Effect of financial literacy on personal financial management among employees of financial and non financial sector in jimma town

Abstract

Financial literacy is growing in leaps and bounds in the world because of the financial intricacies that have increased in the world economy. The main purpose of this study was to examine the effect of financial literacy on personal financial management among employees of financial and nonfinancial sector Jimma town. In this study both descriptive and explanatory research design was used. The population of this study was all employees of financial and non-financial sector. Multistage sapling technique was used to select respondents from financial and non-financial sector. First purposive sampling was used to select the government employees of financial and nonfinancial sector in Jimma town, then the respondents were grouped in to two strata, while convenience sampling technique was used to select 282 respondents from each sector. A structured questionnaire was delivered to the respondents and collected after completion. The data was analyzed using the Statistical Packages for social Sciences (SPSS ver. 24). Independent sample‟ ttest was used to examine the data with the objective of determining whether there is a significant relationship between financial and non-financial sector employees on financial literacy indicators. The data is presented through tables. The study found that the financial literacy positively affects personal finance management among the employees of financial and non-financial sector Jimma town, which leads to a higher investment practice, more diversified savings and a lower debt percentage. The researcher also sought to establish effects of gender, age, marital status, work experience, income, Level of education and area of specialization on personal financial management. The findings conclude that these factors strongly influenced the personal financial management. Based on the research findings, the researcher recommends both financial and non-financial sector to have various financial literacy training programs and financial planning programs to their employees so as to match the financial literacy of the employees to their propensity to save and invest.