How Financial Literacy Factors Influence Households’ Income and Expenses
Journal
International Journal of Economics and Finance Studies
ISSN
1309-8055
Publisher
Social Sciences Research Society
Date Issued
2024
Author(s)
Type
text::journal::journal article
Abstract
Financial literacy equips individuals with the knowledge and skills necessary to manage money effectively, thereby fostering financial well-being and supporting societal development through the promotion of financial responsibility. This study investigates the key determinants of financial literacy that influence household income and expenditure. The research employs an empirical analysis, utilising data from a biannual National Income and Expenses Survey. Two models were compared using multivariate estimations to examine the cause-and-effect relationships between income, expenditure, and financial literacy variables. The first model applied the least-squares method, while the second utilised a robust least-squares method, which accommodates outliers and mitigates the impact of assumption violations. Findings reveal that certain factors, including savings, education, medical expense insurance, life insurance, and credit card usage, significantly and positively influence household income and expenses over time. Notably, the acquisition of medical expense insurance, life insurance, and credit card usage emerged as the most impactful factors. Although savings and education were statistically significant, their overall influence on household financial outcomes was comparatively limited. This study contributes by identifying and highlighting the most influential factors affecting household income and expenditure, with implications for policy and practice. It is recommended to enhance financial literacy by improving public understanding and practical engagement with medical expense insurance, life insurance, and credit card usage, thereby promoting more sustainable and prosperous financial outcomes for households. © The authors (2024), International Journal of Economics and Finance Studies ©Social Sciences Research Society.
License
Acceso Restringido
How to cite
Ramirez-Perez, H. X., DelaTorre-Diaz, L. & Rivas-Aceves, S. (2024). How Financial Literacy Factors Influence Households’ Income and Expenses. International Journal of Economics and Finance Studies, 16(02), 302-326. doi: 10.34109/ijefs.202416215