In addition, the relationship between financial literacy and savings and debt behavior was examined. What is the relationship between financial literacy and the savings and debt behavior of Howard College freshmen. Research into the relationship between the level of financial literacy and the saving and debt behavior of students.
Chapter Two- Literature Review
Hilgert et al., (2003) from America found that since the 1990s, when concerns around financial literacy arose, there has been an increase in the number and types of education programs offered. However, Ludlum et al., (2012, p.30) found that a student's major at university (business or non-business) had no relationship whatsoever with their financial literacy. Hilgert et al., (2003, p.321) found that the relationship between certain financial literacy scores and the associated financial actions was correlated.
Although there is a body of literature related to college [university] students that investigates some of the factors that contribute to their financial literacy levels and behaviors (Chen and Volpe, 1998; Lyons, 2004; Williams et al., 2011) . Williams et al., (2011, pg.247) emphasizes the fact that these miserable statistics raise the question "where exactly have we failed in educating our country in matters of financial education?".
Chapter Three- Theoretical Framework
The most widely used theory in the personal finance profession, however, is the life cycle theory of consumption (Modigliani 1963; Modigliani and Brumberg. Milton Friedman's permanent income hypothesis is a version of the life cycle theory (Ziemek, 2002) of which is also known as the life cycle hypothesis within the literature. Both founding fathers were Nobel Prize recipients; Friedman in 1976 for his work on money theory and analysis of consumption behavior, and Modigliani in 1985 for his work on the life cycle hypothesis (Schenk, undated).
The two theories are often treated as one theoretical framework due to their common features, see Pistaferri (2009, p.36) who refers to the 'Life Cycle-Permanent Income Hypothesis (LC-PIH) of consumption' or Seater (1998). , p.401) who opts for the “Permanent-Income/Life-Cycle Hypothesis (PILCH). In a similar way to the life cycle hypothesis, individuals are assumed to stabilize their income, and presumably also consumption, by saving when income is high and by saving when income is low. It is the above perception that makes this research fit so well with life cycle theory.
Understanding that, according to life cycle theory, students who do not save are normal, and that the type of behavior this study aims to explain is therefore an anomaly, this study focuses on exploring social concerns if students do not save. Clark et al., (2012) noted that life cycle theory assumes that participants are rational consumers, guided, for example, by informed and calculated decisions. As a result, the debt considered by Modigliani and Brumberg does not reflect current reality, nor do the life cycle theories that predict debt repayment and savings rates.
The life cycle theory and sociocultural theory used in this research are necessary because this study does not examine financial literacy in isolation, but within the context in which people live and learn.
Chapter Four- Methodology
Qualitative research allows the researcher to use a variety of methods and techniques to convey the experiences of participants. The remainder of this chapter discusses the research design used in this study in more detail. Terre Blanche, Durheim and Painter (2006), cited in Rule and John (2011, p.60), point out that qualitative researchers want to make meaning of the above as they occur in the real world, and therefore often place them in their natural environment study. .
Related to the former “is the care often taken in selecting representative samples for the study and the attempt to generalize to broader populations” (Gray, 2014, p.192). Firstly, by posting a message on the university inner web informing humanities students about the nature of the research and requesting participation. After obtaining their consent, a letter or email explaining and confirming the purpose of the interview.
This letter also assured participants of the confidentiality of the trial and compliance with ethical research principles. This style of interviewing allows flexibility during data collection and allows the interviewer to participate in the discussion that arises from the interview (Rule and John, 2011, p.65). After obtaining their consent, a letter or email was sent to them explaining the purpose of the interview and confirming the date, time and location.
After the study is completed, a copy of the examined project will be distributed to the study participants.
Chapter Five- Discussion and Analysis
Tarren placed the blame on the academic institution(s), because according to her, she did not have adequate financial knowledge because "they didn't teach us", the "they" being mentioned is the school. Jorgensen and Salva (2010, p.467) believes that "the financial habits that young people have while in college tend to continue into adulthood." That said, this research does not claim to have exhausted the exploration of the impact of these factors on participants' financial literacy.
Therefore, contrary to the findings of the Jump$tart Coalition (2006) and Williams et al., (2011), this research revealed that participants' financial knowledge cannot be distinguished along socio-economic lines. The quiz targeted a high school system in both a rural and urban area, "results reported that urban students scored an average of 50% on the test, while rural students scored an average of 51%". Juggling work and school did not seem too difficult, as none of the respondents complained about the responsibility.
A less sophisticated argument was that school created a habit in children's lives. Interestingly, when the respondents heard the word "school", they assumed primary or secondary school, and no one associated learning about money with tertiary education. One of the aims of this study was to determine the relationship between financial literacy and saving and debt among first-year students.
Therefore, this research found that the relationship between the financial knowledge and the saving and debt behavior of the sample group was unexpected as participants reported that they did not have financial knowledge, although they showed healthy saving behavior and did not have debt. Respondents used definite words such as "of course," "definitely," and "strongly" to answer the question, "Would you say there is a relationship between the knowledge you have about finances and how you save or if you have debt?" " The answers were generic and focused on the logical assumption, as opposed to their individual scenarios. Like some people may get a certain salary but they will never be rich because of how they are. It depends on what you believe. It's like athletes who earn money. The way I just grew up, and the economy in my country was bad.
Chapter Six- Conclusion
With that said, this chapter explains the many relationships involved in financial literacy and saving and debt behavior. This thesis presents the results of a study which aimed to investigate the financial literacy of first year students at Howard College, UKZN. The exception to the participants, namely those who classified their financial literacy as good, had a common denominator; their primary schools exposed them to a financial institution.
Those participants who achieved financial literacy through experience and who discussed their positive saving and borrowing stood out. However, participants in this research also cited classroom learning as being helpful in building financial literacy, albeit to a lesser extent. Other home experiences that contributed to first-year students' financial literacy were the presence of a family business or learning about the financial hardships parents or guardians had to endure to pay school fees.
All of the above ultimately affects the behavior of the participants, which is the most important thing, since the bottom line with financial knowledge is the right behavior. The savings behavior of the participants was different from that of the literature; students reported having savings. This research provides a starting point for further study of the financial literacy of university students in South Africa.
The financial literacy of the youth is particularly important as there is an optimal period for corrective action if the home environment was not sufficient to teach this financial sensitivity.
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An applied case study analysis of the potential social relevance of financial literacy education for African American and Latino adolescents.
