Investigating financial literacy to improve financial behaviour among Black consumers

Chantal Rootman,Xolile Antoni

doi:10.4102/jef.v8i2.104

Chantal Rootman, Xolile Antoni

Open Access

https://doi.org/10.4102/jef.v8i2.104

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Abstract

Due to South Africa’s high unemployment rate and large uneducated population, consumers’ low savings levels and high debt levels are of concern. Previous South African research in the domain of financial behaviour focused only on the population’s debt and savings behaviour and the statistics thereof. There is little research on identifying solutions to poor debt and savings behaviour, as well as improvements in financial literacy and behaviour. As it is essential to improve consumers’ financial literacy, increase their financial inclusion and change their financial behaviour to their financial benefit, it is important to investigate the relationships between these financial aspects. This exploratory study investigates aspects relating to financial literacy, financial inclusion and financial behaviour, specifically among black consumers in Nelson Mandela Bay. A total of 335 black consumers were respondents in an empirical investigation. The main results showed that saving and responsible spending behaviours can be improved as consumers’ financial knowledge and inclusion increase. Based on the results, the article presents conclusions and recommendations regarding the financial education necessary to improve aspects relating to financial literacy, financial inclusion and financial behaviour.

Highlights

South Africa has a poor savings culture due to its high unemployment rate and a large uneducated population (Dempsey 2011:1)
As this study aims to consider the influence of financial literacy aspects on financial behaviour, and the exploratory factor analysis (EFA) revealed responsible spending behaviour as a specific component of financial behaviour, a third multiple regression analysis was performed
It is evident that financial behaviour consists of various components, including banking and savings behaviour and spending behaviour

Summary

Introduction

South Africa has a poor savings culture due to its high unemployment rate and a large uneducated population (Dempsey 2011:1). Unemployed citizens have no or low income levels, have often not received education on the need for saving and the savings culture in South Africa is poor. FinMark Trust (2011:21) emphasises the poor saving culture in South African by stating that consumers are financially vulnerable because they do not save enough income for a later stage. The poor savings culture leads to South African consumers living in debt and using more credit than what they save (Maisel, n.d.: 2), putting doubt on how responsible consumers spend their financial resources. According to Ndumo (2011:1) almost 50% of South African consumers were in debt during 2010. This implies that South African consumers will possibly face difficulties in obtaining home loans or more debt (Ndumo 2011:1), due to their high level of already outstanding debt

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