The Influence of Financial Literacy, Materialism, And Risk Perception on The Propensity to Indebtedness of the Millennial Generation

The tendency of the millennial generation to take out loans is an interesting topic for debate. The characteristics of the millennial generation, especially high disposable income, motivate the habit of debt (Rudhiwantoro, 2018). In fact, millennials earn more than enough money to pay all bills and save some for the future. However, millennials cannot invest because they depend on consumer credit or installment payments (Rahayu, 2019). This materialistic tendency can encourage people to engage in debt-inducing behavior. This type of debt behavior is carried out intentionally by someone, usually due to difficulty managing finances or being unable to resist buying items to fulfill a lifestyle. Propensity to Indebtedness is the tendency to always borrow money. Propensity to Indebtedness can have a negative impact on consumptive behavior, such as buying products that only satisfy oneself. This study examines how financial literacy, materialism, and risk perception influence Propensity to Indebtedness. This study involved residents of Bandung. A convenience sampling was conducted to collect 200 residents of Bandung City through a questionnaire. Data were analyzed using partial least squares. Financial literacy had a significant negative effect on propensity to indebtedness, materialism had a significant positive effect, and risk perception was insignificant.