Abstract
Financial literacy, understood as the mastery of a set of knowledge, attitudes, and behaviors, has assumed a fundamental role in allowing and enabling people to make responsible decisions as they strive to attain financial well-being. In this context, the objective of this chapter is to build and compare models that assess university students’ financial literacy. To this end, models that integrate financial knowledge, behavior, and attitude are integrated. The models are subsequently estimated, and many comparative tests are performed. For an analysis of the collected data, structural equation modeling (SEM) was employed using two strategies. The findings indicate that, in the model estimation stage, the scales for behavior and attitude have been reduced. Among all of the models estimated, the best adjusted model indicates that financial knowledge and financial attitude have positive impacts on financial behavior. In practical terms, the financial behavior expresses the ability to establish long-term aims and savings aimed at future acquisitions and unexpected spending. This behavior is directly influenced by basic and advanced questions of financial knowledge and also by the importance attributed to attitude by establishing aims, control of spending and financial reserves.
Portions of this chapter appeared in the 2016 paper “Development of a financial literacy model for university students,” Management Research Review, vol 39, pp 356–376.
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Questions Related to Financial Attitude, Financial Behavior, and Financial Knowledge
Questions Related to Financial Attitude, Financial Behavior, and Financial Knowledge
Financial attitude | 01. It is important to control monthly expenses |
02. It is important to establish financial targets for the future | |
03. It is important to save money on a monthly basis | |
04. The way I manage my money today will affect my future | |
05. It is important to have and follow a monthly expense plan | |
06. It is important to pay the full value on credit cards | |
07. When buying in installments, it is important to compare available credit offers | |
08. It is important to stay within a budget | |
09. It is important to invest regularly to achieve targets in the long term | |
Financial behavior | 10. I always pay my credit cards on time to avoid extra charges |
11. I worry about how best to manage my money | |
12. I take notes and control my personal expenses (e.g., expense and revenue spreadsheet) | |
13. I establish financial targets for the long term that influence the managing of my expenses | |
14. I follow a weekly or monthly plan for expenses | |
15. I go more than 1 month without balancing my expenses | |
16. I am satisfied with the way I control my finances | |
17. I pay my bills without delay | |
18. I can identify how much I pay when using credit | |
19. I use credit cards and overdrafts when I do not have money for expenses | |
20. When buying in installments, I compare the available credit options | |
21. I use more than 10% of my monthly earnings to make payments on my credit cards (except car financing) | |
22. I check my credit card invoices to avoid possible mistakes and debts | |
23. I save monthly | |
24. I save so I can buy something expensive (e.g., car) | |
25. I have a financial reserve at least three times my monthly earnings, which can be used in unexpected moments (e.g., unemployment) | |
26. I compare prices when buying something | |
27. I analyze my financial situation before a major purchase | |
28. I buy on impulse | |
29. I prefer to buy a financial product to save money to buy in cash | |
Basic financial knowledge | 30. Imagine you have R$ 100.00 in the savings account and the tax rate is 10% a year. After 5 years, how much money will you have in this account? More than R$ 150.00 Exactly R$ 150.00 Less than R$ 150.00 Do not know |
31. Imagine the tax rate applied to your savings account is 6% a year and the inflation tax is 10% a year. After 1 year, how much will you be able to buy with the money from this account? More than today Exactly the same Less than today Do not know | |
32. Imagine Joseph inherits R$ 10000.00 today and Peter inherits R$ 10000.00 in 3 years. According to the time value of money, who is going to be wealthier? Joseph Peter They are equally as wealthy Do not know | |
Advanced financial knowledge | 33. Which of the options below best describes the stock market’s functions? Allow for the meeting of people who want to buy and sell shares Predict gains of shares Increase the prices of shares Do not know |
34. Considering a long time period, (e.g., 10 years). Which asset described below normally gives the highest rate of return? Account Bond Stocks Do not know | |
35. Which statement is correct? Once investing in investment refunds, it is not possible to take the money out in the first year Investment refunds can be invested in many assets, such as shares and securities Investment refunds pay assured return rates that depend on past behavior None of them Do not know | |
36. Normally, which asset exhibits higher oscillations over time? Savings account Shares Public securities Do not know | |
37. When an investor diversifies, his investments are divided among different assets. The risk of losing money: Increases Decreases Remains the same Do not know |
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Vieira, K.M., Potrich, A.C.G., Mendes-Da-Silva, W. (2019). A Financial Literacy Model for University Students. In: Mendes-Da-Silva, W. (eds) Individual Behaviors and Technologies for Financial Innovations. Springer, Cham. https://doi.org/10.1007/978-3-319-91911-9_4
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