The Psychology of Investing Young: Financial Literacy's Predictor of Investment Behavior Among High School Students

Abstract

Traditional financial literacy frameworks mainly focus on mathematical or institutional knowledge while neglecting cognitive biases and socioeconomic impulses which dictate youth investment behavior on digital platforms. The study’s purpose is to evaluate the extent to which targeted financial literacy interventions with psychological regulation and technical education, addressing loss aversion and Fear of Missing Out (FOMO), can predict disciplined investment intentions and influence risk tolerance amongst high school students. Using a mixed-methods quasi-experimental approach, a sample including high school students (n = 60, grades 10-12), was split into two groups. A treatment group (n = 30) that received a four-week behavioral finance curriculum and a control group (n = 30). Quantitative data was collected through pre- and post-test literacy assessments and self-reported Likert scales regarding investment intentions. Qualitative understanding was gathered via semi-structured interviews analyzed through thematic coding. Quantitative analysis revealed an increase in the treatment group’s mean financial literacy score from 42% to 78%, while the control group showed no significant change. A strong positive correlation (Pearson’s r = 0.65, p < 0.01) was established between post-intervention literacy and in disciplined long-term investment intentions over speculative vehicles associated with high-risk. Qualitative themes validate these findings by demonstrating a clear behavioral shift from speculation driven by social media to strict emotional regulation and diversification. These findings demonstrate that targeted financial education can predict disciplined allocation of assets successfully if cognitive knowledge and behavioral intelligence are utilized. This creates a compelling, empirical argument for including behavioral economics in mandatory high school curricula.