Financial literacy and risky credit behavior: The moderating effect of minimalist lifestyle

The minimalist lifestyle represents an opportunity to make more conscious consumption decisions that lead to higher well-being. In spite of its growing popularity among the younger generations, this lifestyle has received little attention from scholars. To address this limitation, the influence of the minimalist lifestyle on the financial decision-making process was examined. Particularly, the study investigated the moderating effect of the minimalist lifestyle on the relationship between financial literacy and risky credit behavior among 308 adults in Lima, Peru. Using partial least squares structural modeling, the results revealed that the adoption of the minimalist lifestyle strengthened the negative association between financial literacy and risky credit behavior. In other words, the minimalist lifestyle allowed the individual’s level of financial literacy to have a higher effect on risky behavior related to consumer credit only among individuals from Generation Y. What’s more, the application of artificial neural network allowed the identification of financial knowledge and financial behavior as the most important mitigators of risky credit behavior among Generation Y and Generation X individuals, respectively.