ISSN 2348-3156 (Print) International Journal of Social Science and Humanities Research ISSN 2348-3164 (online) Vol. 10, Issue 4, pp: (422-426), Month: October - December 2022, Available at: www.researchpublish.com
A Study on Impact of Financial Literacy on Individuals Financial Behaviour Dr. Ashwini M. Jamuni Assistant Professor, Dept of Commerce, RCUB DOI: https://doi.org/10.5281/zenodo.7323488
Published Date: 15-November-2022
Abstract: Financial Literacy has been recognized as a critical skill for individuals who are embedded in an increasingly complex financial scenario. Financial Literacy helps individuals make more assertive and efficient decisions in the monetary context of their lives. This paper measures individuals' financial literacy level and analyses the relationship and impact between financial Literacy and financial behaviour. The research results show that individuals have a reasonable level of financial Literacy. On analyzing the financial behaviour of individuals, it was found most of them exhibited moderately positive financial behaviour. It is also observed that financial Literacy can enhance people's skills and abilities to make more informed choices and ultimately lead to a positive financial behaviour. Thus one can conclude that increasing the level of financial education stimulates wise economic behaviour. Keywords: financial Literacy, relationship, financial behaviour and impact.
1. INTRODUCTION Today, the value of financial Literacy is rising. Financial Literacy is especially important in the economic and financial spheres since it can explain a variety of financial and economic behaviour. Economic agents' ability to understand basic financial concepts and make decisions is greatly influenced by their level of financial Literacy. Individuals are now more actively involved in their financial planning than ever before thanks to the passage of time. In fact, given that recent crises disproportionately hurt the young and inexperienced, this increased responsibility may have originated from a humanistic need to protect oneself. One could argue that the 2008 subprime mortgage crisis, which was a global crisis, brought financial Literacy to the fore (Mandell and Klein, 2009, p. 16; Robb and Woodyard, 2011, p. Shahrabani (2012), p. 156; 60). On the other hand, the two primary difficulties can increase the significance of this financial understanding (Rooij, Lusardi and Alessi, 2007, p.2). First, the variety of financial products—many of which are fairly complex and difficult to understand— requires knowledge of and comprehension of financial ideas and issues. According to Mandell and Klein (2009, p. 16), the emergence of this diversity of financial instruments in the US followed the deregulation of the financial markets. The second and most recent social security reform in the US, and indeed everywhere else in the world, calls for people to actively manage their finances. Understanding financial concepts and being able to identify financial instruments seem to be crucial for people making any kind of financial decisions. Financial Literacy is the ability to understand how money works in the world and take an informed as well as a judicious decision with regard to all financial activities. A person who is financially literate knows how to earn, manage and invest money. He is familiar with financial products and applies his knowledge to make the best use of them. Recent developments have made financial education and awareness increasingly important for financial wellbeing. The information available on consumer financial literacy shows that individuals generally lack an adequate financial background or understanding to navigate today's complex market, but unfortunately they also generally believe that they are far more financially literate than is really the case. The level of financial Literacy tends to vary according to education and income levels, but the evidence shows that highly educated consumers with high incomes can be just as ignorant about financial issues as less educated, lower income consumers.
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