Financial Literacy among Undergraduate Students: Empirical Evidence from Malaysia
The ability to manage personal finances has become increasingly important in today's world. Unfortunately, studies have shown that financial literacy among young adults is low; they have inadequate knowledge of personal finances. As a result of that, they fail to make correct decisions. This study has three objectives. First, it will provide evidence on the level of personal finance literacy among university students. Second, it examines why some university students are relatively more knowledgeable than others. The third purpose is to examine how a student's knowledge influences his/her opinions and decisions on personal financial issues. This study will use a wide ranging questionnaire designed to cover major aspects of personal finance. It will include financial literacy on general knowledge, savings and borrowing, insurance, and investments. The survey participants will be asked to answer questions of their knowledge in personal finance, their opinions and decisions with regards to personal finance and questions on demographic data. The quality and consistency of the survey will be examined using Cronbach's alpha. The responses from each participant will be used to calculate the average percentage of correct scores for each question, section, and the entire survey. Consistent with the existing literature, the average percentage of correct scores will be grouped into (1) more than 80% (2) 60% to 79% and (3) below 60% The first category represents a relatively high level of knowledge. The second category represents a medium level of knowledge. The third category represents a relatively low level of knowledge. In addition to that, by using ANOVA, this study will also provide evidence on the difference in the level of financial literacy among subgroups of student.