Journal of Education for Business

ISSN: (Print) (Online) Journal homepage: https://www.tandfonline.com/loi/vjeb20

A latent profile analysis of college students'

financial knowledge: The role of financial
education, financial well-being, and financial risk
tolerance

Abed G. Rabbani, Wookjae Heo & Jae Min Lee

To cite this article: Abed G. Rabbani, Wookjae Heo & Jae Min Lee (2021): A latent profile analysis
of college students' financial knowledge: The role of financial education, financial well-being, and
financial risk tolerance, Journal of Education for Business, DOI: 10.1080/08832323.2021.1895046

To link to this article: https://doi.org/10.1080/08832323.2021.1895046

Published online: 12 Mar 2021.

Submit your article to this journal

Article views: 63

View related articles

View Crossmark data

Full Terms & Conditions of access and use can be found at

https://www.tandfonline.com/action/journalInformation?journalCode=vjeb20
JOURNAL OF EDUCATION FOR BUSINESS
https://doi.org/10.1080/08832323.2021.1895046

A latent profile analysis of college students’ financial knowledge: The role of

financial education, financial well-being, and financial risk tolerance
Abed G. Rabbania , Wookjae Heob , and Jae Min Leec
a
Department of Personal Financial Planning, University of Missouri, Columbia, MO, USA; bDivision of Health and Consumer Sciences,
South Dakota State University, Brookings, SD, USA; cDepartment of Family Consumer Science, Minnesota State University - Mankato,
Mankato, MN, USA

ABSTRACT KEYWORDS
This research aims to classify college students into meaningful groups based on their sub- Financial education;
jective financial knowledge (SFK), objective financial knowledge (OFK), and comparative financial knowledge;
financial knowledge (CFK) using Latent Profile Analysis (LPA). LPA captures underlying financial risk tolerance;
financial well-being; latent
dynamics within the grouping variables and compares group differences. Results of LPA profile analysis
suggest three groups of college students in the sample, and the groups differed in levels of
financial well-being (FWB), financial risk tolerance (FRT), and financial education experi-
ence (FEE).

Introduction (i.e., heterogeneity). This approach assumes a latent

Financial knowledge (FK), a key variable of financial
well-being, is often entered into a classification model
using a dichotomization method where researchers
use a mean value of FK scores to divide respondents
into groups (e.g., Agnew & Szykman, 2005; Allgood &
Walstad, 2016; Bannier & Neubert, 2016). This classi-
fication method depends on the distribution of one
type of FK and does not account for interactions of
multiple dimensions of FK—objective financial know-
ledge (OFK), subjective financial knowledge (SFK),
comparative financial knowledge (CFK).
Previous literature using the dichotomization of a
FK variable for classification purposes has often adopted
a variable-centered approach. A variable-centered
approach (e.g., regression analysis, factor analysis, struc-
tural equation modeling) assumes a one-dimensional
aspect of the relationship between variables (e.g., one-
on-one relationship between variables rather than mul-
tiple or multiway relationships) assuming that a sample
is homogeneous (Laursen & Hoff, 2006). Several other
studies (e.g., Marsh, L€ udtke, Trautwein, & Morin, 2009;
Muthen & Muthen, 2000) suggest that person-centered
analytic tools (e.g., latent profile analysis, finite mixture
analysis, latent transition analysis) can be useful to iden-
tify the unobserved relationships between variables and
detect their dynamics on the group classification
relationship among the variables and forms a latent
variable to classify the sample.
In this study, FK is conceived as a multi-dimen-
sional (OFK, SFK, and CFK) construct in its types
and levels between observations. It is assumed that
there would be a great deal of differences in levels of
FK by its type among college students. The differences
can also be associated with other characteristics, such
as financial education experience (FEE), financial
well-being (FWB), and financial risk tolerance (FRT).
Therefore, the primary goals of this study are (a) to
classify respondents based on their OFK, SFK, and
CFK; (b) to examine how FK is associated with FWB,
FRT, and FEE.
Literature review
Dimensions of financial knowledge
Financial knowledge (FK) is defined as understanding
key financial terms and concepts needed to function
daily as an independent financial decision-maker
(Bowen, 2002). The FK measures used in previous
studies fall into three categories: OFK, SFK, and CFK.
Research in decision-making finds that the association
between knowledge and behavior varies not only by
the OFK but also by SFK—self-assessed understanding

CONTACT Abed G. Rabbani rabbania@missouri.edu Department of Personal Financial Planning, 239B Stanley Hall, University of Missouri, Columbia
65211, MO, USA
ß 2021 Taylor & Francis Group, LLC
2 A. G. RABBANI ET AL.
of content knowledge (e.g., Gutter, Copur, &
Garrison, 2010; Tang & Baker, 2016), and CFK—how
one rates one’s knowledge relative to that of friends
(e.g., Agnew & Szykman, 2005; Shim, Xiao, Barber, &
Lyons, 2009; Xiao, Tang, Serido, & Shim, 2011).
Studies of SFK and OFK have long been the focus
of consumer research (Alba & Hutchinson, 2000;
Carlson, Vincent, Hardesty, & Bearden, 2009;
Moorman, Diehl, Brinberg, & Kidwell, 2004).
However, there has been a recent surge in interest
regarding the FK of college students in relation to
their peers (Gutter et al., 2010; Lusardi, Mitchell, &
Curto, 2010; Robb & Woodyard, 2011) and how that
relative knowledge may influence financial decisions
(Agnew & Szykman, 2005). The findings suggest that
investigating the associations between types of FK and
financial behavior requires more complex modeling
(Xiao, Ahn, Serido, & Shim, 2014) that incorporates
all three aspects of FK—OFK, SFK, and CFK. In other
words, there can be a heterogeneity of people caused
by the dynamics from three aspects of FK.
Financial knowledge-based classification
When there is a research need to classify participants
based on FK, many researchers rely on the dichotomiza-
tion (Agnew & Szykman, 2005; Allgood & Walstad,
2016; Bannier & Neubert, 2016). This simple classifica-
tion begins by converting the FK variable into a dichot-
omous variable by splitting the scale at some point and
designating individuals above and below that point as
defining two separate groups described as "Low" and
"High." For example, a median split is a common
approach to split the scale at the sample median, thereby
defining high and low groups on the variable differs by
research, and there is no universal consent about the cri-
teria for the right cutoff point. Alternatively, the scale
might be split at some other point based on the data
(e.g., one standard deviation above the mean) or at a
fixed point on the scale designated a priori (MacCallum,
Zhang, Preacher, & Rucker, 2002).
As FK-based classifications rely mostly on OFK,
researchers often use the mean of the OFK scores as
an indicator of average FK (Agnew & Szykman, 2005;
Allgood & Walstad, 2016; Bannier & Neubert, 2016;
Beal & Delpachitra, 2003; Chen & Volpe, 1998). Based
on this approach, researchers divide the respondents
into two knowledge groups, high knowledge (above
the mean) and low knowledge (below the mean).
When there are OFK and SFK variables, some
researchers often dichotomize both. For example,
Allgood and Walstad (2016) and Bannier and Neubert
(2016) have followed this approach using a two-part
measure of FK to investigate the likely effects of FK
on a broad range of financial behaviors.
Although easy to implement, there are several
known problems with dichotomization procedures
(MacCallum et al., 2002). These problems include loss
of information about individual differences; loss of
effect size and power, increased Type I error; increased
Type II error; or spurious statistical significance and
overestimation of effect size in the case of analyses
with two independent variables; the potential to over-
look nonlinear relationships; and loss of measurement
reliability (MacCallum et al., 2002; McClelland, Lynch,
Irwin, Spiller, & Fitzsimons, 2015; Rucker, McShane, &
Preacher, 2015). The methodological literature demon-
strates that the dichotomization procedure’s weaknesses
may be handled by alternative analytic models such as
latent profile analysis (LPA) (Pastor, Barron, Miller, &
Davis, 2007). LPA technically refers to the unobserved
groups of individuals using a latent variable formed
based on input variables in the model.
Data, variables, and methodology
Study design
Data were collected at a university in the Midwest,
over two weeks during fall 2018, from college students
who were 18 to 21 years old using an online survey
technique. After receiving Institutional Review Board
(IRB) approval, a random sample of 3,000 students
(approximately 10.0% of the total student population)
was selected from the University’s database to receive
an email message for the Qualitrics survey. The survey
collected data on demographic information, FK, FWB,
and FRT. All respondents were offered a nominal
incentive for their participation. A total of 391 stu-
dents participated; the response rate was 13%. This
response rate is consistent with other online surveys
of college students (e.g., Shim et al., 2009). However,
among the participants, only 241 were valid with a
completed survey. Of the valid responses, Table 2
presents detailed information about the demographic
profile of the participants. This respondent profile was
similar to that of other studies investigating college
students enrolled at Midwestern U.S. universities
(Archuleta, Dale, & Spann, 2013; Heckman & Grable,
2011; Peralta, Steele, Nofziger, & Rickles, 2010).
Variables
The main criteria variables to make significant groups
were subjective financial knowledge (SFK),

comparative financial knowledge (CFK), and objective
financial knowledge (OFK). The SFK question was,
"On a scale from one to five, how would you rate your
overall understanding of financial knowledge of various
financial topics?” (5 ¼ extremely knowledgeable;
1 ¼ not at all knowledgeable). The question for the
CFK was, "On a scale from one to five, how would you
compare yourself to your close friends regarding your
overall knowledge of various financial topics?”
(5 ¼ extremely knowledgeable; 1 ¼ not at all know-
ledgeable). The OFK was measured with 28 items
introduced by Hilgert, Hogarth, and Beverly (2003).
There were 28 dichotomous questions (Yes/No). The
Cronbach’s alpha associated with the measure of OFK
was .50, which is low because 28 items used are all
yes/no questions. Standardized scores from these three
scales were used as latent profile criteria to classify
241 respondents into meaningful groups.
The following psychological features and educa-
tional factors were included as external controls: level
of financial well-being (FWB), financial risk tolerance
(FRT), and whether they had taken personal finance
courses at a high school, and whether they had taken
personal finance courses at college (FEE). FWB was
measured using 10-items developed by the Consumer
Financial Protection Bureau (CFPB). FRT was meas-
ured using Grable and Lytton’s 13-items (Kuzniak,
Rabbani, Heo, Ruiz-Menjivar, & Grable, 2015). The
Cronbach’s alphas associated with FWB and FRT
were .84 and .69 respectively, which are within the
acceptable range of .65 and .80.
Latent profile analysis (LPA)
This study used LPA to capture the potential group
differences in terms of three aspects of FK and esti-
mate the relationship with FWB, FRT, and FEE. LPA
is a latent group modeling technique, also known as a
latent class analysis (Vermunt & Magidson, 2002) and
finite mixture modeling (Peel & McLachlan, 2000),
which is useful to handle data with potential multiple
subgroups (Hair, Sarstedt, Ringle, & Gudergan, 2018).
Specifically, each type of FK (i.e., SFK, OFK, and
CFK) is a unique construct but can interrelate with
each other; thus, identifying profiles of subgroups and
capturing complex interaction requires an estimation
of the distribution of each FK.
LPA is a probabilistic model-based clustering
approach that offers a sound mechanism of estimating
the optimal number of clusters (Leisch, 2004; Olaru,
Smith, & Taplin, 2011) using selection criteria, such as
Akaike Information Criteria (AIC), Bayesian Information
JOURNAL OF EDUCATION FOR BUSINESS 3
Criteria (BIC) and Entropy criteria. In this study, differ-
ent models with a varying number of clusters ranging
from 2 to 5 were explored, and a combination of indices
and criteria were used to determine the model with the
optimal number of clusters. The findings of LPA were
also compared with groups derived from the dichotomi-
zation approach.
Results
Table 1 shows the dichotomized subgroups’ FEE and
the levels of FK. The dichotomization methods divide
total samples into subgroups based on the mean value
of each input variable: two groups by SFK, two groups
by OFK, and two groups by CFK. Dichotomization
methods can suggest different group membership of
each observation based on each type of FK. However,
the other control characteristics (i.e., FWB, FRT, and
FEE) did not bring defining features for groups.
However, as shown in Table 2, LPA can suggest
multiple group classification using more than two
input variables. Demographic, FK, FWB, FRT, FEE
profiles varied by three FK groups developed using
LPA. Those who were likely to belong to Group A
tended to be females, white juniors who had the low-
est FWB, and FRT scores. Those who were likely to
belong to Group B tended to be females, juniors, and
predominately white. However, on average, they had
higher scores on FWB than those of Group A but
lower than those of Group C. Group C was the small-
est group composed of male sophomores with the
highest level of FWB and FRT score.
As shown in Table 3, each type of FK was signifi-
cantly correlated. The results imply that each type of
FK measures a unique but interrelated aspect of FK.
The total sample can be divided into subgroups with
a different distribution of FK, considering potential
heterogeneity of observations in response to these var-
iables individually. Based on the model fit (AIC, BIC,
and entropy), a three-group model was found more
optimal than two group model (See Table 4).
Table 5 shows the parameter estimates (log-odds
ratio) of three profile indicator variables (the three types
of FK) for the three profiles, along with the class mar-
gins and standard errors. It means that respondents in
each group had a similar tendency in the effect of FK.
For instance, 120 respondents in Group A showed a sig-
nificantly negative direction on all FK scores. Thus, 120
respondents with low level of FK (log-odds ratio of OFK
¼ 0.31, p < .01; log-odds ratio of SFK ¼ 0.57, p <
.001; log-odds ratio of CFK ¼ 0.73, p < .001) were
more likely to belong to Group A. The marginal
4 A. G. RABBANI ET AL.

Table 1. Dichotomization comparison by Mean.

High vs. Low
Low High
Median (S.D.)/ Mean/Proportion
Number (%) n Mean (S.D.)/Number (%) n Mean (S.D.)/Number (%) comparison (t)
Grouping criteria
OFK 19.73 (2.94) 111 17.21 (2.04) 130 21.89 (1.52) 20.37
Control variable
FWB 52.66 (9.00) 111 52.38 (8.71) 130 52.91 (9.27) 0.45
FRT 23.77 (4.46) 111 23.46 (4.24) 130 24.04 (4.64) 1.00
High School Fin. 163 (67.63 %) 111 64 (57.66%) 130 99 (76.15%) 3.11
College Fin. 53 (21.99%) 111 20 (18.02%) 130 34 (26.15%) 1.51
Grouping criteria
SFK 2.41 (0.82) 130 1.77 (0.42) 111 3.17 (0.42) 25.63
Control variable
FWB 52.66 (9.00) 130 52.10 (8.81) 111 53.32 (9.22) 1.05
FRT 23.77 (4.46) 130 23.33 (4.34) 111 24.29 (4.56) 1.67
High School Fin. 163 (67.63 %) 130 81 (62.31%) 111 82 (73.87%) 1.92
College Fin. 53 (21.99%) 130 18 (13.85%) 111 36 (32.43%) 3.52
Grouping criteria
CFK 3.09 (0.96) 155 2.50 (0.62) 86 4.15 (0.36) 22.68
Control variable
FWB 52.66 (9.00) 155 51.68 (8.56) 86 54.44 (9.55) 2.30
FRT 23.77 (4.46) 155 23.64 (4.56) 86 24.01 (4.29) 0.62
High School Fin. 163 (67.63 %) 155 93 (60.00%) 86 70 (81.40%) 3.47
College Fin. 53 (21.99%) 155 29 (18.71%) 86 25 (29.07%) 1.85
p < .05; p < .01; p < .001.

Table 2. Descriptive table of total and subsamples.

LPA model
Total Group A Group B Group C
(n ¼ 241) (n ¼ 120) (n ¼ 99) (n ¼ 21)
Categorical Variables Number (%) Number (%) Number (%) Number (%)
Male 49 (20.42%) 19 (15.83%) 19 (19.19%) 11 (52.38%)
College rank
Freshman 53 (21.99%) 26 (21.49%) 27 (27.27%) 0 (0%)
Sophomore 58 (24.07%) 27 (22.31%) 20 (20.20%) 11 (52.38%)
Junior 77 (31.95%) 40 (33.06%) 33 (33.33%) 4 (19.05%)
Senior 49 (20.33%) 25 (20.66%) 18 (18.18%) 6 (28.57%)
Other 4 (1.66%) 3 (2.48%) 1 (1.01%) 0 (0%)
Race
White 204 (84.65%) 98 (80.99%) 88 (88.89%) 18 (85.71%)
African American 12 (4.98%) 9 (7.44%) 3 (3.03%) 0 (0%)
Hispanic 6 (2.49%) 5 (4.13%) 0 (0%) 1 (4.76%)
Asian 14 (5.81%) 6 (4.96%) 6 (6.06%) 2 (9.52%)
Other 5 (2.07%) 3 (2.48%) 2 (2.02%) 0 (0%)
Taking finance at high school (Yes ¼2) 163 (67.63 %) 66 (55%) 77 (77.77%) 19 (90.48%)
Taking finance at college (Yes ¼ 2) 53 (21.99%) 11 (9.17%) 32 (32.32%) 10 (47.62%)
Age
18 40 (16.60%) 18 (14.88%) 21 (21.21%) 1 (4.76%)
19 56 (23.24%) 32 (26.45%) 20 (20.20%) 4 (19.05%)
20 74 (30.71%) 36 (29.75%) 29 (29.29%) 9 (42.86%)
21 71 (29.46%) 35 (28.93%) 29 (29.29%) 7 (33.33%)
Continuous Variables Mean (S.D.) Mean (S.D.) Mean (S.D.) Mean (S.D.)
OFK 19.73 (2.94) 18.74 (2.82) 20.62 (3.09) 21.29 (3.16)
SFK 2.41 (0.82) 1.93 (0.68) 2.75 (0.52) 3.62 (0.67)
CFK 3.09 (0.96) 2.37 (0.65) 3.65 (0.52) 4.57 (0.51)
FWB 52.66 (9.00) 51.42 (8.99) 52.12 (8.03) 62.38 (7.86)
FRT 23.77 (4.46) 23.41 (4.53) 23.52 (3.91) 27.05 (5.31)

probability to belong to Group A was 48%, with a 7%
standard error. This means that 48% of homogeneous
respondents would have the probability of belonging
to Group A.
Compared to Group A, 99 respondents in Group B
had significantly positive direction on SFK and CFK.
This result means that 99 respondents with higher
levels of SFK and CFK (log-odds ratio of SFK ¼ 0.32,
p < .05; log-odds ratio of CFK ¼ 0.49, p < .01) were
more likely to belong to Group B. The marginal prob-
ability of belonging to Group B was 43%, with a 7%
standard error. This means that 43% of similar
respondents with this dataset would show the prob-
ability of belonging to Group B.

Finally, Group C respondents (n ¼ 21) showed a
significantly positive direction on all FK types. It
means that 21 respondents with the highest level of
FK in all three types (log-odds ratio of OFK ¼ 0.55, p
< .05; a log-odds ratio of SFK ¼ 1.36, p <.001; a log-
odds ratio of CFK ¼ 1.39, p < .001) were more likely
to belong to Group C. The marginal probability of
belonging to Group C was 10%, with a 4% stand-
ard error.
For control variables, Group A was used as the ref-
erence group. There were no significant differences in
FWB and FRT between Group A and B (Table 5).
However, positive and significant coefficients of taking
personal finance courses in high school and colleges
indicate that those who belong to Group B were more
likely to take a personal finance course in their high
school and college (b ¼ 1.17, p < .01; b ¼ 1.20, p < .05
respectively) than Group A.
For the comparison between Group A and C, FWB
and FRT showed significant differences. The coeffi-
cients of FWB (b ¼ 0.16, p < .01) and FRT (b ¼ 0.81,
p < .05) in Group C indicated that respondents in
Group C were more likely to have a higher number of
FWB scores and FRT scores than Group A.
Additionally, taking personal finance courses in high
school and colleges differed among these groups.
When respondents belonged to Group C, they were
more likely to have taken a personal finance course in
high school and college (b ¼ 2.59, p < .05; b ¼ 2.28,
p < .05 respectively).
Discussion
This study tested the importance of three FK dimen-
sions to capture latent group differences (i.e., hetero-
geneity of samples). It also examined the role of
FEE, FWB, and FRT as predictors of each suggested
group from the LPA classification method. This
study extends the current literature by adopting a
Table 3. Correlation among three financial
ledge variables.
OFK SFK
OFK 1.00
SFK 0.13 1.00
CFK 0.23 0.51
p < .05; p < .001.
Table 4. LPA comparison.
Observations Log-Likelihood
2 Groups 241 972.02
3 Groups 241 961.46
In terms of 4 or more groups, log-likelihood did not converge.
JOURNAL OF EDUCATION FOR BUSINESS 5
person-centered approach to explore differences in
FK-based classes by incorporating potential interac-
tions between types of FK.
The three LPA groups are distinctive in terms of
FWB, FRT, and FEE; thus, it is possible to describe
between-group similarities and differences. For
example, Group C students reported the highest level
of all three FK scores than the other two profiles. This
group was more likely to be male students who have
FEE in high school and college and score high on
FWB and FRT measures.
Group B was the second-largest category of stu-
dents whose levels of SFK and CFK were higher than
Group A but lower than Group C. This profile repre-
sented about 40% of the students. The students in this
group were more likely to have FEE in high school
and college than Group A but less likely than Group
C. However, these students did not significantly differ
in FWB and FRT than Group A.
Group A reported the lowest level of all three FK
scores. This profile comprised about half of the stu-
dents—indicating that the majority appear to have a
low FK level. It is also the most substantial profile.
The students in this profile also reported the lowest
FWB and FRT levels and were less likely to take FEE
in high school and college than these other groups.
There was a higher likelihood of having FEE in high
school for these students than in college.
Findings from between-group similarities and dif-
ferences show how closely FEE, FK, FWB, and FRT
were related. It suggests that increasing access to FEE
(e.g., in business education) is likely to foster a posi-
tive synergy among young adults’ FK, FRT, and FWB.
Hite, Slocombe, Railsback, and Miller (2011) acknowl-
edged a widespread need for additional financial liter-
acy education.
Limitations
There are several limitations to this study. Firstly, the
participants were self-selected. The current study
know- relied on college students enrolled in a university in
the Midwest; it is imperative to be cautious before
CFK
generalizing the results. Secondly, although many of
the participants of the survey were assumed to have
1.00 lived and finished school in one state in which the
state-specific characteristics, such as the state’s
Degree of Freedom AIC BIC Entropy
14 1972.04 2020.83 0.679
22 1966.92 2043.59 0.717
6 A. G. RABBANI ET AL.

Table 5. LPA clustering results. References

LPA model
Agnew, J. R., & Szykman, L. R. (2005). Asset allocation and
Group A Group B Group C information overload: The influence of information dis-
(n ¼ 120) (n ¼ 99) (n ¼ 21)
play, asset choice, and investor experience. Journal of
Grouping criteria
Behavioral Finance, 6(2), 57–70. doi:10.1207/
OFK 0.31 0.22 0.55
SFK 0.57 0.32 1.36 s15427579jpfm0602_2
CFK 0.73 0.49 1.39 Alba, J. W., & Hutchinson, J. W. (2000). Knowledge calibra-
Control variable tion: What consumers know and what they think they
FWB – 0.01 0.16 know. Journal of Consumer Research, 27(2), 123–156. doi:
FRT – 0.02 0.81
Took personal finance (high school) – 1.17 2.59 10.1086/314317
Took personal finance (college) – 1.20 2.28 Allgood, S., & Walstad, W. B. (2016). The effects of per-
Class Margin 0.48 0.43 0.10 ceived and actual financial literacy on financial behaviors.
Standard Error 0.07 0.10 0.04 Economic Inquiry, 54(1), 675–697. doi:10.1111/ecin.12255
Reference: Group A. Archuleta, K. L., Dale, A., & Spann, S. M. (2013). College
p < .05; p < .01; p < .001.
Students and Financial Distress: Exploring Debt,
Financial Satisfaction, and Financial Anxiety. Journal of
educational system and policy (i.e., policy by Board of Financial Counseling and Planning, 24(2), 50–62.
Regents), are the same, the results may not fully Bannier, C. E., & Neubert, M. (2016). Gender differences in
reflect potential state-level and individual-level differ- financial risk taking: The role of financial literacy and
risk tolerance. Economics Letters, 145, 130–135. doi:10.
ences other than characteristics used in the study. 1016/j.econlet.2016.05.033
Finally, any details of financial education were not Beal, D., & Delpachitra, S. (2003). Financial literacy among
included in the analytic procedure because of the sur- Australian university students. Economic Papers: A
vey method’s limitation. However, the results bring a Journal of Applied Economics and Policy, 22(1), 65–78.
doi:10.1111/j.1759-3441.2003.tb00337.x
notable implication that financial education itself was
Bowen, C. F. (2002). Financial knowledge of teens and their
an important factor to consider. parents. Financial Counseling and Planning, 13(2),
93–102.
Carlson, J. P., Vincent, L. H., Hardesty, D. M., & Bearden,
W. O. (2009). Objective and subjective knowledge rela-
tionship: A quantitative analysis of consumer research
findings. Journal of Consumer Research, 35(5), 864–876.
Conclusion doi:10.1086/593688
Chen, H., & Volpe, R. P. (1998). An analysis of personal
Despite some limitations, results from the present financial literacy among college students. Financial
study offer methodological insights to study college Services Review, 7(2), 107–128. doi:10.1016/S1057-
students’ FK. When developing a college student pro- 0810(99)80006-7
file based on FK, LPA provides more information Gutter, M., Copur, Z., & Garrison, S. (2010). Financial
about inter-relationship among variables than dichoto- capabilities of college students from states with varying
financial education policies. Denver, CO: National
mization. LPA can suggest an extended perspective Endowment for Financial Education.
and exploration opportunity for the multi-dimensions Hair, J. F., Sarstedt, M., Ringle, C. M., & Gudergan, S. P.
of FK and group differences. Besides, the findings (2018). Advanced issues in partial least squares structural
highlight continued attention to financial literacy and equation modeling. Thousand Oaks, CA: Sage.
Heckman, S. J., & Grable, J. E. (2011). Testing the role of
systemic guidance in educational settings to extend
parental debt attitudes, student income, dependency sta-
financial education opportunities that can relate to tus, and financial knowledge have in shaping financial
later life’s FK and FWB. self efficacy among college students. College Student
Journal, 45, 51.
Hilgert, M. A., Hogarth, J. M., & Beverly, S. G. (2003).
Funding Household financial management: The connection
between knowledge and behavior. Federal Reserve
This work was supported by the University of Missouri
Bulletin, 89, 309.
under Margaret Mangel Research Catalyst Fund [F1713].
Hite, N. G., Slocombe, T. E., Railsback, B., & Miller, D.
(2011). Personal finance education in recessionary times.
Journal of Education for Business, 86(5), 253–257. doi:10.
1080/08832323.2010.511304
ORCID
Kuzniak, S., Rabbani, A., Heo, W., Ruiz-Menjivar, J., &
Abed G. Rabbani http://orcid.org/0000-0001-7647-8973 Grable, J. E. (2015). The Grable and Lytton risk-tolerance
Wookjae Heo http://orcid.org/0000-0001-5807-9792 scale: A 15-year retrospective. Financial Services Review,
Jae Min Lee http://orcid.org/0000-0002-0479-2282 24(2), 177–192.

Laursen, B., & Hoff, E. (2006). Person-centered and vari-
able-centered approaches to longitudinal data. Merrill-
Palmer Quarterly, 52(3), 377–389. doi:10.1353/mpq.2006.
0029
Leisch, F. (2004). FlexMix: A general framework for finite
mixture models and latent class regression in R. Journal
of Statistical Software, 11(8), 1–18. doi:10.18637/jss.v011.
i08
Lusardi, A., Mitchell, O. S., & Curto, V. (2010). Financial
literacy among the young. Journal of Consumer Affairs,
44(2), 358–380. doi:10.1111/j.1745-6606.2010.01173.x
MacCallum, R. C., Zhang, S., Preacher, K. J., & Rucker,
D. D. (2002). On the practice of dichotomization of
quantitative variables. Psychological Methods, 7(1), 19–40.
doi:10.1037/1082-989X.7.1.19
Marsh, H. W., L€ udtke, O., Trautwein, U., & Morin, A. J.
(2009). Classical latent profile analysis of academic self-
concept dimensions: Synergy of person-and variable-
centered approaches to theoretical models of self-concept.
Structural Equation Modeling: A Multidisciplinary
Journal, 16(2), 191–225. doi:10.1080/10705510902751010
McClelland, G. H., Lynch, J. G., Jr, Irwin, J. R., Spiller,
S. A., & Fitzsimons, G. J. (2015). Median splits, Type II
errors, and false–positive consumer psychology: Don’t
fight the power. Journal of Consumer Psychology, 25(4),
679–689. doi:10.1016/j.jcps.2015.05.006
Moorman, C., Diehl, K., Brinberg, D., & Kidwell, B. (2004).
Subjective knowledge, search locations, and consumer
choice. Journal of Consumer Research, 31(3), 673–680.
doi:10.1086/425102
Muthen, B., & Muthen, L. K. (2000). Integrating person-
centered and variable-centered analyses: Growth mixture
modeling with latent trajectory classes. Alcoholism:
Clinical & Experimental Research, 24(6), 882–891.
Olaru, D., Smith, B., & Taplin, J. H. E. (2011). Residential
location and transit-oriented development in a new rail
corridor. Transportation Research Part A: Policy and
Practice, 45, 219–237.
Pastor, D. A., Barron, K. E., Miller, B. J., & Davis, S. L.
(2007). A latent profile analysis of college students’
JOURNAL OF EDUCATION FOR BUSINESS 7
achievement goal orientation. Contemporary Educational
Psychology, 32(1), 8–47. doi:10.1016/j.cedpsych.2006.10.003
Peel, D., & McLachlan, G. J. (2000). Robust mixture model-
ling using the t distribution. Statistics and Computing,
10(4), 339–348. doi:10.1023/A:1008981510081
Peralta, R. L., Steele, J. L., Nofziger, S., & Rickles, M.
(2010). The impact of gender on binge drinking behavior
among US college students attending a Midwestern uni-
versity: An analysis of two gender measures. Feminist
Criminology, 5(4), 355–379. doi:10.1177/15570851
10386363
Robb, C. A., & Woodyard, A. (2011). Financial knowledge
and best practice behavior. Journal of Financial
Counseling and Planning, 22(1), 60–70.
Rucker, D. D., McShane, B. B., & Preacher, K. J. (2015). A
researcher’s guide to regression, discretization, and
median splits of continuous variables. Journal of
Consumer Psychology, 25(4), 666–678. doi:10.1016/j.jcps.
2015.04.004
Shim, S., Xiao, J. J., Barber, B. L., & Lyons, A. C. (2009).
Pathways to life success: A conceptual model of financial
well-being for young adults. Journal of Applied
Developmental Psychology, 30(6), 708–723. doi:10.1016/j.
appdev.2009.02.003
Tang, N., & Baker, A. (2016). Self-esteem, financial know-
ledge and financial behavior. Journal of Economic
Psychology, 54, 164–176. doi:10.1016/j.joep.2016.04.005
Vermunt, J. K., & Magidson, J. (2002). Latent class cluster
analysis. Applied Latent Class Analysis, 11, 89–106.
Xiao, J. J., Ahn, S. Y., Serido, J., & Shim, S. (2014). Earlier
financial literacy and later financial behaviour of college
students. International Journal of Consumer Studies,
38(6), 593–601. doi:10.1111/ijcs.12122
Xiao, J.J., Tang, C., Serido, J., & Shim, S. (2011).
Antecedents and consequences of risky credit behavior
among college students: Application and extension of the
Theory of Planned Behavior. Journal of Public Policy &
Marketing, 30(2), 239–245. doi:10.1509/jppm.30.2.239