Determinants of Financial Literacy And Its Measures

Abstract

Financial literacy and the need for financial knowledge have been attracting attention due to their role in the financial situation. Financial literacy is a way of understanding financial concepts and procedures and applying this awareness to solve financial impediments. Financial literacy is fundamental knowledge about the finance environment in order to thrive in modern life. Higher financial literacy results in informed financial decisions relating to retirement and saving. Financial knowledge is decreasing at all levels due to a lack of financial education. Almost all demographic and socioeconomic variables have a significant impact on financial literacy. A universally accepted financial literacy measurement hasn't been adopted, as different methods have been employed by various scholars, such as performance tests, self-report tests, objective tests, and self-assessment tests. Financial behavior and financial attitudes are considered components of financial literacy but not as part of the measurement. To enhance financial literacy, training should be offered on how to manage one's own finances, favorable methods of financial education should be provided, the main determinants should be identified, and financial behavior and financial attitudes should be considered as measurements rather than components. Therefore, this paper reviews determinants and measurements of financial literacy.

Key words: financial literacy;measurment;Determinant and Financial decision

DOI: 10.7176/RJFA/16-6-04

Publication date: July 30^th 2025