Effects Of Financial Literacy On Personal Financial Decisions Among Egerton University Employees, Nakuru County, Kenya

ABSTRACT

The current financial service market is complex and offers consumers a vast array of products and services to meet their financial needs. The degree of choice requires that consumers be equipped with the financial knowledge and skills to evaluate the options available in the market. Studies by (Beal & Delpachitra, 2003, Nyamute & Monyoncho, 2008) on the effects of financial on personal financial decisions indicate contradicting results. This study was carried out to establish the effect of financial literacy on personal financial decisions among Egerton University employees. The study was guided by the general objective of examining the effects of financial literacy on personal financial decisions. Specifically: to determine the effect of financial knowledge on personal financial decisions, to determine the effect of financial skills on personal financial decisions and to determine the effect of financial attitude on personal financial decisions. The study adopted the descriptive survey research design. The population of the study consisted of all Egerton University employees consisting of top management, middle level staff who include technical, administrative and teaching staff and lower level staff totaling to 1998 employees. A sample of 320 respondents was determined using a sample determination table. The sample size determined was drawn proportionately from each employee categorization. A random sample from each stratum was taken in a number proportional to the stratum’s size when compared to the population. Primary data was collected through structured questionnaires. Data validity and reliability was checked by pilot testing and by use of Cronbach Alpha (0.876). Data was analyzed using descriptive statistics, Pearson correlation and multiple regression analysis with the help of Statistical package for Social Sciences (SPSS) .Findings revealed that financial knowledge and financial skills were significant in determining personal financial decisions while financial attitudes did not influence significantly personal financial decisions. Overall the effect of financial literacy was found to have a positive statistically significant relationship with personal financial decisions. The study recommendations include: Financial literacy programs with the aim of closing any knowledge gaps. The training will ensure that the employees have the requisite skills to manage their personal finances. This will enable them formulate financial plans to achieve financial freedom and improve their welfare and standard of living which would then improve productivity at their place of work. The findings of this study are important not only to the employees of Egerton University but also to the employer and government to guide in policy formulation.