Financial literacy amongst African Generation Y students: an empirical analysis of selected demographic factors

Abstract

The entire spectrum of society, including Generation Y, face the challenge of managing their personal finances in uncertain economic, financial and political times. This challenge highlights the importance of being equipped with the necessary financial literacy to make informed financial decisions. Financial illiteracy is a global phenomenon that has become a topical issue. As a result, there has been a steady increase in the body of knowledge that pertains to the importance and benefits of financial literacy and the consequences of financial illiteracy. This study investigates differences in the significantly sized black Generation Y (hereafter referred to as African Generation Y) student cohort's financial literacy in terms of selected demographic factors, namely gender, year and field of study respectively, within the South African context. Following a descriptive research design and a quantitative research approach, data were collected from a convenience sample of 385 African students registered at two Gauteng based public South African university campuses. Multiple-choice questions, relating to general financial knowledge, saving, spending and debt, were used to test the students' financial literacy. Data analysis included descriptive statistics, an independent-samples t-test and one-way analysis of variance (ANOVA). The findings suggest that African Generation Y students may be categorised as having a relatively low level of financial literacy and that the sample's financial literacy did not differ much in terms of gender. The findings of this study is likely to inform policymakers, educators, universities and financial institutions on the most effective strategies to employ for implementation with regards to differing financial literacy levels.