Financial Literacy of Undergraduate Students: Do Personality Traits and Cognitive Ability Matter?

Abstract

This study investigates how psychological traits affect financial literacy levels at the undergraduate level of education. Using a cross-sectional survey of 580 students, the study examines whether the level of openness, conscientiousness and cognitive ability of students affect how financially literate they are. The Pearson’s Correlation Test and Ordinary Least Square Regression methods are employed to test hypothesized relationships. The results show a generally low level of financial literacy. Further, openness, conscientiousness, and cognitive ability were found to have a statistically significant correlation with financial literacy (r=0.349, 0.287 and 0.199 respectively). Similarly, the regression analysis found a positive relationship between all three variables and the dependent variable (financial literacy). Therefore, the study recommends that innovative financial literacy programmes that target the youth need to be introduced. It is imperative that these programmes have components that are tailor-made for individuals with different personality traits to attract them. Finally, the programmes must contain aspects which aim to improve the cognitive abilities of the beneficiaries to increase their effectiveness.