An investigation of students’ financial literacy at Central University of Technology, Welkom Campus

Abstract

Worldwide, low financial literacy levels of students are receiving increased attention due to the impact it has on financial decision making during the adult years. In line with this international trend, South African students have demonstrated low levels of financial literacy, which is of great concern if one takes into consideration that they are the future participants of an economy that is nearing recession. Therefore, the aim of this study was to determine students’ financial literacy at a public university in South Africa, in order to understand the students’ financial needs, which will form the basis for recommendations regarding relevant strategies that can be applied to improve students’ financial literacy levels. A cross-sectional study was conducted of a sample of 300 students studying towards finance-related and non-finance related qualifications. Financial independence, financial needs and financial knowledge were measured by means of a self-administered quantitative questionnaire. The data was analysed by means of descriptive and inferential statistics. Questions were clustered together and four clusters were produced which are: general financial literacy, banking and taxation, financial planning, interest rates and general inflation, and legal aspects of personal financial management. The participants’ knowledge about the issues relating to “general financial literacy” were observed to be low in all the questions while they performed poorly on most questions relating to “banking and taxation” and “financial planning, interest rates and general inflation”. The participants were observed to perform fair on “legal aspects of personal financial management”. The participants lacked in terms of most of the financial literacy clusters that were measured in the study. They would require training regarding banking and taxation, personal financial planning, interest rates and general inflation, and legal aspects of personal financial management. The study also found that certain aspects of financial literacy were statistically significantly related to students’ biographical variables, such as mother tongue, field of study and age. Furthermore, the findings showed that students who were registered for non-finance related qualifications had a higher mean score for financial needs than those studying towards a finance-related qualification. The findings of the study enabled a more in-depth understanding of the financial literacy of undergraduate students, which holds important implications for financial literacy training. The research confirmed that a need for financial literacy training exists, in order to ensure that students experience financial wellbeing during adult years.