FINANCIAL LITERACY AFFECTS THE FINANCIAL MANAGEMENT OF

STUDENTS MAJORING IN ECONOMIC EDUCATION

Nurain Adiko1), Usman Moonti2), Agil Bahsoan3), Radia Hafid4), Roy Hasiru5)

Students of the Department of Economic Education, Gorontalo State University1)

Lecturer of Department of Economic Education, Gorontalo State University2)3)4)5)
adikoain@gmail.com

ABSTRACT
The purpose of this study was to determine the effect of financial literacy on financial
management of students majoring in Economic Education. This study uses a quantitative
approach with the number of respondents as many as thirty one students majoring in
Economic Education. In the meantime, the data collection techniques used in this research
were observation, questionnaires, and documentation, and the data analysis technique was
simple regression.

The results of this study indicate that financial literacy has an effect on the financial
management of students majoring in economic education, with a contribution of 36,7%. In
comparison, the remaining 63,3% were affected by other variables not examined this this
research.

Keywords: Financial Literacy, Financial Management.

INTRODUCTION
Money is something that cannot be separated from human life, from children to
adults. Money is used to meet all needs, so financial intelligence is something that needs to be
considered in today's life. Financial intelligence is the ability of a person to manage his
financial resources in order to achieve financial well-being.
Manage finance is everyone's task in everyday life, where finances must be managed
properly to balance income and expenses. A person must have good financial management
skills so that the money earned is not wasted. Effective financial management has a positive
impact on life, namely avoiding financial problems. Financial management is one of the basic
skills needed by this society, because daily consumption choices affect financial security and
living standards (Zahroh, 2014:3).
One of the factors that can affect financial management is financial literacy
(Prihartono, 2018:316). The role of the government to increase public financial literacy by
encouraging the Financial Services Authority (OJK) to conduct education related to efforts to
increase public knowledge including personal financial management. Efforts to increase
financial literacy include increasing knowledge, skills and confidence of consumers and the
public so that they are able to manage their finances (OJK, 2015:1).
Knowledge of financial literacy becomes a necessity in life so as not to be swept away
by rapid technological developments or consumptive and hedonistic behaviors and lifestyles.
Students must adapt to technological advances. Therefore, education for students plays an
important role in the formation of financial literacy, both informal in the home environment
and formal education in higher education. Financial literacy the goal is not to make it difficult
for a person to use the money they have, but so that individuals can enjoy life by using their
financial resources appropriately. The higher a person's level of financial literacy, the better
his financial management will be (Suwatno et al., 2020:92).
In reality, financial management problems are often caused by an individual's lack of
understanding of financial management, resulting in poor economic conditions (Lestari,
2020:94). This can be seen from the problem that often occurs among students, namely not
having income, besides that the funds sent by parents run out in a short time. In this regard, it
can be said that the level of financial literacy among students is still relatively low.
Based on empirical studies by Nidar (2012:170) states that the level of financial
literacy possesed by students is still in the low category. Given that students have freedom in
making financial decisions because student are a transitional stage from financial
management that was originally arranged by parents to their own financial management, it is
expected that students can be rational actors.
Financial literacy is the ability to make good judgments and take effective action
regarding the current and future use and management of finances, including the ability to
understand financial choices, plan for the future, spend wisely, and manage challenges related
to life events (Herdinata, 2020:7).
Based on initial observations made by researchers at the student of the 2019
Economic Education Department of the Faculty of Economics, Gorontalo State University, it
was found that most of the students' understanding of financial management is still low as can
be seen from unhealthy financial behavior. This is indicated by poor planning, management
and financial control activities. Some students do not have a spending plan or budget that
suits their needs so that they slip into spending habits beyond the target, many students are
unable to make a scale of consumption priorities and are unstable in their consumption
decisions, so students are unable to control their financial expenditures, be it parents' monthly
money or scholarship money every month.
Based on the description of the empirical study that has been described above and
supported by facts and phenomena in the field, this is an encouragement for researchers to be
interested in conducting a study with the title "The Influence of Financial Literacy on
Financial Management of Students of the Department of Economic Education in the Faculty
of Economics, Gorontalo State University".

RESEARCH METHODS
This research was carried out at Gorontalo State University, Faculty of Economics,
more precisely at the Department of Economic Education which is located at Jalan Jend
Sudirman No. 6 Dulalowo Timur, Central City District, Gorontalo City. This research uses a
quantitative approach. This aims to be able to find out the influence of financial literacy on
financial management of students of the Department of Economic Education in the Faculty of
Economics, Gorontalo State University. The population in this study was 157 students, while
the total sample was 31 students. The sampling technique in this study is proportional
random sampling.
Data collection techniques carried out by observation, assessment and documentation.
The number of indicators used in this study is eight indicators. Indicators of independent
variables (financial literacy) are four indicators and dependent variables (financial
management) there are also four indicators with a likert scale of one to five (Sugiyono,
2017:93). The data used is by using the help of IBM Statistics SPSS version 21.0 (If Primary
Data, 2023).

RESULTS OF RESEARCH AND DISCUSSION

Description of Financial Literacy Variable Data (X)
Based on descriptive analysis processed using IBM Statistics SPSS version 21.0, the
financial literacy variable (X) can be known the mean is 59,387, the median (me) is 61 and
the standard deviation is 5,874. Based on the instruments distributed, it can also be known
that the maximum score is 68 and the minimum score is 47.

Table 1. Descriptive Financial Literacy Variables (X)

Statistics
Financial Literacy
Valid 31
N
Missing 0
Mean 59,3871
Median 61,0000
Mode 64,00
Std. Deviation 5,87468
Variance 34,512
Minimum 47,00
Maximum 68,00
Sum 1841,00
Source: Primary data processing results 2023

Description of Financial Management Variable Data (Y)

Based on descriptive analysis processed using the help of IBM Statistics SPSS version
21.0, for financial management variables (Y) it can be known the average (mean) is 64.225,
the median (me) is 68 and the standard deviation is 9.337. Based on the distributed financial
management variable instruments, it can also be known that the maximum score is 75 and the
minimum score is 47.

Table 2. Descriptive Financial Management Variables (Y)

Statistics
Financial Management
Valid 31
N
Missing 0
Mean 64,2258
Median 68,0000
Mode 72,00
Std. Deviation 9,33706
Variance 87,181
Minimum 47,00
Maximum 75,00
 Sum 1991,00
Source: Primary data processing results 2023

Instrument Validity Test

A valid instrument means that the measuring instrument used to obtain data
(measurements) is valid. Valid means that the tool can be used to measure what should be
measured (Sugiyono, 2017:121). The results of the pearson product moment model
instrument validity test on financial literacy variables are presented in the following table :

Table 3. Validity of Financial Literacy Variable Instruments (X)

Items
No. R count R table Criterion
Question
1. Question one 0.492 Valid
2. Question two 0.514 Valid
3. Question three 0.509 Valid
4. Question four 0.682 Valid
5. Question five 0.465 Valid
6. Question six 0.547 Valid
7. Question seven 0.738 0.355 Valid
8. Question eight 0.566 Valid
9. Question nine 0.810 Valid
10. Question ten 0.585 Valid
11. Question eleven 0.466 Valid
12. Question twelve 0.676 Valid
13. Question thirteen 0.592 Valid
14. Question fourteen 0.735 Valid
Source: Primary data processing results 2023

The results of the pearson product moment model instrument validity test on financial
management
variables are presented in the following table :

Table 4. Validity of Financial Literacy Variable Instruments (X)

Items
No. R count R table Criterion
Question
1. Question one 0.656 Valid
2. Question two 0.629 Valid
3. Question three 0.792 Valid
 4. Question four 0.848 Valid
5. Question five 0.691 Valid
6. Question six 0.375 Valid
7. Question seven 0.629 Valid
8. Question eight 0.745 Valid
9. Question nine 0.401 Valid
10. Question ten 0.829 Valid
11. Question eleven 0.745 Valid
12. Question twelve 0.794 Valid
13. Question thirteen 0.623 Valid
14. Question fourteen 0.622 0.355 Valid
15. Question fiveteen 0.600 Valid
16. Question sixteen 0.743 Valid
Source: Primary data processing results 2023

Based on the data from the test results of the validity of the pearson product moment
model instruments in the table above, it can be seen that all instrument question items in each
variable, both variable X (financial literacy) and variable Y (financial management), have a
Rhitung > Rtabel value so that all item items (questions) in this research instrument are
declared valid (Primary data processing results, 2023).

Reliability Test
Reliability is the extent to which measurements of a test remain consistent after being
repeated with the subject and under the same conditions (Sanaky, 2021:433).

Table 5. Instrument Reliability

No Variable Cronbach Alpha R table Ket

1. Financial literacy (X) 0.852 0,600 Reliable

2. Financial management (Y) 0.920 0,600 Reliable

Source: Primary data processing results 2023

Based on the table above using the help of IBM Statistics SPSS version 21.0, the item
is said to be reliable if the Cronbach Alpha value > 0.600 (Rtabel). In the table of test results
Reliability Instruments variable X (Financial Literacy) and variable Y (Financial
Management) the alpha value of cronbach > 0.600 (Rtabel) is variable X 0.852 and variable
Y 0.920.
Data Normality Test
The data normality test uses the kolmogrov smirnov normality test which is part of the
classical assumption test. Testing the normality of data with kolmogrov simornov aims to find
out whether the residual value is normally distributed or not. A good regression model is to
have a normally distributed residual value.

Table 6. Normality Test

One-Sample Kolmogorov-Smirnov Test
Unstandardized Residual
N 31
Mean ,0000000
Normal Parametersa,b
Std. Deviation 7,42696465
Absolute ,164
Most Extreme Differences Positive ,112
Negative -,164]
Kolmo gorov-Smirnov Z ,913
Asymp. Sig. (2-tailed) ,375
a. Test distribution is Normal.
b. Calculated from data.
The basis for decision making in the kolmogorov smirnov data normality test is if the
siginifikansi value > 0.05, then the residual value is normally distributed, on the contrary, if
the siginifikansi value < 0.05, then the residual value is not normally distributed.
Based on the table above, it can be seen that the results of the normality test using the
kolmoogrov-Smirnov test method have a significance value of 0.375 where this value is
greater than alpha 5% (0.05) so it can be concluded that the residual value is normally
distributed.

Simple Regression Analysis

Table 7. Simple Regression Analysis Results
Coefficientsa
Type Unstandardized Coefficients Standardized t Sig.
Coefficients
B Std. Error Beta
(Constant) 7,022 14,008 ,501 ,620
1
Literasi_Keuangan ,963 ,235 ,606 4,103 ,000
a. Dependent Variable: Pengelolaan_Keuangan
Based on the results of the above analysis, the simple linear regression model built is:
Ŷ = 7,022+ 0.963X
From the model are interpreted the following:
a. The value of variable Y (financial management) will be 7.022 if variable X (financial
literacy) is 0 or none.
b. Every one percent increase in variable X (financial literacy), then the number of variables
Y (financial management) will increase by 0.963.
c. Positive value coefficient means that there is a positive and significant relationship
between variable Y (financial management) and variable X (financial literacy), the higher
the value of variable X (financial literacy), the more the value of variable Y (financial
management) will increase.

Hypothesis Testing (t-test)

The test was performed using a t-test. The statistical hypotheses to be tested are as
follows:
H 0: β = 0 means that there is no influence of variable X (financial literacy) on variable Y
(financial management).
H 1: β ≠ 0 means that there is an influence of variable X (financial literacy) on variable Y
(financial management).

The test criteria are if the value ≥ so rejected accepted means signifkan. If the value ≤ so
received and To be rejected is insignificant.

Table 8. t Test Results

Coefficientsa
Type Unstandardized Standardize t Sig.
Coefficients d
Coefficients
B Std. Error Beta
(Constant) 7,022 14,008 ,501 ,620
1 Literasi_Keuanga ,963 ,235 ,606 4,103 ,000
n

a. Dependent Variable: Financial_Management

From the above results obtained values by 4.103 and a significant rate of 0.000. Thus
obtained significant test results as follows:
Table 9. Comparison of Significant Tests
Extent Value Value Value
Conclusion
Significance of α Significance

5% 4,103 2,039 0,000 Significant

Source: Primary data processing results 2023
Based on the results of significant tests obtained values > i.e. 4,103> 2,039 at a
significance level of α of 5%, then rejected received, with significant conclusions. This gives
an indication that financial literacy affects the financial management of students of the
Department of Economic Education class of 2019, Faculty of Economics, Gorontalo State
University.

Correlation Analysis
The guidelines for the degree of closeness of the relationship between the two
variables are based on the following rules:

Table 10. Interpretation of the Correlation Coefficient

Coefficient Interval Relationship Level
0.80 – 1,000 Very Strong
0.60 – 0.799 Strong
0.40 – 0.599 Strong Enough
0.20 – 0.399 Low
0.00 – 0.199 Very Low
Source : (Riduwan, 2014)

Using the help of the IBM Statistics SPSS program version 21.0 obtained the
following values of the correlation coefficient:
ModelSummary b
Type R R Square Adjusted R Square Std. Error of the
Estimate
1 ,606a ,367 ,345 7,55393
a. Predictors: (Constant), Financial_Literacy
b. Dependent Variable: Financial_Management

Based on the results of the analysis above, the value of the pearson correlation
coefficient of 0.606 was obtained. This shows that there is a strong relationship between
financial literacy (X) and financial management (Y) students of the Department of Economic
Education class of 2019, Faculty of Economics, Gorontalo State University.
Coefficient of Determination
The coefficient of determination reflects the magnitude of the influence of changes in
independent variables in carrying out changes to dependent variables together, with the aim
of measuring the truth and goodness of the relationships between variables in the model used.
The magnitude of the value ranges between 0<r 2<1.

Table 11. Coefficient of Determination X to Y

R R Square Contribution of Other Factors
0.606 0.367 0.633
Source: Primary data processing results 2023

Based on the above results, RSquare was obtained at 0.367. This value means that
36.7% of variability regarding financial management variables of students of the Department
of Economic Education class of 2019, Faculty of Economics, Gorontalo State University can
be influenced by financial literacy variables, while the remaining 63.3% is influenced by other
variables that were not studied in this study.

Discussion
In this section, a discussion of the results of research on the Effect of Financial
Literacy on Financial Management of Students of the Department of Economic Education
class of 2019, Faculty of Economics, Gorontalo State University was stated. The problem and
purpose of the study is that researchers want to measure the magnitude of the influence of
financial literacy on financial management of students of the Department of Economic
Education class of 2019, Faculty of Economics, Gorontalo State University.
The t-test results are used to find out whether independent variables affect dependent
variables. It is known that the calculated t value of 4,103 > t table 2,039 and a significant rate
of 5% means that H1 is accepted and H0 is rejected which means that financial literacy
affects the financial management of students of the Department of Economic Education class
of 2019, Faculty of Economics, Gorontalo State University. Thus, the research hypothesis
that states that there is an influence between financial literacy on the financial management of
students of the Department of Economic Education class of 2019, Faculty of Economics,
Gorontalo State University, was accepted in this study.
Based on the results of the study, it was found that financial literacy influence the
financial management of students majoring in Economic Education class of 2019, Faculty of
Economics, Gorontalo State University. The influence of high financial literacy causes high
student abilities in the use of funds, determining sources of funds, risk management, and
future planning. Students with high financial literacy are very careful with their finances and
are fully responsible for their decisions to use the funds according to their needs, for example
70% of the funds are used for daily needs and consumption and the rest for savings or
business. Students with high financial literacy will be wise in determining the source of
funds, and students can also estimate the risks they will face, so they can anticipate
emergencies in advance, such as preparing funds for emergency needs. Furthermore, students
who are financially literate will be accustomed to managing their finances well so that they
slowly start planning for the future, such as carrying out productive activities since college in
order to achieve financial well-being in the future.
This is in accordance with Article 3 of the Financial Services Authority Regulation
No. 76 FY 2016. According to Article 3 of the Financial Services Authority Regulation No.
76 FY 2016, the goal of financial literacy is to improve the quality of individual financial
decision-making and change individual attitudes and behaviors in financial management in a
better direction to achieve financial welfare goals (Ojk, 2017:2).
In addition, the theory that states the influence of financial literacy on financial
management was proposed by Laily (2016:2), namely the higher the financial literacy and
financial management ability of students, the wiser they will be in making financial
decisions. Financial literacy affects almost everything related to planning and spending
money, such as income, credit card use, savings, investment, financial management, and
financial decision making.
The results of this study are supported by the results of relevant previous research:
namely several studies conducted by Jannah (2022:13555); Busyro (2019:37); Nasriah
(2021:37); Veriwati (2021:51) with the results of research that concludes and shows that
financial literacy variables have an influence on financial management.

Conclusion
Based on the description that has been put forward by the researcher in the previous
section, the researcher can draw conclusions, namely testing the research hypothesis which
reads "There is an Effect of Financial Literacy on Financial Management of Students of the
Department of Economic Education class of 2019, Faculty of Economics, Gorontalo State
University" is acceptable. The results of this study show the value of the correlation
coefficient (R) with a strong interpreation of influences. The value of the coefficient of
determination (Rsquare) shows the magnitude of the percentage of influence of variable X
(Financial literacy) on variable Y (Financial management) which is 36.7%.

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