(RRL ABOUT FINANCIAL LITERACY NGA MA KONEK SA PAGIGING

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Financial Literacy

An essential indicator of people’s ability to make financial decisions is their level

of financial literacy. The Organisation for Economic Co-operation and Development

(OECD) aptly defines financial literacy as not only the knowledge and understanding of

financial concepts and risks but also the skills, motivation, and confidence to apply such

knowledge and understanding in order to make effective decisions across a range of

financial contexts, to improve the financial well-being of individuals and society, and to

enable participation in economic life. Thus, financial literacy refers to both knowledge

and financial behaviour. As describe in more detail below, findings around the world are

sobering. Financial literacy is low even in advanced economies with well-developed

financial markets. On average, about one third of the global population has familiarity

with the basic concepts that underlie everyday financial decisions. The average hides

gaping vulnerabilities of certain population subgroups and even lower knowledge of

specific financial topics. Furthermore, there is evidence of a lack of confidence,

particularly among women, and this has implications for how people approach and make

financial decisions (Lusardi and Mitchell, 2011).

Financial literacy is a chain of tactics or activities that is very helpful to improve

one individual's knowledge, skills, and confidence. So that they are able to manipulate

their personal finances higher. It is not only for the rich or individual who is capable to

make massive investments but however also for the average individual who may able to
invest in small investment or even to young ones whose own pocket it is the most effective

way for them to save money for future purposes. Nowadays, financial literacy is mainly

critical for students because the students are one of the components of society. They

need to be smart financially, to know how to utilize revenues for saving, making an

investment, protection, and to fulfill their needs (Otoritas Jasa Keuangan, 2014; Sina,

2012).

Some researcher stated that in able to make a good financial management individual

should have financial knowledge, the ability to apply their knowledge, skills, and

confidence in every financial decision made. In defining financial literacy is how an

individual understands and make a financial decision and develop financial behavior.

Furthermore, it is to be a component of human capital and has a relationship with a

person's competency for managing money (Pudło & Gavurova, 2012; Orton, 2007;

Huston, 2010; Remund, 2010; OCDE, 2013).

People may have a better understanding of financial concepts when they are

confronted with them in their daily lives. Financial knowledge helps an individual to

compare financial products and services and well informed financial decisions. The ability

to have numeracy skills in a financial context will help the consumers manage their

financial affair independently and respond appropriately. Moreover, financial knowledge

is highly important in times where increasingly complex financial products are easily

available to a wide range of the population. There would be a problem if the consumers

will fail to understand the concept of interest compounding. As a result, they end up

borrowing more and saving less money (Morgan and Trinh 2019).
 It was demonstrated that moderately aged people are more financially proficient

than old. And it was agreed that an old person is less financially literate. Moreover, it is

reported that financial knowledge improves with age. One explanation for this observation

is described in a segment of research that has been distinguished between fluid and

crystallized intelligence. It states that fluid intelligence is being capable to manipulate

information and discriminate connection among new and old information (Lusardi and

Mitchell 2011; Beckmann 2013; and Alhenawi and Elkhal 2013).

Financial literacy correlates directly to financial behavior. An individual's behavior

towards his own financial situation is greatly influenced by the level of his financial

knowledge attained through his own personal experiences and through formal academic

institutions. Studies show that financial behavior involves basic financial management

concepts such as planning, management and controlling. With these basic financial

management tools, an individual is somehow equipped in the decision-making process

for certain actions on his available financial resources. Relevant financial information,

among other important factors, has significantly shaped an individual's financial attitudes

and behavior in managing his financial resources, spending and investing activities, and

creating responsible future financial plans (Kasmir 2010; Ida and Dwinta 2010; Nababan

and Sadalia, 2012).

Financial literacy occurs when an individual has set-off skills and abilities that make

the person is able to utilize the existing resources to achieve the expected goals. By that,

people with strong financial skills do a better job planning and saving for future use

(Behrman et al., 2012; Lusardi and Mitchell, 2014).

 Handling money is not easy especially for those students who have a lot of things

to buy. Self-perceived suggested as a measure on how we are confident in handling

finances, also self-perceived focuses on the financial institution and to test the behavior

and attitude of the individual in financial. Having a piece of knowledge in finance could

help us in dividing our money. Self-assessed perception of financial knowledge is really

important in handling money. But we should have knowledge in order to save more money

(Lusardi and Mitchell, 2014; Porto and Xiao, 2016; Allgood and Walstad, 2016).

It is fundamental that every individual ought to be able to see how money works;

how to oversee it to win and to contribute or how to give it to help other people (IEF,

2013). Financial literacy gives the vital information, abilities and devices for people to

make informed budgetary choices with certainty, to oversee individual riches with

proficiency and to increase monetary capability to interest for better money related

administrations (Ali, 2013). JumpStart (2009) noted and contended that under studies

who took up financial literacy courses were worse off than the individuals who did not.

The difficulty is that most understudies particularly graduating understudies these days

are unqualified as far as money related administration. The administration doesn't give a

lot of attention to it that is the reason a great many people are as yet budgetary ignorant,

they don't have the foggiest idea how to spending plan and spare their cash. A present

national concern is the low money related education of understudies. School under

studies are not accepting the money related information important to be fruitful in the

present quick paced economy. Because of an undeniably intricate commercial center,

understudies need greater knowledge about their own funds and the economy. The

money related choices made right on time in life make propensities hard to break and
influence understudies' capacity to turn out to be monetarily secure grown-ups. Latest

investigations show normal individual monetary scores declining with normal scores close

to a bombing grade (Seat, Allen and Hayhoe, 2007).

Investment Decision

Investment is an activity that is engaged by people who have savings by commits

their funds in capital assets/ goods and services, with an expectation of some positive

rate of return. An essential element of investment is the anticipated return therefore

management of the asset invested must be done to ensure that at least assets appreciate

in value. Investment decision is the determination made by the investors, in case of an

individual investment or management where a corporation is involved, as to how, when,

where, and how much capital will be spent on investment opportunities. These decisions

are usually supported by decision tools, literacy being one of the necessity, that would

help achieve a satisfactory return after performing an investment analysis using the

fundamental and technical 6 analysis. The decision to invest is usually followed by

research to determine the costs and returns for various options available (Pandey, 2014).

Investment decision making is a very crucial process which is influenced by many

factors. An important thing which is necessary to understand is the degree to which an

investor can absorb the risk. This intensity of risk which can be of minimal, maximum or

mediocre level, defines the strategies regarding the decisions of investment. A

determinant of investment decisions needs special consideration to be understood by

investors (Awais, 2015).