Financial Literacy by Percy A. Austin

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Financial Literacy by Percy A. Austin

• The Haves

• The Have Nots

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Financial LiteracyWhat is it?

• Financial literacy is the ability to understand
• How money works in the world.
• How someone earns money
• How someone manages money
• How he/she invests it (turn it into more)
• More specifically, it refers to the set of skills
  and
• knowledge that allows an individual to make
• informed and effective decisions with all of
  their
• financial resources

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Objective(s)

• Analyze and evaluate the existing methodologies
  utilized by previous studies
• Analyze mathematical models on retirement
  security and financial literacy for low income
  and minority communities.
• Identify regional data sources

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Article(s) Reviews

• Run, Walk, or Buy? Financial Literacy,
  Dual-Process Theory, and Investment Behavior
• Markus Glaser and Torsten Walther
• SELF-CONTROL, FINANCIAL LITERACY, AND THE
  FINANCIAL BEHAVIORS OF YOUNG ADULTS
• Jodi C. Letkiewicz
• Cognitive Abilities and Household Financial
  Decision Making
• Sumit Agarwal and Bhashkar Mazumder

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Run, Walk, or Buy? Financial Literacy,
Dual-Process Theory, and Investment Behavior

• Purpose In this article, the authors examined or
  focused on the following question Why do some
  financially literate people deviate from their
  normal investment strategy?
• Methodology Descriptive analysis
• Conclusion The major findings in this study was
  that financially literate people were more likely
  to deviate from their investment strategy if
  they tended to trust in their hunches.

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SELF-CONTROL, FINANCIAL LITERACY, AND THE
FINANCIAL BEHAVIORS OF YOUNG ADULTS

• Purpose The objective of this paper was to
  determine whether financial literacy can moderate
  the effects that self-control has on financial
  outcomes.
• Methodology Descriptive analysis
• Conclusion The major findings in this study were
  the strong and consistent effects of
  conscientiousness on financial behaviors,
  conscientiousness was positively related to
  wealth, there was overwhelming evidence of the
  positive effect of conscientiousness on financial
  outcomes and it appeared that financial literacy
  was more beneficial when focused on longer term
  investments and savings than on everyday
  management of money and budgets.

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Cognitive Abilities and Household Financial
Decision Making

• Purpose The primary objective of this study was
  to present new empirical findings on the
  relationship between cognitive ability and
  financial decision making by focusing on how
  financial mistakes are linked to cognitive
  ability.
• Methodology Empirical analysis
• Conclusion The major findings in this study
  were, One interpretation of these finding is that
  those with greater math ability are more patient
  and therefore less likely to make financial
  mistakes, that math ability is directly related
  to the ability to understand financial concepts,
  to analyze tradeoffs and to make relevant
  financial calculations.

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What Ive Learnedthus far

• We have a large segment of the population who are
  economically illiterate consumers and do not
  understand how to spend intelligently, save
  wisely, invest, or do simple financial planning.
  Yes, the credit card companies and other credit
  granters are partially to blame for encouraging
  people to live beyond their means, which creates
  financial stress for individuals and their
  families. However, people who are poorly informed
  about money matters have to shoulder some of the
  responsibility for their own difficulties.

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What Ive learned thus far continued

• Although some studies have shown some changes in
  spending and saving behaviors of certain
  individuals, most studies conclude that most
  individuals require extensive long-term
  counseling and or training to adequately be
  prepared to make informed decisions regarding
  their finances.

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References

• Run, Walk, or Buy? Financial Literacy,
  Dual-Process Theory, and Investment Behavior by
  Markus Glaser and Torsten Walther
• SELF-CONTROL, FINANCIAL LITERACY, AND THE
  FINANCIAL BEHAVIORS OF YOUNG ADULTS by Jodi C.
  Letkiewicz
• Cognitive Abilities and Household Financial
  Decision Making by Sumit Agarwal and Bhashkar
  Mazumder