Financial literacy of Generation Y and the influence that personality traits have on financial knowledge

Abstract

This article examines the financial literacy of the Generation Y age cohort and explores how personality traits influence individual’s financial knowledge. Using a detailed financial literacy survey, multiple areas of financial literacy are measured (investments, budgeting, economics, risk management, and retirement planning) along with the well-known Big Five personality traits. The findings of this article suggest that the Generation Y cohort is more knowledgeable in budgeting and risk management segments of financial literacy but lack knowledge in retirement planning. Secondly, extraversion and conscientiousness are both important personality traits when regressed on individuals overall financial literacy levels. These finding help develop the insights into how behavioral and personality traits influence the cognitive and financial decision-making ability of individuals.