Economics of Innovation and New Technology

ISSN: (Print) (Online) Journal homepage: https://www.tandfonline.com/loi/gein20

Digital financial literacy, current behavior of saving

and spending and its future foresight

Maman Setiawan , Nury Effendi , Teguh Santoso , Vera Intanie Dewi &
Militcyano Samuel Sapulette

To cite this article: Maman Setiawan , Nury Effendi , Teguh Santoso , Vera Intanie Dewi &
Militcyano Samuel Sapulette (2020): Digital financial literacy, current behavior of saving and
spending and its future foresight, Economics of Innovation and New Technology

To link to this article: https://doi.org/10.1080/10438599.2020.1799142

Published online: 10 Aug 2020.

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ECONOMICS OF INNOVATION AND NEW TECHNOLOGY
https://doi.org/10.1080/10438599.2020.1799142

Digital financial literacy, current behavior of saving and spending

and its future foresight
Maman Setiawan a, Nury Effendia, Teguh Santoso a
, Vera Intanie Dewi b
and
Militcyano Samuel Sapulette a
a
Department of Economics, Faculty of Economics and Business, University of Padjadjaran, Bandung, Indonesia;
b
Faculty of Economics and Business, Parahyangan Catholic University, Bandung, Indonesia

ABSTRACT ARTICLE HISTORY

This paper investigates the relationship among digital financial literacy Received 25 February 2020
(DFL), current saving behavior, current spending behavior, and foresight Accepted 6 July 2020
of future spending and saving behavior among Indonesian millennials.
KEYWORDS
This research uses structural equation modeling to estimate the Digital financial literacy;
relationship among the variables. The research surveyed millennials in saving behavior; spending
the 25–40 age group in several urban areas of Java island. The survey behavior; millennial
collected information of the indicators constructing the latent variables.
The results indicate that DFL is influenced by social-economic standing. JEL Classification
DFL also positively affects the current saving and spending behavior. O33; O35; G21; G51; G53
Moreover, the current saving and spending behavior contribute to the
future saving and spending foresight. This research suggests
policymaker to provide knowledge about DFL to the millennials.

1. Introduction
The development of digital technology and e-commerce may change the behavior of consumers in
saving and spending in media and value of transactions. E-commerce includes not only the retail
trade sector of goods and services, but also the financial services with different platforms such as
lending, mortgage, payment instruments, peer-to-peer lending and comparison of financial insti-
tution products and services. Adellia and Prasetio (2016) and Google and Temasek (2019) revealed
that Indonesia has the largest potential e-commerce market share and its current e-commerce trans-
actions are the largest in Southeast Asia. Also, the trend of e-commerce users continues to grow and
is predicted to reach 75.3% of the total Indonesian population in 2023 (Jayani 2019).
In the financial sector, the application of digital technology is well known as financial technology
or fintech. Although fintech grows substantially, Indonesia still has a weak regulation in this digital
financial technology. According to OECD (2018), the policymakers and public authorities should be
fully aware of the benefits and risks created by digital financial technology, and how these may
affect consumers and entrepreneurs. IFC (2017) found that fintech could optimize the link of the
financial services value chain by providing a connection to the rest of the financial ecosystem
which had not yet been reached by the conventional banking system. Fintech provides the
product solution for the payment system, saving, remittances, investment, trading, lending, insurance
and small and medium enterprises (SMEs). Thus, the weak regulation and unpreparedness of society
in the digital financial revolution raises a variety of challenges.

CONTACT Maman Setiawan [email protected] Department of Economics, Faculty of Economics and Business,
University of Padjadjaran, Jl. Dipati Ukur No. 35, Bandung 40132, Jawa Barat, Indonesia
© 2020 Informa UK Limited, trading as Taylor & Francis Group
2 M. SETIAWAN ET AL.

The Global Findex Database (2017) reported that 21% of adults had mobile money accounts and
52% of adults had sent or received digital payments. In China, 57% of firms used mobile phones or
the Internet to make a purchase or pay bills. The digital payment provided by fintech can simplify the
transactions between producers and consumers which may revolutionize the consumption of the
products or services by consumers. Cobla and Osei-Assibey (2018) found that digital payment
affected spending behavior. Agarwal et al. (2019) also found that digital payment caused over-spend-
ing in India. Thus, fintech may change the behavior of consumers in their spending. Besides affecting
spending behavior, digital financial technology may also affect saving behavior (Moenjak, Kongpra-
jya, and Monchaitrakul 2020). The Global Findex Database (2017) also found that there was a signifi-
cant gap between the proportion of adults who saved at the financial institution and adults who
saved in any money outside financial institution including digital saving. There is a tendency that
saving at financial institution is declining while saving in any money is increasing. This can be an
opportunity for digital saving to play the role in the financial system and this requires the policymaker
to bring digital saving into the regulated financial sector.
Regarding the contribution of digital financial technology on spending and saving behavior,
financial literacy in digital technology or digital financial literacy (DFL) is important. The over-spend-
ing can be hindered if DFL has been understood by the consumers. Also, access to saving can be
increased if DFL improves. In line with that Lusardi (2008) found that the lack of financial literacy
may cause less saving and more spending in the future. Poor saving and spending decisions may
be less visible today, but lead to serious implications for long-term financial security (Hung, Parker,
and Yoong 2009). OECD (2018) suggests enhancing DFL because financial technology has unique
characteristics, advantages and risks. Therefore, research investigating DFL and its impact on
saving and spending behavior and their foresight of the future financial behavior is important.
Furthermore, the use of digital financial technology is affected by Internet and mobile phones
uses. Millennials are the generation with heavy use of digital technology and its digital Fintech. Siva-
sankaran (2017) found that most millennials in India had access to digital social media and 50% of
them were affected by social media in buying decision. Cobla and Osei-Assibey (2018) also found
a significant effect of the digital payment on the spending and saving behavior for the young. There-
fore, investigating the effect of DFL on the saving and spending decisions among millennials is
relevant.
Previous studies are still limited to the study of financial literacy without having specific analysis on
DFL. Also, the measure of DFL is hardly found in the literature. Financial technology is a digital
financial system in financial service delivered through technology media such as smart mobile
phones, computers and Internet that are linked to the platform of digital investment or payment.
The lack of DFL may affect individuals in making important financial decisions in saving and spending
using the digital platform. The results of previous studies proved that financial literacy had a signifi-
cant impact on financial behavior including saving and spending behavior (Ariadi, Malelak, and Astuti
2015; Harli, Linawati, and Memarista 2015; Allgood and Walstad 2016; Hsiao, Lin, and Dambaravdan
2016; Chu et al. 2017; Sivaramakrishnan, Srivastava, and Rastogi 2017; Ameliawati and Setiyani 2018;
Zulaihati, Susanti, and Widyastuti 2020). Since previous research only measured the effect of financial
literacy on financial behavior, it is important to investigate the impact of DFL on financial behavior.
Moreover, DFL can also be affected by social characteristics or social-economic standing such as
age, income and education. Previous research related to the impact of social characteristics on
financial literacy has been conducted by Garg and Singh (2018), Yıldırım et al. (2017), Scheresberg
(2013), Wangmo (2015) and Nanziri and Olckers (2019). Their findings did not converge to the
same conclusion on the direction of the relationships. The same condition may also apply to the
relationship between the social characteristics and the DFL. Thus, including the social characteristics
as factors affecting DFL is still relevant in the Indonesian economy.
This research investigates the impact of DFL on saving and spending behavior in the Indonesian
millennials. Moreover, the relations among the current saving behavior, current spending behavior
and the foresight of future saving and spending are also investigated. The social-economic standing
 ECONOMICS OF INNOVATION AND NEW TECHNOLOGY 3

is also associated with DFL. There is rare research investigating the relation among the variables for
the millennials in the Indonesian economy. This research also has policy implications to maintain the
stability of the financial system in the Indonesian economy with respect to the saving and spending
behavior of the millennials. Thus, this research is important to the Indonesian economy.

2. Literatures
DFL is related to the knowledge of the online systems of spending and saving through online
payment and banking (Prasad and Meghwal 2017). Tony and Desai (2020) stated that DFL is a com-
bination of two concepts including financial literacy and digital platforms. Thus, DFL can be defined
as financial literacy in digital financial technology. OECD (2018) theoretically suggested that DFL can
improve spending and saving behavior. However, previous research investigated only the effect of
financial literacy on the spending and saving behavior (see Varcoe et al. 2005; Sabri and MacDonald
2010; Perry 2011; Jamal et al. 2015; Fraczec and Klimontowicz 2015; Widyastuti, Suhud, and Sumiati
2016; Henager and Cude 2016; Wangmo 2015). There is a rare empirical research investigating the
effect of the DFL on the saving and spending behavior. A research about DFL has been conducted
by Prasad and Meghwal (2017) and Tony and Desai (2020) in India, but the research did not specifi-
cally relate DFL with saving and spending behavior. For example, Tony and Desai (2020) only inves-
tigated the relation between DFL with the general financial inclusion. Also, Prasad and Meghwal
(2017) only mapped DFL among the households. Since there is a sparsely empirical research inves-
tigating the effect of DFL on saving and spending behavior, a research investigating the topic is
still relevant, especially in the Indonesian millennials.
Although the previous research did not specifically investigate the effect of DFL on saving and
spending behavior, the insights of the effect of financial literacy on saving and spending behavior
can be used to explain the relation between DFL on saving and spending behavior. DFL is the
digital mode of the standard of financial literacy (Prasad and Meghwal 2017). Thus, the effect of
DFL on saving and spending behavior is supposed to be the same with the effect of financial literacy
on saving and spending behavior. Moreover, Tony and Desai (2020) also found that digitalization in
finance can increase financial inclusion including saving and spending using digital platforms. There-
fore, a better DFL is expected to improve saving and spending behavior. Regarding the impact of DFL
on saving behavior, previous research by Sabri and MacDonald (2010), Widyastuti, Suhud, and
Sumiati (2016), Varcoe et al. (2005), Jamal et al. (2015), Henager and Cude (2016), Wangmo (2015),
Morgan and Trinh (2019a) and Zulaihati, Susanti, and Widyastuti (2020) can underpin the relationship
between the two variables. Sabri and MacDonald (2010) found that there was a positive effect of
financial literacy on saving behavior in 2519 respondents of 11 universities in Malaysia. Also, Widyas-
tuti, Suhud, and Sumiati (2016) and Zulaihati, Susanti, and Widyastuti (2020) found that financial lit-
eracy could positively affect saving behavior for millennial teachers in Indonesia. Varcoe et al. (2005)
found that financial literacy improved saving behavior of senior high school students. Moreover,
Jamal et al. (2015) also found that financial literacy significantly affected saving behavior of
college and university students in Kota Kinabalu Sabah, Malaysia. In the younger age groups,
Henager and Cude (2016) also found that financial knowledge could affect short-term financial
behavior including saving behavior. Wangmo (2015) and Morgan and Trinh (2019a) found that
higher financial literacy caused better saving behavior in Bhutan and Vietnam, respectively. There-
fore, based on the previous literatures, it is hypothesized that DFL positively affects saving behavior.
With respect to the relation between financial literacy and spending behavior, previous research
by Perry (2011), Allgood and Walstad (2016), Fraczec and Klimontowicz (2015), Varcoe et al. (2005),
Henager and Cude (2016), Wangmo (2015) and Zulaihati, Susanti, and Widyastuti (2020) found
that financial literacy could affect spending behavior positively. Perry (2011) found that millennials
had a limited financial literacy and this caused them to struggle with self-control in spending.
Also, Fraczec and Klimontowicz (2015) suggested that over-spending rate of young customers
might be caused by insufficient financial literacy. Thus, DFL may positively affect spending behavior.
4 M. SETIAWAN ET AL.

Regarding the association of the current spending and saving behavior, Velankar et al. (2014) pro-
vided one-way direction association between the two variables, suggesting that only the spending
affected the saving. They found a positive effect of spending behavior on saving behavior. An inves-
tigation by Sabri and MacDonald (2010) on 2519 respondents of 11 universities in Malaysia found that
the current spending behavior had an association with the current saving behavior. Jeevitha and
Priya (2019) also investigated the relation between current saving and current spending behavior
over 200 college students in Coimbatore city in India. They found that spending behavior affects
saving behavior. Using digital technology, spending behavior can also induce saving behavior (see
Ozili 2018; Ajeesh 2019). Thus, spending behavior can affect saving behavior positively in digital
finance. Furthermore, such a relationship is also hypothesized to be applied on the relationship
between future saving and spending behavior. In the future, the relationship between saving and
spending behavior can be treated as current condition. Thus, future spending behavior is also
hypothesized to affect future saving behavior positively.
Regarding the relationship between the current saving and spending behavior with future saving
and spending behavior, Lusardi (2008) and Hung, Parker, and Yoong (2009) found that poor financial
decision might be less visible today, but it would have big implications for long-term financial secur-
ity. Thus, the current saving and spending behavior could affect future saving and spending behavior,
respectively. Hung, Parker, and Yoong (2009) investigated the behavior of 2000 consumers (age>18
years old) in the U.S. and found that higher current spending can also affect future financial behavior.
The research also suggested that poor saving decision today may cause long-term financial security,
including future spending and saving. Furthermore, Wilkinson (2008) theoretically discussed the
relation between current spending and future saving behavior for the young and old. The finding
suggested that future saving can be affected by the current spending. The research also suggested
that current consumption could affect future consumption which also implied a connection between
current spending and future spending and a connection between current saving and future saving.
Also, Ozili (2018) suggested that the digitalization in finance might cause spending and saving to
complement each other. Moreover, Velankar et al. (2014) and Ajeesh (2019) suggested a positive
association of saving and spending behavior, which may also reflect the similar condition for the
relationship between current and future of the saving and spending behavior. This may imply posi-
tive effects of the current saving and spending behavior on future saving and spending behavior,
respectively. Therefore, based on the previous literatures, the effects of the current saving and spend-
ing behavior on future saving and spending behavior are hypothesized to be positive, respectively.
Despite the previous findings, the previous research did not empirically and specifically investigate
the relationship among current saving, current spending, future saving and future spending behav-
ior. Thus, it is important to make association empirically between the variables.
Regarding the effect of social characteristics or social-economic standing such as age, income and
education on DFL, Garg and Singh (2018), Yıldırım et al. (2017), Scheresberg (2013), Wangmo (2015),
Nanziri and Olckers (2019), Morgan and Trinh (2019a) and Xue et al. (2019) found the different effects
of social characteristics on financial literacy, which is expected to have the same results on DFL. For
example, Wangmo (2015) found that financial literacy was affected only by income level and not by
age. Nanziri and Olckers (2019) investigated the impact of demographic characteristic in South Africa.
The study found that education and income had positive impacts on financial literacy. Morgan and
Trinh (2019a) determined the demographic variables affecting financial literacy in Cambodia and
Vietnam. The study revealed that education, income and age became the determinants factors of
financial literacy. Xue et al. (2019) investigated 15,000 Australians and found that age and income
affected financial literacy. Based on the previous research, the different cultures may have caused
the different impacts of social characteristics on financial literacy. Thus, it is still important to see
the effect of social characteristics on DFL in Indonesian economy.
Figure 1 shows the conceptual framework explaining the relationship among social characteristics
(social-economic standing), DFL, current saving and spending behavior and their foresight of the
 ECONOMICS OF INNOVATION AND NEW TECHNOLOGY 5

Figure 1. Conceptual framework.

future saving and spending behavior. Figure 1 is constructed based on the theoretical concept and
previous studies.
Regarding the variables associations, it can be hypothesized that social-economic standing posi-
tively affects the DFL. DFL is also expected to have positive effects on current spending and saving
behavior. Furthermore, current spending behavior is supposed to have a positive contribution to
current saving behavior. Moreover, the foresight of future spending behavior has a positive effect
on future saving foresight. Also, current spending and saving behavior have positive contributions
to the respective future spending and future saving foresight.

3. Methods
3.1. Modeling
This study uses structural equation modeling (SEM) to estimate the relations among DFL, current
saving behavior, current spending behavior, future saving foresight and future spending foresight
(FSB). All variables have been constructed as latent variables. Therefore, each variable is constructed
using relevant indicators as shown in Table 1. Regarding the measures for DFL, Prasad and Meghwal
(2017) and Morgan and Trinh (2019b, 2019c) proposed four dimensions of DFL including knowledge
of digital financial products and services; experience in using digital financial products and services;
awareness of digital financial risk; and skill in control and managing financial digital activities. Social-
economic standing is proposed to be measured by three indicators: age, education and income. DFL,
current saving behavior, current spending behavior, future saving foresight and FSB have 11 indi-
cators, 9 indicators, 7 indicators, 8 indicators and 5 indicators, respectively.
Since the research investigating the relation among DFL, current spending and current saving
behavior as well as the foresight of future saving and spending behavior is relatively rare, this
research performed a two-round Delphi process to confirm the validity of the indicators to be
included to measure each latent variable. The panelists which participated in the Delphi process con-
sisted of eight people from several companies, associations and regulatory institutions related to
saving and spending behavior. They were asked to fill a 9-point scale questionnaire where the
value of 1 was defined as very strongly disagree for the respective indicator to be part of its respective
variable. The value of 9 was defined as very strongly agree for the indicator to be part of its respective
variable. Following Gnatzy et al. (2011), interquartile interval (IQR) with a threshold of ≤2 is used as a
consensus criterion. Indicators with IQR value of >2 are deemed to not reach consensus by panelists.
The Delphi process was conducted using two rounds. In the first round, only six indicators had a
value below eight (agree), the lowest value in the first round was 7 (somewhat agree) and the average
value was 8.01. Thus, on average, panelists agreed with all the indicators. The average value increased
6 M. SETIAWAN ET AL.

Table 1. Indicators for each latent variable.

Variable Indicators
Social-economic standing (SES) (Fisher and Anong 2012; Age (AGE)
Watson 2003; Atri 2012; Birari and Patil 2014; Garg and Singh Education (EDU)
2018; Yıldırım et al. 2017; Scheresberg 2013; Wangmo 2015; Income (INC)
Nanziri and Olckers 2019; Morgan and Trinh 2019a)
Digital Financial Literacy (Prasad and Meghwal 2017; Morgan Having a good understanding of digital payment products such
and Trinh 2019b, 2019c) as E-Debit, E-Credit, E-Money, Mobile/Internet banking, E-
wallet (DFK1)
Having a good understanding of product digital asset
management such as Tanamduit, Finansialku, Bareksa (DFK2)
Having a good understanding of digital alternatives such as
Investeree, Kreditku, etc. (DFK3)
Having a good understanding of digital insurance such as W+,
Cekpremi, Rajapremi (DFK4)
Having a good understanding of customer rights and protection
as well as the procedure to complain about the service from
digital financial providers (DFK5)
Having experience in using the product and service of fintech for
digital payment such as OVO, Gopay, LinkAja (DFE1)
Experience in using the product and service of fintech for
financing (loan) and investment such as CoinWorks, Investree,
Modalku, Amarta (DFE2)
Experience in using the product and service of fintech for asset
management such as Bareksa, tanamduit and finansialku
(DFE3)
Awareness about the potential of financial risk in using digital
financial provider or fintech, such as the legality of the fintech
provider, interest rate and transaction fee (DFA1)
Having a good capability in managing financial activities through
a digital platform such as managing the cost of using digital
financial transactions (DFS1)
Having a good control on financial activities using digital
platforms by evaluating the spending in the platforms (DFS2)
Current spending behavior (Watson 2003; Furnham 1999) Having a routine shopping using e-commerce (BSH2).
Having a preference to choose shopping using digital platform
(Shoppee, tokopedia, etc.) than the conventional platform
(traditional market, supermarket, mall, etc.) (BSS1).
Having more spending using the digital platform (shoppee,
tokopedia, etc.) than the conventional platform (traditional
market, supermarket, mall, etc.) (BSS2)
Choosing shopping using digital platforms to buy domestic
product (BSS3)
Choosing shopping using digital platforms to buy personal
products (BRS1)
Choosing shopping using digital platforms for leisure and
enjoyment (BSP3)
Choosing shopping using digital platforms because of its
convenience (BSP4)
Current saving behavior (Furnham 1999; Watson 2003; Alonso- Saving in digital financial products and transaction motive
Garcıa et al. 2017) (BRM1)
Saving in digital financial products on saving for speculation
motive (BRM2)
Saving in digital financial products and precautionary motive
(BRM3)
Saving in digital financial products and retirement program
motive (BRM4)
Saving in digital financial products and bequest motive (BRM5)
Perception of independent of financial management using
digital financial platform for saving (BSM1)
Security perception of saving using digital financial products
(BSM2)
Satisfaction for saving using digital financial products (BSM3)
Having regular savings using digital financial platform s(BSH3)
Level of future spending using the digital platform (FSP1)

(Continued)
 ECONOMICS OF INNOVATION AND NEW TECHNOLOGY 7

Table 1. Continued.
Variable Indicators
Future spending foresight (Pan et al. 2019; Jacobs-Lawson, Future spending using digital platforms compared to traditional
Hershey, and Neukam 2004) platforms (FSP2)
The future use of digital platforms for lifestyle (PSF1)
The future use of digital platforms for enjoyment (PSF3)
The future use of digital platforms for convenience (PSF4)
Future Saving Foresight (Muellbauer 1988; Pan et al. 2019) Future freedom for saving money using digital platforms (SFP1)
Security perception in future financial transactions using digital
financial platforms (SFP2)
The satisfaction of using digital platforms in the future (SFP3)
The use of digital platforms for transaction motives in the future
(SFT1)
The use of digital platforms for precautionary motives in the
future (SFT2)
The use of digital platforms for speculative motives in the future
(SFT3)
The use of digital platforms for retirement program motive in the
future (SFT4)
Future saving in digital platforms for bequest (SFT5)
Source: Various sources.

to 8.08 in the second round. Although panelists, on average, agreed about the indicators in the first
round, there were five indicators that did not reach consensus (i.e. divergence), meaning that pane-
lists did not agree with how fit these indicators were as part of their respective variables. However, the
number of variables that did not reach consensus decreased to three in the second round. Thus,
overall, all indicators had values that indicated panelists’ agreement for the indicators to be part
of variables. However, there were three indicators that had scores indicating agreement that did
not reach consensus after the two-round Delphi process. In spite of this, the variables having
scores indicating agreement did not reach consensus were still maintained, since all panelists
agree with all the indicators, on average. Also, the next step of SEM estimation will confirm about
the significance of the indicators.
There are few steps in estimating the structural model using the structural equation model (Hair
et al. 2014), i.e. (i) defining individual construct, (ii) developing the overall measurement (path dia-
grams), (iii) specifying the structural model, (iv) designing the study to produce empirical results,
(v) assessing measurement model validity and (vi) assessing the structural model validity. Defining
individual construct has been applied in Table 1 that describes the indicators constructing each
latent variable. Figure 2 shows the path diagram of the overall measurement as well as the specifica-
tion of the structural model.
Figure 2 shows the path diagrams with all indicators and latent variables before testing the validity
of the indicators for each latent variable. All structural models associated with Figure 2 are written in
Table 2. There are five structural models to be estimated, i.e. DFL model (η1), current spending behav-
ior model (η2), current saving behavior model (η3), future spending foresight (FSB) model (η4) and
future saving foresight model (η5). The measurement model validity and structural validity is
shown in Table 3. For example, the measurement models and all structural models estimation are
valid if those models have a p-value of chi-square <.10. The models are estimated using recursive

Table 2. Structural model specification.

Dependent latent variables Independent latent variables Model and notation
Digital financial literacy Social-economic standing η1 =γ1ξ1 + ζ1
Spending behavior Digital financial literacy η2 = β21 η 1 +ζ2
Saving behavior Digital financial literacy, Spending behavior η3 = β31 η 1 + β32 η 2 +ζ3
Future spending foresight Spending behavior, Saving behavior η4 = β41 η 2 + β42 η 3 + ζ4
Future saving foresight Spending behavior, Saving behavior, η5 = β51 η2 + β52 η3 + β53 η4 + ζ5
Future spending foresight
8 M. SETIAWAN ET AL.

Figure 2. Path diagram.

model taking account the problem of endogeneity in the variables of current spending behavior,
current saving behavior and future spending and saving foresight.

3.2. Data
This research uses 527 samples of millennials in Java Island.1 The data are collected by purposive
random sampling (face-to-face interview) consisting of millennials using digital financial service
and e-commerce in the urban area of Java. The sample of millennials includes respondents born
after 1980 with the age interval of 25–40 years old (Ng, Schweitzer, and Lyons 2010, 2012). This
research distributed 600 questionnaires, but only 527 respondents filled the questionnaires with
complete and valid responses. The survey covers 32 cities in the provinces of Banten (46 samples
from 4 cities), Yogyakarta (31 samples from 2 cities), Jakarta (58 samples from 5 cities), West Java
(169 samples from 9 cities), Central Java (104 samples from 5 cities) and East Java (119 samples
from 7 cities). The samples fulfill the minimum samples as suggested by Hair et al. (2014). Based
on them, the minimum sample size is 5–8 times to the number of indicators. With the number of

Table 3. Evaluating goodness-of-fit criteria.

Criteria Cut-off value
1. Chi-square p-value of chi-square <0.100
2. Chi-square/df <5
3. RMSEA (Root mean square error of approximation) <0.08
4. GFI (Goodness-of-fit index) > 0.90
5. AGFI (Adjusted goodness of fit) > 0.90
6. NFI (Normed fit index) > 0.90
7. CFI (Comparative fit index) > 0.95
8. Parsimonious goodness-of-fit index(PGFI) Reliability ≥ 0.70,
Variance extracted ≥ 0.50
Source: Browne and Cudeck (1993), Hulland, Chow, and Lam (1996) and Hair et al. (2014).
 ECONOMICS OF INNOVATION AND NEW TECHNOLOGY 9

indicators of 40, the minimum sample requirement is 200–320. Thus, the number of samples of 527
complies with the minimum sample requirement.
To meet with the purpose of this study, this research selected the respondents based on the fol-
lowing criteria: (i) the respondent was an individual born after the year 1980, (ii) the age of the
respondent was in the interval of 25–40 years old and (iii) the respondent has been using digital
financial service and e-commerce for a few months. Before the interview, a surveyor explained the
purpose of the study to the respondent and asked a few filtering questions to match with the criteria
of the respondent. The respondent that fits the criteria of sample was interviewed using a question-
naire guide that was also given to the respondent. The respondent was given electronic money as
incentive to encourage respondents to take part in the interview. The electronic money was given
to the respondent who filled the complete and valid questionnaire.
In the sample, the profile of gender is distributed to 56% of male and 44% of female. Most of them
are university graduates (64%) including diploma (10%), undergraduate (46%) and postgraduate of
8%. The rest of the sample belongs to high school education of 32% and below high school of
4%. The majority of respondents are in the income range of Rp 0–Rp 7.5 million (40%). Based on
the sample, 41% of respondents spent <10% of their income using digital platforms per month. It
is also found that millennials used electronic money and e-commerce platforms mostly because of
practicality and promotion. Furthermore, 89% of millennials used electronic money with almost
60% of millennials used server-based e-money and about 40% used card-based electronic money
(chip-based e-money). Millennials who used both chip-based e-money and server-based e-money
were 39.30%.
Tables 4–8 provide the descriptive statistics of the variables. Table 4 provides descriptive statistics
of DFL variable and its variation with respect to its indicators, level of education and level of income.
Table 4 shows that DFL of the Indonesian millennials are relatively not high, since the average score of
2.986 was closer to the median score of 2.5 than to the maximum score of 5. Based on the indicators
of financial literacy, the perception of millennials suggests that the skill in control and managing
financial activities had the highest average score of 3.539 followed by the awareness of digital
financial risk (3.528), knowledge of digital financial products and services (2.836) and experience in
using digital financial products and services (2.684). From Table 4, it is seen that DFL tended to
improve for the millennials with higher education level. For example, millennials with university
graduates tended to have higher average score (higher than 3) compared to millennials with edu-
cation of senior high school and below senior high school levels (<3). Also, the DFL of millennials

Table 4. Digital financial literacy.

Mean Std. deviation
Dimensions of digital financial literacy
Digital financial literacy 2.986 0.649
Knowledge 2.836 0.768
Experience 2.684 0.779
Awareness 3.528 1.143
Skill 3.539 0.885
Digital financial literacy based on education
Below senior high school 2.436 0.593
Senior high school 2.900 0.729
Diploma degree 3.061 0.619
Bachelor degree 3.058 0.597
Postgraduate degree 3.064 0.509
Digital financial literacy based on monthly income (expenditure)
Less than Rp 2,500,000 2.853 0.624
Rp 5,000,001 to Rp 7,500,000 3.001 0.642
Rp 5,000,001 to Rp 7,500,000 3.180 0.583
Rp 7,500,001 to Rp 15,000,000 3.275 0.709
More than Rp 15,000,000 3.352 0.703
Source: Authors’ calculation.
10 M. SETIAWAN ET AL.

Table 5. Digital spending behavior.

Percentage
Average spending frequency on digital platform per month
None to 3 times 56.93%
4–7 times 26.94%
More than 8 times 16.13%
Average value of spending on digital platform per month
Less than Rp 50,000 7.59%
More than Rp 50,000 to Rp 150,000 36.05%
More than Rp 150,000 to Rp 250,000 29.03%
More than Rp 250,000 to Rp 500,000 18.22%
More than Rp 500,000 to Rp 1,000,000 6.26%
More than Rp 1,000,000 2.85%
Source: Authors’ calculation.

was better following the level of expenditure. For example, the average score of DFL of the millennials
with expenditure of less than Rp 2.5 million was 2.853 and the score increased to 3.352 for the mil-
lennials with expenditure of more than Rp 15 million.
Table 5 shows the average frequency and average value of spending on digital platform every
month of the samples of millennials. From Table 5, it is seen that the percentage of the millennials
having the spending frequency using digital platform of not more than seven times was about
83.87%. Only 16.13% of the millennials had the spending frequency on digital platform of more
than eight times. This can be an indication that the spending of the millennials using digital platform
was still limited. In line with that, the percentage of millennials with average value of spending on
digital platform of more than Rp 50,000 and less and equal to Rp 500,000 was 83.30%. Only 2.85%
of millennials in the sample spent on digital platform of more than Rp 1,000,000.
Table 6 shows the digital saving behavior of the millennials every month in the samples. The per-
centage of the millennials with average saving frequency on digital platform of not more than 3 times
was 69.07%. The percentage of the millennials with average saving frequency on digital platform of
more than 3 times was 30.93%. This indicates that there is still limited saving transactions using digital
saving by the millennials. In line with that, the percentage of millennials having the average value of
saving on digital platform of not more than Rp 500,000 was 83.30%. Only 16.70% of millennials had
the average value of saving on digital platform of more than Rp 500,000.
Table 7 shows the average scores of the spending and saving behavior based on education and
monthly expenditure. The average scores of spending behavior and saving behavior were 3.369 and
2.944, respectively. Based on education, the millennials with university graduate tended to have the
higher scores of spending and saving behavior. The millennials with diploma degrees tended to have
the highest score of spending and saving behavior with the average score of 3.478 and 3.186,
respectively. Based on expenditure, the spending and saving behavior were higher following the

Table 6. Digital saving behavior.

Variables Percentage
Average saving frequency on digital platform per month
None to 1 time 27.13%
2 times 26.76%
3 times 15.18%
4 times 9.11%
More than 5 times 21.82%
Average value of saving on digital platform per month
Less than Rp 250,000 60.34%
More than Rp 250,000 to Rp 500,000 22.96%
More than Rp 500,000 to Rp 750,000 5.88%
More than Rp 750,000 to Rp 1,000,000 3.61%
More than Rp 1000,000 7.21%
Source: Authors’ calculation.
 ECONOMICS OF INNOVATION AND NEW TECHNOLOGY 11

Table 7. Average score of spending and saving behavior.

Variables Spending behavior Saving behavior
Average score 3.369 (0.722) 2.944 (0.789)
Grouped by education
Below senior high school 3.314 (0.812) 2.411 (0.684)
Senior high school 3.357 (0.748) 2.938 (0.864)
Diploma degree 3.478 (0.699) 3.186 (0.770)
Bachelor degree 3.376 (0.706) 2.967 (0.747)
Postgraduate degree 3.260 (0.707) 2.775 (0.656)
Grouped by monthly expenditure
Less than Rp 2,500,000 3.226 (0.692) 2.856 (0.807)
RP 5,000,001 to Rp 7,500,000 3.395 (0.709) 2.982 (0.794)
RP 5,000,001 to Rp 7,500,000 3.541 (0.775) 2.950 (0.695)
Rp 7,500,001 to Rp 15,000,000 3.648 (0.719) 3.130 (0.769)
More than Rp 15,000,000 3.911 (0.700) 3.264 (0.682)
Source: Authors’ calculation.
Standard of deviation in the parentheses.

Table 8. Future saving and spending foresight.

Variables Future spending Future saving
Average score 3.408 (0.747) 3.010 (0.851)
Grouped by education
Below senior high school 3.610 (0.953) 2.790 (0.804)
Senior high school 3.378 (0.781) 2.999 (0.939)
Diploma degree 3.367 (0.655) 3.219 (0.813)
Bachelor degree 3.430 (0.724) 3.025 (0.810)
Postgraduate degree 3.364 (0.763) 2.809 (0.740)
Grouped by expenditure
Less than Rp 2,500,000 3.328 (0.723) 2.940 (0.835)
Rp 5,000,001 to Rp 7,500,000 3.403 (0.768) 3.061 (0.860)
Rp 5,000,001 to Rp 7,500,000 3.588 (0.730) 2.980 (0.808)
Rp 7,500,001 to Rp 15,000,000 3.551 (0.752) 3.041 (0.951)
More than Rp 15,000,000 3.825 (0.627) 3.549 (0.570)
Source: Authors’ calculation.
Standard of deviation in the parentheses.

expenditure levels. For example, the respective average scores of spending and saving behavior were
3.226 and 2.856 for the millennials with the expenditure of less than Rp 2,500,000 and the scores
increased to 3.911 and 3.264 for the millennials with the expenditure of more than Rp 15,000,000.
It is also found that the millennials with the expenditure of more than Rp 15,000,000 had the stron-
gest perception that the spending and saving behavior were better compared to the millennials with
other levels of expenditure.
Table 8 shows the average scores of future spending and saving foresight of the millennials based
on education and monthly expenditure. From Table 8, it is seen that the average scores of future
spending and saving foresight were 3.408 and 3.010, respectively. From Table 8, it is seen that the
average score of FSB was higher for the millennials with non-university degree compared to the mil-
lennials with university graduate. On the contrary, the average score of future saving foresight was
higher for the millennial with university degree compared to the millennials with non-university
degree. This may indicate that the future spending behavior of the millennials with non-university
degree was perceived to have more improvement than the millennials with university graduate.
Moreover, the millennials with university graduate are expected to have better saving in the
future compared to the millennials with non-university degree. Based on expenditure, Table 8
shows that the millennials with an income of more than Rp 15,000,000 had the highest average
score of the future spending and saving foresight compared to other millennials with any levels of
expenditure. Millennials with expenditure of less than Rp 2,500,000 had the lowest score of future
spending and saving foresight. This means that the higher the expenditure, the better the future
12 M. SETIAWAN ET AL.

spending and saving foresight. This may also an indication that the millennials with higher expendi-
ture levels had better future plans for their spending and saving.

4. Result and analysis

4.1. Measurement model
Table 9 provides the estimation of the loading factor for each indicator on each dimension or latent
variable. From Table 9, it can be seen that all the indicators of the latent variables had loading factors
of more than 0.4. Table 4 has dropped a few indicators that had loading factors of <0.4.2 This research
still maintains the indicators of the latent variables with loading factors of 0.4 based on Hair et al.

Table 9. Validity and reliability test.

T- Loading Error Construct reliability Average variance extracted
Variable Indicators value factor variance (CR) (AVE) Conclusion
Criteria >1.96 >0.4 >0.7 >0.5
Digital financial literacy 0.92 0.540 Reliable
DFE3 7.97 1.00 0.00 Valid
DFE2 8.00 0.91 0.17 Valid
DFK3 8.26 0.55 0.70 Valid
DFK5 8.06 0.52 0.73 Valid
DFK2 8.04 0.51 0.74 Valid
DFA2 6.42 0.50 0.75 Valid
DFK1 5.09 0.47 0.78 Valid
DFK4 7.66 0.46 0.79 Valid
DFS2 7.41 0.46 0.79 Valid
DFE1 5.63 0.43 0.82 Valid
DFS1 4.63 0.43 0.82 Valid
Spending behavior 0.90 0.560 Reliable
BSH2 15.75 0.69 0.52 Valid
BSS2 15.61 0.66 0.56 Valid
BSS1 14.42 0.63 0.60 Valid
BSP4 13.01 0.61 0.63 Valid
BSS3 12.38 0.58 0.66 Valid
BRS1 10.96 0.57 0.68 Valid
BSP3 9.00 0.42 0.82 Valid
Saving behavior 0.95 0.712 Reliable
BRM2 9.70 1.13 −0.28 Valid
BRM3 9.07 1.01 −0.02 Valid
BSM2 15.82 0.71 0.50 Valid
BSM1 14.16 0.70 0.51 Valid
BRM1 15.36 0.69 0.52 Valid
BSH3 15.1 0.68 0.54 Valid
BSM3 13.26 0.67 0.55 Valid
BRM4 13.61 0.63 0.60 Valid
BRM5 9.36 0.47 0.78 Valid
Future spending foresight 0.89 0.614 Reliable
FSP1 5.36 0.78 0.39 Valid
PSF3 4.25 0.66 0.56 Valid
PSF1 5.72 0.62 0.62 Valid
PSF4 5.38 0.57 0.68 Valid
FSP2 4.65 0.47 0.78 Valid
Future saving foresight 0.96 0.762 Reliable
SFT5 14.44 0.81 0.34 Valid
SFP1 19.82 0.81 0.34 Valid
SFP2 19.32 0.80 0.36 Valid
SFP3 16.69 0.72 0.48 Valid
SFT1 16.52 0.68 0.54 Valid
SFT4 15.32 0.64 0.59 Valid
SFT2 9.50 0.51 0.74 Valid
SFT3 7.98 0.44 0.81 Valid
Source: Authors’ calculation using Lisrel 8.80.
 ECONOMICS OF INNOVATION AND NEW TECHNOLOGY 13

(2014). For example, this research still keeps the indicators of DFK1, DFK4, DFS2, DFE1 and DFS1 that
have a loading factor of about 0.4. Each indicator also has a significant effect on each dimension
based on the t-test.
Table 10 provides the goodness of fit for the measurement model using the criteria of chi-square
and RMSEA. Based on the criteria of chi-square, the p-value of the chi-square for each latent variable
was larger than 0.1 and can be categorized as a good fit or perfect fit. The p-values of chi-square for
DFL, current spending behavior, current saving behavior, FSB and future saving foresight were 0.639
(good fit), 0.250 (good fit), 0.417 (good fit), 1.000 (perfect fit) and 0.938 (good fit). Based on the RMSEA
criteria, each latent variable was categorized as a good fit or perfect fit. The RMSEA for DFL, current
spending behavior, current saving behavior, FSB and future saving foresight were 0.000 (perfect fit),
0.024 (good fit), 0.000 (perfect fit), 0.000 (perfect fit) and 0.000 (perfect fit). Based on the goodness-of-
fit criteria, the relevant indicators fit with each latent variable as shown in Table 10.

4.2. Analysis
Figures 3 and 4 show the estimation of the structural models and the relations among the variables
and their indicators with the top three highest loading factors. Figure 3 explains the path coefficient
of each independent latent variable in affecting its dependent variable. Figure 4 explains the t-test of
each independent variable. The results are also written in Equations (1)–(5) for each relevant model.
The number in the parenthesis is the t-statistic. This research finally only considers the education and
income as the indicators of social-economic standing, since the indicator of age has loading factor
<0.4
DFL = 0.23∗SES, R2 = 0.055
(1)
t-value (5.51)

BSB = 0.40∗DFL, R2 = 0.16

(2)
t-value (9.94)

BSV = 0.35∗DFL + 0.36∗BSB, R2 = 0.35

(3)
t-value (9.05) (9.36)

FSB = 0.11∗BSV + 0.54∗BSB, R2 = 0.36

(4)
t-value (2.75) (13.50)

FSV = 0.63∗BSV + 0.018∗BSB + 0.18∗FSB, R2 = 0.54

(5)
t-value (18.53) (0.45) (14.59)
Table 11 shows that the estimation of the structural equation models was valid based on the criteria of chi-square and RMSEA.
Based on the chi-square criteria, the p-value of chi-square was more than 0.1 for the system. Based on the criteria of RMSEA,

Table 10. The goodness of fits measurement model.

Chi-square/df < p-value (criteria RMSEA (criteria <
Latent variable 5 Conclusion >0.05) Conclusion 0.05) Conclusion
Digital financial 4.28/6 = 0.71 Good fit 0.639 Good fit 0.000 Perfect fit
literacy
Spending behavior 9.04/7 = 1.29 Good fit 0.250 Good fit 0.024 Good fit
Saving behavior 2.84/3 = 0.95 Good fit 0.417 Good fit 0.000 Perfect fit
Future spending 0.000 Perfect fit 1.000 Perfect fit 0.000 Perfect fit
foresight
Future saving 0.80/4 = 0.2 Good fit 0.938 Good fit 0.000 Perfect fit
foresight
Source: Authors’ calculation using Lisrel 8.80.
14 M. SETIAWAN ET AL.

Figure 3. Structural measurement model – standardized solution.

this research also concludes that all models were valid because the RMSEA was <0.05 for all the models. Other criteria such as GFI,
AGFI, PGFI, NFI and CFI also categorized the models as good and perfect fit.
Equation (1) shows that social-economic standing has a positive effect on DFL at a 1% critical level.
The coefficient of SES of 0.23 indicated that the direct contribution of the SES on the DFL variation
was about 5% (=0.232). The result was consistent with the findings of Garg and Singh (2018), Yıldırım
et al. (2017), Scheresberg (2013), Wangmo (2015), Nanziri and Olckers (2019), Morgan and Trinh
(2019a) and Xue et al. (2019) who found the positive effect of the social-economic standing on
financial literacy. Since the socio-economic standing was significantly affected by its indicators of
income and education, then DFL was also supported by the level of income and education. Thus,
the higher the millennials’ education and income, the more literate the millennials will be in their
digital financial activities.
Equation (2) shows that DFL had a positive effect on current spending behavior (BSB) at a 1% criti-
cal level. The same findings with this research had been found by Perry (2011), Allgood and Walstad
(2016), Fraczec and Klimontowicz (2015), Varcoe et al. (2005), Henager and Cude (2016), Wangmo

Figure 4. Structural measurement model – T-value.

 ECONOMICS OF INNOVATION AND NEW TECHNOLOGY 15

Table 11. Criteria of goodness of fit.

No Measurement of goodness of fit Criteria Estimation results Conclusion
1 p-value p-value > 0.05 0.342 Good fit
2 RMSEA RMSEA<0.05 0.016 Good fit
3 Chi-square/df Chi-square/df ≤ 5 6.78/6 = 1.13 Good fit
4 NFI NFI ≥ 0.90 0.99 Good fit
5 CFI CFI ≥ 0.90 1.00 Perfect fit
6 GFI GFI ≥ 0.90 1.00 Perfect fit
7 AGFI AGFI ≥ 0.90 0.99 Good fit
8 PGFI PGFI ≥ 0.60 0.28 Closed fit
Source: Authors’ calculation using Lisrel 8.80.

(2015) and Zulaihati, Susanti, and Widyastuti (2020). The coefficient of DFL of 0.40 indicated that the
direct contribution of the DFL on the BSB variation was 16% (= 0.402). The results conclude that DFL
affected significantly the spending behavior. The result also indicates that the millennials will be more
rational in their spending behavior if they have higher experience and knowledge.
Equation (3) shows that DFL and current spending behavior (BSB) had positive effects on current
saving behavior (BSV) at a 1% critical level. The coefficient of DFL of 0.35 indicated that the direct
contribution of the DFL on the BSV variation was 12.25% (= 0.352) and the coefficient of BSB of
0.36 indicated that the direct contribution of the BSB on the BSV variation was 12.96% (= 0.362).
This results support previous studies by Sabri and MacDonald (2010), Widyastuti, Suhud, and
Sumiati (2016), Varcoe et al. (2005), Jamal et al. (2015), Henager and Cude (2016), Wangmo (2015),
Morgan and Trinh (2019a), Zulaihati, Susanti, and Widyastuti (2020) and Tony and Desai (2020)
who found the same results on the positive relationship between the financial literacy and current
saving behavior. Also, the significant effect of the current spending behavior on the current saving
behavior supports the previous research by Sabri and MacDonald (2010) and Jeevitha and Priya
(2019). Furthermore, the positive effect of the current spending on the current saving supports the
research by Velankar et al. (2014) and Ajeesh (2019). The results conclude that besides the significant
effect of the current spending on the current saving behavior, the higher experience and knowledge
(better DFL) will cause the millennials to be more rational in their saving behavior.
Furthermore, Equation (4) shows that current spending behavior (BSV) and current saving behav-
ior (BSB) have positive effects on FSB at 1% critical level, respectively. The coefficient of BSV of 0.11
indicated that the direct contribution of the BSV on the FSB variation was 1.21% (= 0.112) and the
coefficient of BSB of 0.54 indicated that the direct contribution of the BSB on the FSB variation
was 29.16% (= 0.542). This study supports the previous finding by Wilkinson (2008), Lusardi (2008)
and Hung, Parker, and Yoong (2009) who found that the current behavior in spending and saving
affected the future financial behavior including future spending behavior. The positive association
among the variables may also support the findings from Ozili (2018) who suggested that saving is
complement to spending in digital finance, which also may apply in the connection between
current and future of the saving and spending behavior. Moreover, current spending behavior had
higher contribution on the FSB compared to the contribution of current saving behavior. This indi-
cates that there is an important link between current and future spending behavior for the millen-
nials. Current culture in spending of the millennials will be brought significantly to the future
culture of their spending.
Equation (5) shows that only current saving behavior (BSV) and FSB have positive and significant
effects on the foresight of future saving behavior (FSV) at the 1% critical level. The current spending
behavior (BSB) did not have a significant effect on the future saving foresight at the 10% critical level.
This may be an indication that the millennials still viewed that the current spending had no significant
contribution on the future saving foresight. This did not support the argument from Wilkinson (2008),
Lusardi (2008), Hung, Parker, and Yoong (2009), Velankar et al. (2014), Ajeesh (2019) and Ozili (2018)
who might suggest a contribution of current spending behavior on the future saving foresight. The
coefficient of BSV of 0.63 indicated that the direct contribution of the BSV on the FSV variation was
16 M. SETIAWAN ET AL.

about 40% (= 0.632) and the coefficient of BSB of 0.018 indicated that the direct contribution of the
BSB on the FSV variation was only 0.03% (= 0.0182). The coefficient of FSB of 0.18 also indicated that
the direct contribution of the FSB on the FSV variation was 3.24% (=0.182). This study may also prove
the previous statement by Lusardi (2008) and Hung, Parker, and Yoong (2009) where current saving
will have an impact on their financial behavior in the future. The positive association between the
variables may also support the findings from Velankar et al. (2014), Ozili (2018) and Ajeesh (2019).
Also, there is an indication that the current saving behavior has more important connection with
the future saving foresight compared to the FSB. This association was also in line with the finding
from Wilkinson (2008) who suggested that the current saving behavior could affect the future
saving behavior. The current culture of saving will be brought to the future culture of saving of
the millennials. Regarding the positive effect of the FSB on the foresight of future saving (FSV),
this was in line with the prior hypothesis which suggests that the relation between FSB and FSV
will be the same with the relation between current spending and current saving behavior.
DFL has a significant contribution to the current saving and spending behavior. The current saving
behavior is the variable with the highest contribution affecting the future saving foresight followed
by the FSB and current spending behavior. Moreover, the current spending behavior is the variable
with the highest contribution affecting the FSB followed by the current saving behavior. These indi-
cate that there are the important links between the condition of the current saving behavior and the
future saving foresight. The same condition also applies to the connection between the current
spending behavior and the FSB. Thus, DFL is an important factor to mitigate the current and
future financial problems for millennials. Building good culture in the current saving and spending
behavior will bring good culture of saving and spending behavior in the future, respectively.
From the results of the questionnaire, it is found that millennials already had good knowledge of
digital-based borrowing products, but they still had limited knowledge for digital-based investment
and saving products. It becomes a challenge for the policymaker to provide an effective socialization
and regulation about the digital-based investment and saving product. There is a challenge to create
saving and investment products that are attractive to millennials, since their behavior in investing
and saving in the present time will affect their financial behavior in the future. From the question-
naire, millennial also needs to improve their DFL on several aspects such as knowledge about con-
sumer rights and protection and complaints procedures related to digital financial services;
understanding of digital assets management products; understanding of digital payment products
and understanding of digital insurance products; awareness of the potential financial risks from
the use of digital financial products; and improved financial skills such as money management
skills and evaluation of spending on digital platforms. Thus, the challenge for practitioners, regulators
and academics is to meet the need for knowledge related to digital financial products and services.

5. Conclusion and recommendation

5.1. Conclusion
This research investigates the relations among socio-economic standing, DFL, current spending and
saving behavior as well as the future spending and saving foresight. This research finds that social-
economic standing positively affects DFL. DFL also affects spending and saving behavior positively.
This research also finds that there are positive relations among current saving behavior, current
spending behavior, future saving foresight and FSB. In spite of this, the current spending behavior
does not have a significant effect on the future saving foresight, which can be an indication that
the millennials still perceived no significant connection between the current spending with the
future saving foresight
Based on the results, income and education become important factors for the millennials to have
better DFL, which can affect both current saving and spending behavior. The current saving behavior
becomes the dominant factor affecting the future saving foresight. Also, the current spending
 ECONOMICS OF INNOVATION AND NEW TECHNOLOGY 17

behavior becomes the dominant factor affecting the FSB. The culture in the current saving and
spending behavior may dominantly influence the culture of the saving and spending behavior in
the future, respectively.

5.2. Recommendation
The challenge for practitioners is currently about how to create saving and investment products that
are attractive to millennials because it will have big impact on the behavior of investing and saving in
the future. Users of financial products and services for long-term savings and investments are still
relatively low.
This research suggests policymakers to consider DFL as an important knowledge to be given to
the millennials. By having this knowledge, the current saving and spending behavior, as well as
the future saving and spending behavior can be controllable and support the health of the
financial system. The knowledge about an important link between current spending behavior and
future saving foresight can also be given to the millennials. With respect to the social-economic
standing, other factors besides income and education need to be measured. Also, other control vari-
ables should be included in the system affecting DFL and the current and future of saving and spend-
ing behavior among millennials. In addition, further research is also needed to be connected to the
source of experience that affects millennial financial literacy.

Notes
1. Data from Indonesian Bureau of Central Statistics (2018) reported that about 57% of the Indonesian population of
266.1 million was projected to inhabit in Java Island in 2019.
2. For example, this research dropped indicators of DFA1, DFS3 and DFE4 in the dimension of digital financial lit-
eracy. Also, the indicators of BSA1 and BSA2 were dropped from the dimension of saving behavior because
the loading factors were <0.4.

Acknowledgments
This research is supported by a Research Grant Bank Indonesia (RGBI) Program 2019. This research also has facility sup-
ports from Padjadjaran University and PDUPT-Dikti 2020. We thank Dr. Reza, Dr. Solikin M. Juhro, Dr. Ali, Dr. Ascarya and
fellow researchers from Bank Indonesia Institute and Padjadjaran University for extremely useful suggestions. We are also
indebted to the anonymous referees for providing insightful comments to improve this paper. All remaining errors are
ours.

Disclosure statement
No potential conflict of interest was reported by the author(s).

ORCID
Maman Setiawan http://orcid.org/0000-0001-5141-0104
Teguh Santoso http://orcid.org/0000-0002-5751-6150
Vera Intanie Dewi http://orcid.org/0000-0002-6989-6859
Militcyano Samuel Sapulette http://orcid.org/0000-0003-4010-6785

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