Generational Differences in Personal Finance Behaviour – A Insight into Investors in Kolkata

Abstract

Purpose – Similar experiences, values and beliefs shared among people of a generational cohort determines the choices that they make. This explains why people of the same generational cohort have distinct perceptions and tendencies towards investing. This paper focuses on generation differences in personal finance decisions. Objectives- The objective of the paper is to group the different personal finance variables into identifiable factors and to compare these personal finance factors across generations. Methodology – Data is collected through a primary survey with a structured questionnaire, among 140 respondents in Kolkata and Ranchi. Questions have been asked on personal finance behaviour, with their responses on a Likert scale. A Factor Analysis has been conducted on these questions to group them into different factors contributing to personal finance behaviour. These identified factors are also compared across generations. Findings – It was concluded that younger generations invest for the objective of keeping funds for emergency purposes, whereas older generations invest for their retirement needs. Younger generations usually invest for the short run, whereas older generations invest for the long run. Also, younger generations invest in easily accessible and popular investment avenues, whereas older invest in the most effective avenue. The items had clustered around six factors namely, Financial Planning, Use of Technology, Financial Independence, Financial Irresponsibility, Financial Openness and Use of Credit Cards. Originality- Behavioral differences across generations is an area that is studied across diverse topics and disciplines. However, very scarce studies have been conducted to assess generational differences in financial behaviour. Practical Implications- This paper attempts to bridge this gap by collecting financial data from respondents of all generations and making a comparison among them. This helps to understand the reasons for differences in investment behaviour of generations.