Analysis of Financial Literacy Levels in Generations Baby Boomers, X, Y, and Z Small Traders

Abstract

Background: Financial Literacy (FL) is crucial for investors to enhance their understanding and utilise economic data to make informed decisions about financial planning, wealth accumulation, retirement, and debt management.

Objective: This study aims to determine the literacy level of small traders classified by birth generation, whether the level of FL for each generation is different, and whether the level of literacy affects their ability to manage finances

Methodology: This research is descriptive and associative. Data were collected through questionnaire copies, and of the 48 distributed questionnaires, 41 were deemed eligible for processing. The stages of data processing carried out included calculating the highest and lowest scores, the average, and standard deviation for each generation, conducting a difference test, and performing a linear regression analysis.

Results. This study found that the variance in financial literacy (FL) levels across each generation (baby boomers, X, Y, and Z) was the same. Second, the level of FL between baby boomers and Generation X, between baby boomers and Generation Y, between baby boomers and Generation Z, between Generation X and Y, and between Generation X and Z is the same, but different between Generations Y and Z when viewed in terms of means. Third, the level of financial management ability of each generation (baby boomers, X, Y and Z) is the same in terms of variance and means. Fourth, the level of FL of each generation influences their ability to manage their finances. Fifth, the magnitude of the influence of the level of FL on the ability to manage finances is 14%, with the remaining 86% of the ability to manage finances influenced by factors other than the level of FL.

Conclusion: The FL levels of each generation (baby boomers, X, Y, and Z) exhibit the same variance, indicating no difference in risk between them.

Unique contribution: This research has made a significant contribution to the literature on the literacy level of small traders, specifically in relation to their birth generation, in the areas of financial management and investment.

Key Recommendation: It is recommended that the governments plan and implement training programs aimed at developing individual investors' financial literacy and competency.