Family Wealth Accumulation and Fiscal Prudence among China’s Young Adults: Between the Privileged and the Common

Young adults in middle class Chinese families are seeing increased access to their family’s wealth. With the growing ubiquity of digital payments and consumer goods, they are spending at an ever increasing rate. But for young adults from less privileged financial backgrounds, high disposable incomes and glamorous shopping items may be out of reach. This paper is designed to analyze the development of financial literacy among all groups of young adults in China and assess the rationality of their financial behavior. I sought to determine the correlations between financial literacy, family income and fiscal prudence. I applied methods like OLS regression, entropy weight model and significance test to establish firm correlations. I hypothesized children of wealthier families would behave in a more financially reasonable way as they tend to have access to more education and general financial information. Thus, I would test using initial hypothesis that more privileged children will react and shop more prudently, which is further proved in the sections below.