The Correlation between Financial Literacy and Personal Finance Management

When Making Investment Decisions Among Students

Introduction

In today's environment, being able to manage personal finances is becoming more and
more crucial. People need to make long-term plans for their investments in retirement
and student's education. Additionally, they must choose between making short-term
savings and borrowing money for things like a vacation, education, an emergency, a
house, a car loan, and other things. They also have to take care of their own health and
life insurance requirements. Awareness money and how it is used in daily life requires a
basic understanding of financial literacy. This involves having the ability to use the
standard means of exchanging and managing money, as well as the way income and
expenses are controlled. Additionally, financial literacy includes knowledge of common
scenarios that must be understood, such as saving, borrowing, credit and insurance.

Relevance of the study

According to Lusardi (2019) financial literacy among students is possibly more important
than ever. The reason is that recent financial market changes have brought fresh
emphasis to the significance of people being financially literate, or, in other words, being
knowledgeable about their financial options and discerning financial consumers.
Financial literacy can also assist customers get ready for hard times financially by
promoting risk-reduction tactics including building up savings, separating assets, and
buying insurance. Individuals' understanding of economics and finance has generally
been linked to their financial decisions, such as portfolio selection, retirement planning,
and savings.

Background discussion
According to Fazal (2017), financial literacy has been acknowledged globally as a
fundamental tool for development with issues relating to budgeting, savings,
investments, and risk management that are crucial for people, households, and
organizations during their developmental process. Research has demonstrated the
importance of financial literacy in making wise investing choices. The individuals' lack of
commitment to financial management had an impact on their own personal finances,
which impacted their capacity to save and invest money. Financial decision-making is
widely recognized as one of the key elements that affects one's capacity to manage
money and overall financial welfare. As a result, one of the key concerns for both
personal and societal development is identifying variables that are strongly related to
financial decisions.

Methodology

The researchers used survey questionnaires as study tools to determine the association
between financial literacy and personal financial management while students are
making investment decisions. Using a systematic series of questions, survey
questionnaires are a strategy for gathering statistical data about the characteristics,
attitudes, or behaviors of a community. It involves selecting a random sample of the
study's variables or topics, and participants fill out a questionnaire about their interests.

T, K. D. A. (2020, December 21). The Impact of Financial Literacy on Investment Decisions:

With Special Reference to Undergraduates in Western Province, Sri Lanka | Asian

Journal of Contemporary Education

View of The Correlation between Financial Literacy and Personal Saving Behavior in Vietnam |

Asian Economic and Financial Review. (n.d.).