2.1 FINANCIAL LITERACY
Financial literacy has been perceived as fundamental for individuals who work in an increasingly complex environment. According to Organisation for Economic Co-operation and Development (OECD, 2015), Financial Literacy was defined as a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing. Moreover, (Australian Unity, 2014) also define financial literacy as a person’s understanding of financial concepts and options in the context of their personal economic situation, combined with their behaviours and judgement to apply the knowledge to achieve a desired level of financial wellbeing.
Although financial literacy …show more content…
Since we are young, we observe and imitate the action and behavior of our parents. Thus, parents’ financial behavior and consumer behavior may affect children’s financial behavior in future. This can support by Webley, P and Nyhus,E.K,( 2006) on their study that there is a clear correlation on parental behavior and impact on the economic activity and saving ability of children. For instance, when parents always go to banks with their children during their childhood to save money and, their children will influence by their parents to save money as they already get used to the behavior of saving money. Additionally, parents who pay the bills of credit cards on time to avoid bad debts also will caused their children to pay bills on time when they grow up. Besides, parents also provide their children a lot of opportunity to observe their consumer behavior and spending behavior during their childhood when they shopping together. As Caruana,A. and Vassallo, A., (2003) state that by acting as a positive role model to children, parents have the ability to impact their offspring’s financial habits whereas they are at an impressionable age, which will ideally remain with them throughout their life. For instance, this attitude will deepen in their mind if their parents open a saving account for them since they were young and always encourage them to so. Moreover, individuals who were urged to save money using a bank account as kids are able to …show more content…
Youngsters start to develop friendship that are more intimate, private and steady than in previous years. In many ways, these friendships are a fundamental segment of development. Friendship provides safe venues to youth where they can explore their personalities; they can feel accepted and build up a feeling of belongingness. Besides, friendships likewise permit youth to practice and encourage social skills necessary for future achievement. As Peers are important to individuals, they will affect individuals’ consumer behavior and financial behavior when they shopping together. Individuals will obtain the advice and information of the product from friends when before they make purchasing decision. When youth observe a product to consume, there is the tendency for youth to comply with expectation from their peers regardless of whether the product is exclusive or commonly used (Makgosa, R. and Mohube, K., 2007) On the other hand, when youth and peer come from different background and become friends, theirs spending behavior will be affected. For example, when they always hang out and having lunch or dinner at luxurious place with their friends who come from wealthy family, they may get used to it and causing them to spend more money. This may causes their income cannot cover their spending and thus lead to bad debt when they unable to pay the bills of credit cards. This statement may support by (Al-Hanai, , 2011) who state
Financial literacy has been perceived as fundamental for individuals who work in an increasingly complex environment. According to Organisation for Economic Co-operation and Development (OECD, 2015), Financial Literacy was defined as a combination of awareness, knowledge, skill, attitude and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing. Moreover, (Australian Unity, 2014) also define financial literacy as a person’s understanding of financial concepts and options in the context of their personal economic situation, combined with their behaviours and judgement to apply the knowledge to achieve a desired level of financial wellbeing.
Although financial literacy …show more content…
Since we are young, we observe and imitate the action and behavior of our parents. Thus, parents’ financial behavior and consumer behavior may affect children’s financial behavior in future. This can support by Webley, P and Nyhus,E.K,( 2006) on their study that there is a clear correlation on parental behavior and impact on the economic activity and saving ability of children. For instance, when parents always go to banks with their children during their childhood to save money and, their children will influence by their parents to save money as they already get used to the behavior of saving money. Additionally, parents who pay the bills of credit cards on time to avoid bad debts also will caused their children to pay bills on time when they grow up. Besides, parents also provide their children a lot of opportunity to observe their consumer behavior and spending behavior during their childhood when they shopping together. As Caruana,A. and Vassallo, A., (2003) state that by acting as a positive role model to children, parents have the ability to impact their offspring’s financial habits whereas they are at an impressionable age, which will ideally remain with them throughout their life. For instance, this attitude will deepen in their mind if their parents open a saving account for them since they were young and always encourage them to so. Moreover, individuals who were urged to save money using a bank account as kids are able to …show more content…
Youngsters start to develop friendship that are more intimate, private and steady than in previous years. In many ways, these friendships are a fundamental segment of development. Friendship provides safe venues to youth where they can explore their personalities; they can feel accepted and build up a feeling of belongingness. Besides, friendships likewise permit youth to practice and encourage social skills necessary for future achievement. As Peers are important to individuals, they will affect individuals’ consumer behavior and financial behavior when they shopping together. Individuals will obtain the advice and information of the product from friends when before they make purchasing decision. When youth observe a product to consume, there is the tendency for youth to comply with expectation from their peers regardless of whether the product is exclusive or commonly used (Makgosa, R. and Mohube, K., 2007) On the other hand, when youth and peer come from different background and become friends, theirs spending behavior will be affected. For example, when they always hang out and having lunch or dinner at luxurious place with their friends who come from wealthy family, they may get used to it and causing them to spend more money. This may causes their income cannot cover their spending and thus lead to bad debt when they unable to pay the bills of credit cards. This statement may support by (Al-Hanai, , 2011) who state