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Financial Literacy by Percy A. Austin

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Financial literacy is the ability to understand How money works in the world. How someone earns money How someone manages money How he/she ... save wisely, invest, or ... – PowerPoint PPT presentation

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Title: Financial Literacy by Percy A. Austin


1
Financial Literacy by Percy A. Austin
  • The Haves
  • The Have Nots

2
Financial LiteracyWhat is it?
  • Financial literacy is the ability to understand
  • How money works in the world.
  • How someone earns money
  • How someone manages money
  • How he/she invests it (turn it into more)
  • More specifically, it refers to the set of skills
    and
  • knowledge that allows an individual to make
  • informed and effective decisions with all of
    their
  • financial resources

3
Objective(s)
  • Analyze and evaluate the existing methodologies
    utilized by previous studies
  • Analyze mathematical models on retirement
    security and financial literacy for low income
    and minority communities.
  • Identify regional data sources

4
Article(s) Reviews
  • Run, Walk, or Buy? Financial Literacy,
    Dual-Process Theory, and Investment Behavior
  • Markus Glaser and Torsten Walther
  • SELF-CONTROL, FINANCIAL LITERACY, AND THE
    FINANCIAL BEHAVIORS OF YOUNG ADULTS
  • Jodi C. Letkiewicz
  • Cognitive Abilities and Household Financial
    Decision Making
  • Sumit Agarwal and Bhashkar Mazumder

5
Run, Walk, or Buy? Financial Literacy,
Dual-Process Theory, and Investment Behavior
  • Purpose In this article, the authors examined or
    focused on the following question Why do some
    financially literate people deviate from their
    normal investment strategy?
  • Methodology Descriptive analysis
  • Conclusion The major findings in this study was
    that financially literate people were more likely
    to deviate from their investment strategy if
    they tended to trust in their hunches.

6
SELF-CONTROL, FINANCIAL LITERACY, AND THE
FINANCIAL BEHAVIORS OF YOUNG ADULTS
  • Purpose The objective of this paper was to
    determine whether financial literacy can moderate
    the effects that self-control has on financial
    outcomes.
  • Methodology Descriptive analysis
  • Conclusion The major findings in this study were
    the strong and consistent effects of
    conscientiousness on financial behaviors,
    conscientiousness was positively related to
    wealth, there was overwhelming evidence of the
    positive effect of conscientiousness on financial
    outcomes and it appeared that financial literacy
    was more beneficial when focused on longer term
    investments and savings than on everyday
    management of money and budgets.

7
Cognitive Abilities and Household Financial
Decision Making
  • Purpose The primary objective of this study was
    to present new empirical findings on the
    relationship between cognitive ability and
    financial decision making by focusing on how
    financial mistakes are linked to cognitive
    ability.
  • Methodology Empirical analysis
  • Conclusion The major findings in this study
    were, One interpretation of these finding is that
    those with greater math ability are more patient
    and therefore less likely to make financial
    mistakes, that math ability is directly related
    to the ability to understand financial concepts,
    to analyze tradeoffs and to make relevant
    financial calculations.

8
What Ive Learnedthus far
  • We have a large segment of the population who are
    economically illiterate consumers and do not
    understand how to spend intelligently, save
    wisely, invest, or do simple financial planning.
    Yes, the credit card companies and other credit
    granters are partially to blame for encouraging
    people to live beyond their means, which creates
    financial stress for individuals and their
    families. However, people who are poorly informed
    about money matters have to shoulder some of the
    responsibility for their own difficulties.

9
What Ive learned thus far continued
  • Although some studies have shown some changes in
    spending and saving behaviors of certain
    individuals, most studies conclude that most
    individuals require extensive long-term
    counseling and or training to adequately be
    prepared to make informed decisions regarding
    their finances.

10
References
  • Run, Walk, or Buy? Financial Literacy,
    Dual-Process Theory, and Investment Behavior by
    Markus Glaser and Torsten Walther
  • SELF-CONTROL, FINANCIAL LITERACY, AND THE
    FINANCIAL BEHAVIORS OF YOUNG ADULTS by Jodi C.
    Letkiewicz
  • Cognitive Abilities and Household Financial
    Decision Making by Sumit Agarwal and Bhashkar
    Mazumder
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