Financial literacy and money management among the young

Abstract

The aim of thisstudy is to analyze the relationship between financial literacy, both basicand advanced,and money managementamong the youth. This includes saving and cash management. Data sets were collected using questionnaire surveysfrom undergraduate students inBangkok. A regression analysis was conductedto test the relationship of financial literacy (the independent variable) and money management (the dependent variables). The results indicate that in the case of students who have basic financial literacy, i.e., understand inflation, theeffectsof interest rates, and how risk diversification works, there is a close relationship to money management. In contrast,in the case of studentswho have advanced financial literacy,i.e., have a solid grasp ofrisk-return tradeoffs, basic asset pricings, and knowledge in bonds, stocksand mutual funds, there is a weak relationship between literacy and money management. Thisis a rather surprising finding as it seems that more financially knowledgeable students should be more aware of how to manage money. These findings will be useful for policymakers and institutional educators to improve their curricula, which could help toimprove the financial well-being of undergraduate students.