Income, Saving Behavior, and Household Financial Decision-Making: A Moderated-Mediation Analysis of Behavioral and Economic Factors in Indonesia

Muhammad Sohilauw; Rosdiana Rosdiana; Andi Harmoko Arifin; Nasir Nasir; Muhammad Kafrawi Yunus

doi:10.61255/jeemba.v4i4.844

Authors

Muhammad Sohilauw STIEM Bongaya Makassar, Indonesia
Rosdiana Universitas Nuku, Indonesia
Andi Harmoko Arifin Universitas Terbuka, Indonesia
Nasir Politeknik Negeri Ujung Pandang, Indonesia
Muhammad Kafrawi Yunus Universitas Bosowa, Indonesia

DOI:

https://doi.org/10.61255/jeemba.v4i4.844

Keywords:

Household financial decision-making, Saving behavior, Financial risk management, Income, Behavioral household finance

Abstract

This study develops a framework to explain household financial decision-making by examining how economic capacity and behavioral discipline jointly influence financial outcomes. While income reflects financial capacity, saving behavior represents the discipline that determines how resources are managed. Using survey data from 500 working individuals in Makassar City, Indonesia, this study applies a predictive composite modeling approach combining robust MM estimation and cross-validated regression to address non normal behavioral financial data. The results show that saving behavior strongly influences both household financial decision-making and financial risk management, and also indirectly affects financial decisions through financial risk management. Income also shows a positive but weaker effect. The interaction between income and saving behavior is statistically significant (β = −0.267, p < 0.001), indicating that the marginal effect of income declines as saving discipline increases. The model explains 62.8% of the variance in financial decision-making. The study introduces a capacity–discipline interaction framework and demonstrates the value of robust predictive modeling for behavioral finance research.

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