Financial Literacy and Financial Attitude on Financial Management Behaviour: Mediating Role of Locus of Control

Abstract

The financial literacy gap among Generation Z in Indonesia is not improving at a pace that matches the country's digital growth. Non-performing online loans among young adults continue to climb, and basic financial understanding across Indonesian society remains shallow despite years of awareness campaigns. Broad access to digital financial tools has not translated into better financial decision-making for this cohort. Consumptive spending persists, saving rates stay low, and long-term financial planning is treated more as an abstraction than a practice. This study investigates how financial literacy and financial attitude shape financial management behaviour among Generation Z in Batam City, and whether locus of control plays a mediating role in those relationships. Using purposive sampling, 155 respondents between 20 and 28 years old with a fixed monthly income of at least IDR 4,000,000 were recruited. Structured questionnaires served as the primary data collection instrument, and the data were processed through SEM-PLS using Smart PLS 4.1.1.6. The findings confirm that financial literacy has a positive and significant effect on both locus of control and financial management behaviour. Financial attitude produces the same pattern. Locus of control itself significantly predicts financial management behaviour and partially mediates the paths from both financial literacy and financial attitude to that outcome. Taken together, the results suggest that improving financial knowledge and shaping a healthier financial attitude only go so far unless individuals also believe they have real agency over their own financial lives.