and Social Democratic (Denmark) countries, experience progressively longer periods of poverty, indicating the persistent rather than transitional nature of youth poverty. Similarly, Aassve et al. (2006) conducted a comparative analysis of poverty among youths aged 19 to 29 across European countries using ECHP and found that the youth poverty rate is relatively higher in liberal and Southern European countries, and the early youths (16–20 years) is relatively poorer than the late youths (25–29 years) among youths in poverty.

Youth poverty is gradually worsening also in South Korea. According to the National Youth Policy Institute’s survey for youths aged 19 to 34 (Kim et al., 2021), more than 4 out of 10 (41.4%), are in a situation of income poverty with an annual income of less than 20 million won ($14,640.22 as of 5/8/2024). Particularly, the net asset poverty rate, which refers to the proportion of households with less than 50% of the median value of total assets minus debts, is the highest compared to other age groups, and this trend is gradually worsening.

Poverty, Economic Self-Sufficiency, and Financial Literacy

The relationship between youth poverty and economic self-sufficiency represents a critical theoretical and empirical gap in existing literature. Traditional poverty research has focused primarily on material deprivation, while self-sufficiency literature has emphasized employment outcomes. However, for impoverished youth, the pathway from poverty to self-sufficiency requires a more sophisticated approach that incorporates capability development, behavioral change, and structural opportunity creation. This shift toward a comprehensive approach to poverty also suggests that economic self-sufficiency should be achieved through a multidimensional approach. Sen’s (1999) capability approach provides the theoretical foundation for understanding this transition. Sen argues that poverty represents not merely income deficiency but the inability to achieve valuable functioning—including economic agency, social participation, and life planning. For Korean youth facing structural labor market barriers, developing economic self-sufficiency requires building capabilities that enable navigation of dual labor markets, precarious employment, and delayed economic independence. Gowdy and Pearlmutter’s (1993) multidimensional conceptualization of economic self-sufficiency aligns with capability approaches by defining ESS as encompassing: (1) autonomy and self-determination, (2) financial security and responsibility, (3) family and self-well-being, and (4) basic assets for living in the community.

While earlier Korean studies understood poverty primarily from an economic perspective (Jung et al., 2012; Kim & Choi, 2017; Kim & Hong, 2018), recent work (Byun & Lee, 2020; Choi et al., 2019; Lee, 2018) has begun to approach more comprehensively including economic, psychological, and social aspects. This shift toward a comprehensive approach to poverty also suggests that economic self-sufficiency should be achieved through a multidimensional approach.

Financial literacy has evolved from a narrow concept focusing on cognitive skills to a broader construct encompassing knowledge, attitudes, and behaviors (OECD, 2022). While early studies understood financial literacy as the ability to understand and use financial information (Huston, 2010; Vitt et al., 2000), recent study by OECD and the Council for Economic Education (2013) integrates affective and behavioral dimensions in understanding financial literacy. Financial literacy has evolved from a narrow concept focusing on cognitive skills to a broader construct encompassing knowledge, attitudes, and behaviors (OECD/INFE, 2022). While early studies understood financial literacy as the ability to understand and use financial information (Huston, 2010; Vitt et al., 2000), recent study by OECD and the Council for Economic Education (2013) integrates affective and behavioral dimensions in understanding financial literacy. The OECD/INFE Toolkit explicitly measures these three domains of knowledge, attitudes, and behaviors to assess financial literacy in cross-national contexts (OECD/INFE, 2022).

The Knowledge-Attitude-Behavior (KAB) Model as a Theoretical Framework: The Relationship Among Financial Knowledge, Attitude, Behavior, and Economic Self-Sufficiency

This study is theoretically based on the KAB model. The KAB theorizes that knowledge influences attitudes, which in turn shape behavior (Ajzen & Fishbein, 1980; Xiao et al., 2015). The model draws from Bandura’s (1976) Social Learning Theory, which emphasizes the role of cognitive processes, observational learning, and self-efficacy in behavior change and also incorporates the Diffusion of Innovations theory by Rogers (1995), which explains how individuals adopt new behaviors through a sequential process of awareness, interest, evaluation, trial, and adoption. This theoretical foundation is crucial for understanding how to achieve self-sufficiency from financial knowledge and attitudes among the impoverished Korean youths.

The KAB model is often compared to the theory of planned behaviors (TPB). The TPB explains that attitudes, subjective norms, perceived behavioral control influence behaviors via behavioral intentions (Ajzen, 1991). The KAB model is evaluated as having higher utility as an intervention model by being applicable across diverse cultural contexts and reflecting the sequential process where learning and behavioral change occur in stages (Amagir et al., 2020; Liao et al., 2022). This study adopted the KAB model in that it provides logical clarity in explaining the relationships among financial knowledge, attitudes, and behaviors as well as offering practical implications for designing future intervention strategies. A series of studies have examined the relationships among financial knowledge, financial attitudes, and financial behaviors. Van Rooij et al. (2011) empirically demonstrated a positive relationship between financial knowledge and financial behavior, while Hong et al. (2022) verified a positive relationship between financial attitudes and financial behavior among low-income youths. However, studies that comprehensively address relationships among knowledge, attitudes, and behaviors are difficult to find, and Kaiser and Menkhoff (2017) argued that existing financial education has been limited in effectiveness by focusing on knowledge transfer while overlooking behavioral or attitudinal changes. Therefore, this study employs the KAB model to take a comprehensive approach to financial literacy, hypothesizes that financial knowledge and attitude promote financial behavior.

Hypothesis 1: Financial knowledge has a positive influence on financial behavior.

Hypothesis 2: Financial attitude has a positive influence on financial behavior.

Mounting empirical evidence demonstrates that financial literacy plays an important role in promoting economic self-sufficiency. Anthony-Orji et al. (2020) indicated that financial knowledge enhances economic mobility through the mediation of financial behaviors such as savings among disadvantaged populations in Nigeria. Price et al. (2019) found that financial literacy interventions increase self-sufficiency among homeless populations, while Atkinson and Messy (2013) demonstrated that financial education promotes economic inclusion and social participation. Similarly, Miller et al. (2015) found that financial literacy programs as educational inputs for low-income populations produce economic outcomes, mediated by behavioral change. These studies reported positive relationships between financial literacy components, including financial behavior, and economic self-sufficiency.

Furthermore, regarding financial behavior, the studies generally reported that knowledge accumulation through financial education contributes to economic self-sufficiency not by itself, but by behavioral changes such as initiating savings or increasing the frequency of financial service usage. Regarding the role of behavior, according to Bandura (1976)’s Social Learning Theory, behavior serves as the primary mechanism through which cognitive knowledge and affective attitudes translate into observable outcomes. Thaler and Benartzi (2004) demonstrated that financial knowledge alone is insufficient to produce optimal financial outcomes without corresponding behavioral changes in the financial context. Based on these findings, this study hypothesizes that financial behavior positively influences economic self-sufficiency (H3) while also contributes to economic self-sufficiency through the mediation of financial knowledge (H4) and attitudes (H5).

Hypothesis 3: Financial behavior has a positive influence on economic self-sufficiency.

Hypothesis 4: Financial behavior mediates the relationship between financial knowledge and on economic self-sufficiency.

Hypothesis 5: Financial behavior mediates the relationship between financial attitude and on economic self-sufficiency.

As previously discussed, previous studies on financial literacy have explored financial knowledge, financial attitudes, and financial behaviors—often as outcomes of financial education—in a fragmented manner. This study applies to the KAB model to examine how the three components constituting financial literacy from a comprehensive perspective influence economic self-sufficiency among the impoverished youths in Korea. This approach is expected to fill the research gap in related studies and provide practical implications to effectively support economic self-sufficiency of youths.

Methods

Sample and Data Collection

The study is based on the secondary data from a 2023 survey conducted by the Korean Ministry of Health and Welfare & Dongguk University, which targeted participants of the Youth Tomorrow Savings Account Program—an asset-building program for economically disadvantaged youth supported by the Korean government. This program aims to promote asset building among youths aged 15 to 39 whose household income falls below 100% of national median income by encouraging savings, thereby enhancing their capacity to invest in future goals such as education, housing, and entrepreneurship. To ensure analytical precision in identifying structurally disadvantaged youth, the present study focuses on a subsample with household income below 50% of the national median income. In Korea, this group exhibits the highest asset poverty and persistent economic vulnerability (Kim et al., 2021), making it critical for evaluating pathways to self-sufficiency (Gowdy & Pearlmutter, 1993; Sen, 1999). Eight hundred and sixty-six youths were used available for analysis. The missing values of the key variables were replaced using the EM (Expectation Maximization) method.

Measures

Financial Literacy

The financial literacy scale by OECD (2020) was used to measure financial literacy. This scale was sourced from the Korea National Financial Literacy Survey, which has been conducted biennially since 2012 by the Bank of Korea and the Financial Supervisory Service of Korea. This government-approved national survey applies to the OECD’s standardized methodology to assess financial literacy across the Korean population. This continuous measure includes 22 questions that fall under three factors: (a) financial knowledge, (b) financial attitude, and (c) financial behavior. Financial literacy was measured using the OECD (2020) scale, which comprises 7 items assessing financial knowledge, 3 items assessing financial attitude, and 12 items assessing financial behavior. The scores range from 0 to 7 for financial knowledge, 0 to 5 for financial attitude, and 0 to 9 for financial behavior. When the sum of each factor of financial literacy, higher scores indicated higher financial literacy. The reliability coefficients for the scales in this study were as follows: financial knowledge scale (α = .62), financial attitude scale (α = .67), and financial behavior scale (α = .68). The financial attitude and financial behavior scales demonstrated moderate internal consistency. The financial knowledge scale showed acceptable reliability considering the limited number of items, as Cronbach’s alpha values between .60 and .70 are generally deemed acceptable for exploratory research (Hair et al., 2010; Nunnally & Bernstein, 1994).

Economic Self-Sufficiency (ESS)

The study used Gowdy and Pearlmutter (1993)’s ESS scale. The Korean version used in this study was based on the version employed in The First Panel Study on the Youth Tomorrow Savings Account Program Participants (The Korean Ministry of welfare & Donggnk University, 2022), which reported high internal consistency (Cronbach’s α = .889). The ESS scale assesses individuals’ ability to perform financial related tasks in the context of their own economic situation. ESS scale is composed of 14 items. Of the original 14 items, 12 were included in the analysis. Two items were excluded due to response options that varied depending on the participant’s parental or debt status. After confirmatory factor analysis, four items including “Buy the kind and amount of food you like,”“Do what you want to do, when you want to do it,”“Buy extras for yourself and your family,”“Pursue your own interests and goals” with communalities greater than 0.7 were used in the analysis. Eight items including “Be free from government programs like Temporary Assistance for Needy Families, food stamps, GA, etc.,”“Pay your own way without borrowing from family or friends,”“Put money in a savings account,”“Afford to take trips,”“Afford to have a reliable car,”“Afford to have decent housing,”“Get health care for yourself and your family when needed,” and “Stay on budget” were deleted. Respondents rate each statement on a Likert-type scale ranging from 1 to 5, with 1 indicating strongly dis-agree and 5 indicating strongly agree. A Cronbach’s alpha of .90 for the ESS scale was recorded in the present study.

Control Variables

As control variables, the study used gender, educational level, and employment status. All the control variables were treated as binary variables. Male, and regular employees who were college graduates were coded as “1.”

Analysis Procedures

The preliminary analysis of the data was conducted using SPSS to ensure that the data was suitable for further analysis. Structural equation modeling (SEM) was then performed with AMOS to evaluate the relationships among the study variables. Given the multidimensionality of the key constructs—financial literacy (encompassing knowledge, attitudes, and behaviors)—this study employed SEM to examine the hypothesized relationships. SEM was selected over traditional regression methods as it enables the simultaneous analysis of multiple, interrelated relationships among observed and latent variables. In addition, SEM is well-suited for assessing mediation effects and latent constructs while controlling for measurement error, which is particularly important when modeling complex psychological and behavioral processes among disadvantaged youth (Hoyle, 2012; Kline, 2011). The use of SEM aligns with the theoretical foundation of the KAB model and strengthens the validity of the study’s causal interpretations.

Initially, a confirmatory factor analysis (CFA) was carried out to assess the proposed dimensionality of the constructs and to evaluate the fit of individual items to their respective scales. This process involved testing the measurement model to confirm that each item loaded appropriately on its intended factor and that the overall model showed an acceptable level of fit based on common goodness-of-fit indices. Several goodness-of-fit indices were considered to assess model fit: the root mean square error of approximation (RMSEA), the comprehensive fit index (CFI), and the non-normed fit index (NNFI). CFI and NNFI values above 0.90 are considered a good fit (Bentler & Bonett, 1980; Kline, 2011), and RMSEA values up to 0.08 indicate an acceptable fit (Kline, 2011).

Once the measurement model was confirmed, the research model was tested using SEM with the maximum likelihood (ML) estimation method. This method allowed for the assessment of the direct relationships between the variables in the hypothesized model. The SEM process also provided insights into the model’s overall fit and allowed for the examination of the paths that represented the proposed causal relationships. Structural Equation Modeling (SEM) with Maximum Likelihood estimation has also been employed in prior studies. For example, Hong et al. (2022) used SEM to investigate the financial capability of low-income individuals. Similarly, Potrich, Vieira and Mendes-Da-Silva (2016) applied the Knowledge-Attitude-Behavior (KAB) model within an SEM framework to examine financial literacy among university students.

To further explore the relationships within the model, especially concerning the indirect effects, a bootstrapping procedure was conducted. This technique was employed to estimate the indirect effect of financial behavior on economic self-sufficiency, providing a more robust analysis of the mediation effects. By resampling the data and computing confidence intervals for the indirect effect, bootstrapping provided a reliable estimate of the strength and significance of the indirect relationships in the model. This approach ensured that the results were not influenced by assumptions about the distribution of the data and offered a more accurate representation of the underlying relationships.

Results

Descriptive Statistics

Table 1 shows the descriptive and bivariate statistics for the study variables. As expected, financial knowledge, financial attitude, financial behavior, and ESS are correlated to one another. All the relationships are statistically significant except the relationship between ESS and financial knowledge, and financial knowledge and financial attitude.

Table 1.

Descriptive and Bivariate Statistics for the Study Variables (n = 866).

Variable	Mean (SD), N (%)	Range	1	2	3	4	5	6	7
1. Economic self-sufficiency	3.24 (1.02)	1–5	1
2. Financial knowledge	4.78 (1.48)	0–7	0.044	1
3. Financial attitude	3.06 (0.83)	0.99–5	−0.083**	−0.009	1
4. Financial behavior	5.81 (2.08)	0–9	0.212**	0.259**	0.190**	1
5. Gender (male)	321 (37.1)	0–1	0.063	0.174**	−0.039	0.020	1
6. Employment status (regular)	313 (36.1)	0–1	0.030	−0.018	0.011	−0.009	−0.025	1
7. Educational level (college)	587 (67.8)	0–1	0.104**	0.099**	−0.006	0.130	−0.023	−0.011	1

p < .01.

Out of 866 youths, about 64% were female, 60% were head of household, and 36.1% were regular employee. Most respondents were college graduates and higher (68%). The average age was 28.6 years old (SD = 5.4).

Measurement Model

After confirmatory factor analysis on ESS, eight indicators were deleted due to factor loadings less than 0.70 (Fornell & Larcker, 1981). A CFA was conducted on the measurement model with five latent variables of ESS. As a result of CFA, a measurement model fits the data reasonably well (χ²(p) = 34.454 (0.000), df = 2, CFI = 0.986, NNFI = 0.985, RMSEA = 0.137, SRMR = 0.0233). Although the RMSEA value (0.137) exceeds commonly accepted thresholds, its interpretation warrants caution due to the model’s very low degrees of freedom (df = 2). As noted by Kenny, Kaniskan, and McCoach (2015), RMSEA tends to overestimate lack of fit in models with few degrees of freedom, particularly when the sample size is moderate rather than large. In this study, other fit indices suggest a strong model fit, with CFI (0.986), NNFI (0.985), and SRMR (0.0233). According to Hu and Bentler (1999), the combination of CFI values above 0.95 and SRMR below 0.08 provides substantial support for model adequacy, even when RMSEA is inflated due to structural constraints. Considering that evaluation based on multiple indices offers a more reliable assessment than reliance on a single fit statistic (Marsh et al., 2004), the model can reasonably be regarded as acceptable.

Research Model

We tested the hypothesized model using SEM. All fit indices indicate that the research model has a good fit to the data (χ²(p) = 104.181 (0.000), df = 26, CFI = 0.968, NNFI = 0.958, RMSEA = 0.059, SRMR = 0.0460), as reported in Figure 1. The assessment of hypotheses is presented in Table 2. The effects of financial knowledge and financial attitude on financial behavior are significant, thus supporting both H1 and H2. Also, financial behavior positively on economic self-sufficiency, thus supporting H3.

Figure 1.

Mediation model with standardized parameter estimates.

Table 2.

Results of Testing Hypotheses (n = 866).

Hypotheses	Regression coefficients			CR
Hypotheses	Unstand.	Stand.	SE	CR
H1 Financial knowledge → Financial behavior	.366	.261***	.045	8.100
H2 Financial attitude → Financial behavior	.479	.192***	.080	5.974
H3 Financial behavior → ESS	.100	.203***	.017	5.843

Note. χ² = 104.181 (0.000), df = 26, CFI = 0.968, NNFI = 0.958, RMSEA = 0.059, SRMR = 0.0460. CFI = Comparative Fit Index; RMSEA = root mean square error of approximation; CI = confidence interval; SRMR = standardized root mean square residual.

***

p < .001.

Indirect Effect

The indirect effect of financial knowledge and financial attitude on economic self-sufficiency was tested bootstrapping. If zero exists in the interval of standardized estimates, it means that there is no significant indirect effect. As seen in Table 3, the indirect effect of financial knowledge and financial attitude on economic self-sufficiency appears significant, which demonstrates that financial behavior does mediate the path from financial knowledge and financial attitude to economic self-sufficiency statistically significant, thus supporting H4 and H5. These results revealed that financial behavior fully mediated the relationships between both financial knowledge and economic self-sufficiency, and financial attitude and economic self-sufficiency.

Table 3.

The Results of Bootstrapping: The Estimation of Indirect Effects (n = 866).

Hypotheses	Standardized estimates	Lower bounds	Upper bounds
Financial knowledge	0.053*	0.033	0.076
Financial attitude	0.039*	0.025	0.040

p < .05.

Although the standardized indirect effects reported in the Table 3 are relatively modest in size, they are statistically significant and theoretically meaningful. As Cohen (1988) notes, small effect sizes may still carry practical significance, particularly in socio-behavioral research with large samples. In studies involving economically disadvantaged youth, even minor changes in financial behavior can have cumulative impacts at the population level, informing the development of interventions or educational strategies aimed at promoting financial capability and economic self-sufficiency. Moreover, in the context of structurally vulnerable populations, incremental gains in financial behavior may represent meaningful progress toward long-term economic stability. The narrow confidence intervals obtained through bootstrapping further indicate the precision and reliability of these estimates, enhancing confidence in the robustness of the hypothesized mediation model.

Discussion

This study empirically examined the relationship between financial literacy and economic self-sufficiency among economically disadvantaged youths in South Korea. The findings highlight that financial literacy plays a crucial role in achieving economic self-sufficiency. Specifically, financial knowledge and attitude contribute to increasing economic self-sufficiency with the mediating effect of financial behaviors, supporting all hypotheses. This confirms that all the three dimensions of financial literacy—knowledge, attitude, and behavior—are interconnected and collectively important for economic self-sufficiency.

The findings of this study align with the existing literature on the relationship between financial literacy and economic self-sufficiency which focus on the role of financial knowledge and attitude as antecedents of economic self-sufficiency (Atkinson & Messy, 2013; Price et al., 2019). The mediating role of financial behavior in the pathway from financial knowledge and attitude to economic self-sufficiency is consistent with the results of the previous studies (Cancian, 2001; Fernandes et al., 2014; Johnson & Corcora, 2003; Hong et al., 2022; Van Rooij et al., 2011). This study highlights that knowledge and attitudes contribute to economic self-sufficiency only when translated into action, underscoring the critical importance of practical behavior. In contrast to the previous study that suggested a strong direct association between financial knowledge and economic self-sufficiency (Lusardi & Mitchell, 2014), this study found that financial knowledge influences economic self-sufficiency only through the mediation of financial behavior. While this discrepancy may be attributed to cultural and contextual differences, it should be examined more rigorously in future research.

The findings of this study offer meaningful theoretical contributions about the KAB model in the context of economically disadvantaged Korean youth. The results empirically confirm the KAB model’s sequential structure through structural equation modeling, thus reinforcing the model’s applicability and predictive validity beyond Western contexts. The existing literature has predominantly focused on Western populations and often employed fragmented approaches that consider financial knowledge, attitudes, and behaviors as discrete constructs rather than components of a unified theoretical framework. It is the first, to our knowledge, to apply the comprehensive KAB framework to examine financial literacy pathways to economic self-sufficiency specifically among youth receiving public assistance in an East Asian context. Despite Korea’s distinct sociocultural and labor market structures, the persistence of the cognitive–affective–behavioral pathway demonstrates the cross-cultural robustness of the KAB model. Likewise, the findings are in line with those of Sen’s (1999) capability approach emphasizing the development of financial behaviors to empower economic capability and long-term well-being among youths. This study is also meaningful in that it verified following attempts by previous studies (Hong et al., 2022; Potrich, Vieira, & Mendes-Da-Silva, 2016), that the positive relationship between financial literacy and economic self-sufficiency based on the KAB approach applies to both young populations and vulnerable groups. Therefore, this study contributes to the development of financial literacy theory as well as the field of youth poverty interventions. The results provide empirically grounded insights rooted in the cultural context, which may guide policy and program design in other collectivist and rapidly developing societies confronting comparable challenges of youth economic marginalization.

These results provide significant implications for policies aimed at supporting the economic self-sufficiency of economically disadvantaged youths. The current study found the key role of financial behaviors mediating knowledge and attitudes to economic self-sufficiency. Accordingly, interventions should be designed not only to deliver financial information but also to actively facilitate behavior change. First, behavior-focused financial coaching programs should be implemented to promote sustained financial practice changes among disadvantaged youth. Rather than merely providing financial knowledge, these programs should emphasize developing and executing individualized financial action plans, including budgeting, setting savings goals, and progress monitoring. Additionally, mobile-based mission programs can serve as complementary strategies by delivering weekly financial behavior tasks through applications or messaging platforms—such as expense tracking or automatic savings transfers. Successful completion of missions can be reinforced through small incentives like digital badges or gift cards. Given young people’s high digital engagement and smartphone proficiency, these mobile interventions are particularly suitable for their lifestyles, offering a scalable approach to improving economic self-sufficiency through embedding financial behavior change into daily routines.

In addition, governments must strengthen tailored financial support policies, in order to promote positive financial behavior among young adults. Current policies in South Korea primarily focus on debt reduction and savings incentives for low-income individuals. However, this study’s findings suggest that programs targeting behavioral change may be more effective for long-term economic self-sufficiency than direct financial assistance alone. Therefore, an integrated policy framework combining financial literacy education with self-sufficiency support programs is needed.

Finally, improving financial behavior requires addressing both individual factors and broader social-structural determinants. Financial behavior is influenced not only by cognitive and psychological factors but also by labor market conditions, social security systems, and economic environments. Therefore, policy measures enhancing employment stability and expanding social safety nets should be implemented alongside financial education programs to ensure sustained financial behavior among young adults.

This study provides significant insights into the relationship between financial literacy and economic self-sufficiency among economically disadvantaged youths in South Korea. However, there are several limitations considered. First, this study has limitations in verifying causal relationships by utilizing cross-sectional data. Second, by targeting only low-income youth participating in a specific program of “Young Adult Tomorrow Savings Account Program,” the study has limitations in generalizing the findings to low-income youth in general, and furthermore to all youth. In this respect, future research needs to verify the relationships among the components of financial literacy and their relationship with economic self-sufficiency using longitudinal data, and we expect to examine the generalizability to other groups such as more universal youth populations.

Footnotes

Acknowledgements

We thank the anonymous low-income young adults for their useful responses.

ORCID iDs

Sangmi Choi

Jayoung Cho

Ethical Considerations

This study is based on secondary data provided by a government-approved survey. No new data were collected directly from human participants by the authors.

Funding

The authors received no financial support for the research, authorship, and/or publication of this article.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Data Availability Statement

Data sharing not applicable to this article as no datasets were generated or analyzed during the current study.

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The Dynamics From Financial Literacy to Economic Self-Sufficiency Among the Economically Disadvantaged Youths in South Korea: Applying the Knowledge,Attitude,and Behaviors Model

Abstract

Plain Language Summary

Keywords

Introduction

Theoretical Background

Youth Poverty

Poverty, Economic Self-Sufficiency, and Financial Literacy

The Knowledge-Attitude-Behavior (KAB) Model as a Theoretical Framework: The Relationship Among Financial Knowledge, Attitude, Behavior, and Economic Self-Sufficiency

Methods

Sample and Data Collection

Measures

Financial Literacy

Economic Self-Sufficiency (ESS)

Control Variables

Analysis Procedures

Results

Descriptive Statistics

Measurement Model

Research Model

Indirect Effect

Discussion

Footnotes

Acknowledgements

ORCID iDs

Ethical Considerations

Funding

Declaration of Conflicting Interests

Data Availability Statement

References