Financial Literacy and Money Management among the Young

Abstract

The aim of this study is to analyze the relationship between financial literacy, both basic and advanced, and money management among the youth. This includes saving and cash management. Data sets were collected using questionnaire surveys from undergraduate students in Bangkok. A regression analysis was conducted to test the relationship of financial literacy (the independent variable) and money management (the dependent variable). The results indicate that in the case of students who have basic financial literacy, i.e., understand inflation, the effects of interest rates, and how risk diversification works, there is a close relationship to money management. In contrast, in the case of students who have advanced financial literacy, i.e., have a solid grasp of risk-return tradeoffs, basic asset pricings, and knowledge in bonds, stocks and mutual funds, there is a weak relationship between literacy and money management. This is 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 to improve the financial well-being of undergraduate students.