A Study on Financial Literacy among College PG Students in Visakhapatnam City
Anjana Raviprolu, P Nagavali
Dr. Lankapalli Bullayya College, Visakhapatnam
*Corresponding Author E-mail: anju231174@gmail.com, nagavali.mba@gmail.com
ABSTRACT:
Financial literacy is very crucial for making and financial decisions to manage money. These days it is found that in spite of the scholarships to the students, they are unable to save or invest money wisely. The term financial literacy was first coined in 1787 in the USA, when John Adams in a letter to Thomas Jefferson admitted the need for financial literacy for overcoming the confusion and widespread distress in America that had arisen due to ignorance towards credit, circulation and nature of coin. This study is done on the post-graduate students from the various colleges in Visakhapatnam city. The purpose of the study is to find the link between demographic factors such as age, gender and family background with the financial literacy of the students based upon the two factors namely financial awareness of various schemes and saving habits in those schemes. The questionnaire was distributed to 423 post-graduate college students of various colleges in the Visakhapatnam city. 392 questions were answered and analysed for the study.
KEYWORDS: Financial literacy, financial decisions, demographic factors, financial awareness, saving habits.
INTRODUCTION:
Every individual should possess knowledge on financial management so that they can handle their earnings effectively. The person can be wealthy in true means if he or she is financially literate. Financial literacy can be defined as the ability to understand the money’s language. It means that people had to be financially literate to become wealthy or to stabilize their financial situation (Cullen 2013)1. Though the students are given scholarships, they should have enough knowledge in managing that scholarship to carry out their education without facing any financial slump. This is possible to gain some knowledge in financial aspects to manage whatever amount they have.
REVIEW OF LITERATURE:
A study was done by Ergun (2017)2 to find the financial literacy among university students in 8 European countries It was found that there is medium level of literacy among the students. The study revealed that those whose parents belong to high income level and those who have financial education or done a course in financial education have more knowledge than others.
A study in Malaysia on students of private colleges was found that there is very little knowledge in financial literacy and that that they didn’t have any much discussions with their family regarding financial saving. Also, age and income but not the gender are the factors that have an impact on financial literacy of the students (Sabri et al. 2010)3.
There is a positive relationship between the family influence and the financial literacy of the students. The interaction of the parents with the children on financial issues helps the children to gain financial literacy (Williams, 2010)4.
OBJECTIVE OF THE STUDY:
The primary objective of the study is to study the financial awareness level of the students in the college. The study also focusses on the various schemes used by the students to save their money.
RESEARCH METHODOLOGY:
The questionnaire was administered to 423 post-graduate students of various colleges in the Visakhapatnam city. Only 392 filled in questionnaires were received and hence used for the study and analysis. The questionnaire consists of 3 Parts. The first part consists of demographic variable, the second part consists of the awareness level on various financial schemes and third part consists of the saving habits on various financial saving schemes. The sampling method used was simple random sampling and convenience sampling methods. Out of the 8 randomly selected colleges in the Visakhapatnam city, the students were selected at convenience. The IBM Statistical Package for Social Science (SPSS) 20.0 program is used in order to analyze and make inferences from the data obtained.
HYPOTHESES TO BE TESTED:
H1: The level of awareness among the college students for various financial schemes are equal to average level.
H2: There is no significant difference between male and female student with regard to the awareness of various financial schemes.
H3: There is an average level of saving habits among the college students.
H4: There is no significance difference among age groups with respect to the factors of Financial literacy.
H5: There is no significance difference among family types with respect to the factors of Financial literacy.
ANALYSIS AND DISCUSSION:
Reliability test:
Chronbach alpha is used to measure the reliability or internal consistency. Reliability is how well a test measure how it should be.
Chronbach’s alpha
|
Sections |
Item |
Chronbach alpha |
|
Financial awareness |
11 |
.849 |
|
Financial saving |
11 |
.791 |
This result of Chronbach alpha for financial awareness is 0.849 which is an indicator of good strength. Hence, all the 11 items were selected. Also, the Chronbach alpha for financial saving was found to be 0.791, which is also a good indicator of good strength and hence all the 11 indicators here were also selected. Generally speaking, Chronbach alpha with greater than 0.7 is acceptable.
H1: The level of awareness among the college students for various financial schemes are equal to average level
Table 1: Awareness on financial schemes
|
Statement on awareness |
Mean |
Std. Deviation |
T |
Sig |
|
Awareness of bank deposit |
3.53 |
.971 |
6.298 |
.000 |
|
Awareness of NBFC deposit |
2.47 |
.995 |
6.149 |
.000 |
|
Awareness of post office schemes |
2.61 |
1.174 |
3.796 |
.000 |
|
Awareness of Securities |
2.28 |
.844 |
9.734 |
.000 |
|
Awareness of Derivatives |
2.39 |
.916 |
7.628 |
.000 |
|
Awareness mutual funds |
2.40 |
.966 |
7.144 |
.000 |
|
Awareness of Commodity Derivatives |
2.04 |
.706 |
15.592 |
.000 |
|
Awareness of insurance schemes |
2.82 |
1.094 |
1.917 |
.047 |
|
Awareness of physical gold |
2.64 |
1.031 |
3.984 |
.000 |
|
Awareness of chit funds |
2.71 |
1.049 |
3.166 |
.002 |
|
Awareness of Real estate |
2.31 |
.842 |
9.339 |
.000 |
**indicates significant at 0.01 and indicates significant at 0.05
Since the p value for all the statements except for one are less than 0.01 for the t-test, the null hypotheses is rejected for all those statements at 1% level of significance. For the 8th statement the null hypothesis is rejected as the p value is less than 0.05 for 5% level of significance. Hence, the level of awareness of various financial schemes among the college students is not average.
Based upon the mean values of the awareness of individual financial schemes, we can understand that the students are not aware of the financial schemes like NBFC deposits, securities, Derivatives, Mutual funds, Commodity derivatives and real estates. But they are aware of the schemes like bank deposit, post office schemes, insurance schemes, physical gold and chit funds.
H2: There is no significant difference between male and female student with regard to the awareness of various financial schemes.
Table 2: Gender and Financial schemes
|
Statement on awareness |
Gender |
N |
Mean |
T |
Sig |
|
Awareness of bank deposit |
Male |
99 |
3.57 |
.675 |
.502 |
|
Female |
32 |
3.44 |
|||
|
Awareness of NBFC deposit |
Male |
99 |
2.39 |
1.450 |
.153 |
|
Female |
32 |
2.69 |
|||
|
Awareness of post office schemes |
Male |
99 |
2.58 |
.565 |
.575 |
|
Female |
32 |
2.72 |
|||
|
Awareness of securities |
Male |
99 |
2.26 |
.439 |
.663 |
|
Female |
32 |
2.34 |
|||
|
Awareness of derivatives |
Male |
99 |
2.42 |
.680 |
.500 |
|
Female |
32 |
2.28 |
|||
|
Awareness of mutual funds |
Male |
99 |
2.40 |
.143 |
.887 |
|
Female |
32 |
2.38 |
|||
|
Awareness of commodity derivatives |
Male |
99 |
2.04 |
.067 |
.946 |
|
Female |
32 |
2.03 |
|||
|
Awareness of insurance |
Male |
99 |
2.88 |
1.098 |
.278 |
|
Female |
32 |
2.63 |
|||
|
Awareness of physical gold |
Male |
99 |
2.69 |
1.013 |
.315 |
|
Female |
32 |
2.50 |
|||
|
Awareness of chit funds |
Male |
99 |
2.72 |
.141 |
.889 |
|
Female |
32 |
2.69 |
|||
|
Awareness of real estate |
Male |
99 |
2.31 |
.004 |
.997 |
|
Female |
32 |
2.31 |
As the p values for all the statements are greater than .05 for the t-test, it indicates that there is no significant difference in the awareness levels of males and female students with respect to the various financial schemes. Both the male and female students are aware of bank deposit, post office and insurance schemes well. They have little knowledge on physical gold and chit funds. But they are not aware of the financial schemes like NBFC deposit, Securities, Derivatives, Mutual funds, Commodity derivatives and Real estates.
H3: There is an average level of saving habits among the college students
Table 3: Saving habits
|
Statements on Awareness |
N |
Mean |
T |
Sig |
|
Saving in bank deposit |
131 |
2.33 |
-8.040 |
.000** |
|
Saving in NBFC deposits |
131 |
1.92 |
-17.949 |
.000** |
|
Saving in post office |
131 |
1.88 |
-28.694 |
.000** |
|
Saving in securities |
131 |
1.82 |
-17.306 |
.000** |
|
Saving in derivatives |
131 |
1.20 |
-51.499 |
.000** |
|
Savings in mutual funds |
131 |
1.34 |
-31.603 |
.000** |
|
Saving in commodity derivatives |
131 |
1.07 |
-87.054 |
.000** |
|
Saving in insurance |
131 |
1.56 |
-20.504 |
.000** |
|
Saving in physical gold |
130 |
1.22 |
-45.350 |
.000** |
|
Saving in chit fund |
130 |
1.34 |
-27.987 |
.000** |
|
Saving in real estate |
131 |
1.11 |
-59.188 |
.000** |
**indicates significant at 0.01
Since the p value for all the statements are less than 0.01 for the t-test, the null hypothesis is rejected for all those statements at 1% level of significance. Hence, the saving habits among the college students is not average.
Based upon the mean values of the saving habits of the students in various financial schemes, we can understand that the students don’t have the habit of savings in any of the financial schemes.
H4: There is no significance difference among age groups with respect to the factors of Financial literacy
Table 4: Age group and Financial literacy
|
Factors of financial literacy |
|
Age groups in years |
F value |
P value |
||
|
|
<20 |
20-25 |
25-30 |
|||
|
Awareness of financial schemes |
Mean |
17.6667 |
17.7438 |
17.5714 |
.009 |
.991 |
|
Std. Dev. |
4.16333 |
3.39001 |
3.30944 |
|||
|
Saving habits in schemes |
Mean |
20.6667 |
21.2314 |
21.5714 |
.171 |
.843 |
|
Std. Dev. |
1.52753 |
2.28677 |
2.07020 |
|||
Based upon the Duncan Multiple range test, there are no significant difference among age group with respect to awareness of financial schemes and saving habits, since the p value is greater than 0.05. Hence H0 is accepted at 5% level of significance to both the factors of financial literacy.
All the age groups have awareness of only few financial schemes like bank and post office but do not have any saving habits. Even at this stage of the life, the students are not aware of most of the schemes as they don’t have any such discussions at home with their parents on the saving schemes.
H5: There is no significance difference among family types with respect to the factors of Financial literacy
Table 5: Family type and Financial literacy
|
Factors of financial literacy |
|
Type of family |
F value |
P value |
||
|
|
Joint family |
Nuclear family |
Others |
|||
|
Awareness of financial schemes |
Mean |
17.26 |
17.83 |
18.5 |
.478 |
.621 |
|
Std. Dev. |
2.81 |
3.57 |
2.81 |
|||
|
Saving habits in schemes |
Mean |
20.6 |
21.43 |
21.33 |
1.573 |
.211 |
|
Std. Dev. |
1.97 |
2.37 |
.51 |
|||
Based upon the Duncan Multiple range test, there are no significant difference among family type with respect to awareness of financial schemes and saving habits, since the p value is greater than 0.05. Hence H0 is accepted at 5% level of significance to both the factors of financial literacy.
All the family types whether joint family or Nuclear family or separated family have awareness of only few financial schemes like bank and post office but do not have any saving habits. For all the family types, the students are not aware of most of the schemes as they don’t have any such discussions at home with their parents on the saving schemes.
CONCLUSION:
The study on financial literacy of college students in the Visakhapatnam city was done based on two factors namely financial awareness and saving habits. The analysis indicated that there is a poor financial literacy among the students. They are aware of only some popular financial schemes like bank deposits, insurance and post office schemes. The most alarming is that they don’t have any habit of saving in any of the schemes. The future research can be done including other factors like family influence, financial attitude and financial behaviour. Based on the interaction with the students it was found that the parents don’t involve them in making any financial decisions. Its high time that the parents realize that it’s important to involve their children in financial decision making to make them financially literate.
REFERENCES:
1. Cullen, C. 2013. Financial Literacy Among Graduate Students. New York: ProQuest LLC
2. Kutlu Ergun, Jan. 2018, Financial literacy among university students: A study in eight European countries, International journal of consumer studies, vol. 42, Iss. 1, pp. 2-15
3. Sabri, M. F., M. MacDonald, T. K. Hira, and J. Masud, 2010. Childhood Consumer Experience and the Financial Literacy of College Students in Malaysia. Family and Consumer Sciences Research Journal, 38(4), 455-467.
4. Williams, S. 2010. Parental Influence on the Financial Literacy of their School-Aged Children: An Exploratory Study. Exceptional Children, Journal of Special Education, I, 23-33
Received on 11.10.2019 Modified on 21.11.2019
Accepted on 15.12.2019 © AandV Publications All right reserved
Asian Journal of Management. 2020; 11(1):43-46.
DOI: 10.5958/2321-5763.2020.00008.6