DETERMINANT OF FINANCIAL LITERACY

As proposed by Horne and Wachowicz (2002), [CITATION Tha02 \p 2015 \y \l 1033 ] financial management behavior is the determination, acquisition, allocation, and utilization of financial resources, usually with an overall goal in mind. On the other hand, Weston and Brigham (1981) stated financial management behavior as an area of financial decision-making, harmonizing individual motives and enterprise goals. According to Joe (2008) consequently, financial management is mainly concerned with the effective fund’ management. In line with this, effective financial management behavior should improve financial well-being positively and failure to manage personal finances can lead to serious long term, negative social and societaL consequences. In addition, as per Bowen (2002) understanding key financial terms and concepts needed to function daily in American society. It includes knowledge about items related to banking, auto, life, health and homeowner’s insurance, using credit, taxes, and investing. While there are other important areas related to personal finance, these are areas most American adults encounter as they make daily financial transactions and decisions. Researchers indicated‖ that well informed, financially educated consumers are better able to make good decisions for their families and thus are in a position to increase their economic security and well-being. Knowledgeable consumers who make informed choices are essential to an effective and efficient marketplace. The number and types of financial education programs have grown since the mid-1990s. Many of these programs focus on providing information to consumers and operate under the implicit assumption that increases in information and knowledge will lead to changes in financial management practices and behaviors (Hilgert, Hogarth & Beverly, 2003). Financial knowledge is designed and measured in various ways. Financial knowledge can cover a variety of topics, ranging from basic awareness to mastering topics. It can be considered true knowledge or perceived knowledge. For example, knowledge was measured directly. A well-known example of this is Jump start Survey conducted every other year. It uses a set of questions used as a benchmark of financial literacy of high school students. The survey has been conducted nationally and tests both students who have and have not had financial education courses while in high school. Such knowledge tests are often associated with large variations in the topics actually rated. Self-reported financial knowledge was also used when respondents were asked how to assess their level of knowledge on certain personal financial issues. These are often measured as scales. The validity of this measurement is not explicitly shown, but it is included because it can still demonstrate confidence in your knowledge level. A final measure employed for financial knowledge was a relative measurement. These try to establish one ‘s perception of their own knowledge relative to a specific reference group, often as compared to a peer group. This measure may also help to establish confidence in one ‘s knowledge. Stated by [CITATION Gul17 \l 1033 ] Researchers are constantly discussing the concept and definition of financial literacy. Financial literacy, financial education and

financial knowledge are often used interchangeably in academic literature as well as in the media. In line with this, Kozina and Ponikvar (2015) defined financial literacy as the components of human capital that are used in financial activities to improve a person's financial well-being. On the other hand, for Mahdzan and Tabani (2013), financial literacy is the basic skill and knowledge that people need to survive in modern society. Furthermore, Krachowska (2015) states the definitions of financial literacy include the ability to secure personal income, the ability to make cost decisions, understand the consequences of personal and current decision making on current and future earnings and orientation on the job market. Financial literacy can be defined by measuring the extent to which individual financial skills or financial information are understood and applied in their lives (Ibrahim, Aaron, and Mohamed Issa, 2009). Lusardi and Mitchell (2014) defined financial literacy as "the ability of people to process financial information and inform financial planning, wealth accumulation, debt and pensions." According to Remand (2010), the four most common operational definitions of financial education are budgeting, savings, borrowing and investment; Many other scholars are financially knowledgeable individuals who have successfully achieved success by making financial decisions that reflect their personal values (Stone, Weir) and Bryant 2008). Therefore, there is no standard definition of financial literacy. Some studies include knowledge of financial literacy and others claim that in order to be financially literate, people must be able to make informed financial decisions. Based on the most basic definition, financial literacy is related to managing wealth according to a person's ability (Remund, 2010). Financial literacy is not an advantage or knowledge that everyone possesses, but it is an essential survival tool a person must have in order to survive in today's modern society (Jacob, Hudson & Bush, 2000). Knowledge is a clear and common element in many conceptual definitions of financial literacy (Remund, 2010). As Remund (2010) puts it, executives, financial experts and consumer advocates have used the phrase loosely to describe the knowledge, skills, confidence and motivation needed to manage money effectively. Remund (2010) points out, the main conceptual definition speaks of competence, knowledge, and skill, but makes no attempt to explain which aspect of wealth management actually constitutes a person's financial literacy. Financial literacy officials and advocates have not agreed to operational definitions, leaving researchers free to define and measure financial literacy (Remund, 2010). Therefore, financial literacy has several definitions in existing research. Research not only documents generally low levels of financial literacy but also finds large heterogeneity in financial literacy across the population. For example, Bucher-Koenen and Lucardi (2011) assess financial literacy in Germany and provide evidence that knowledge of basic financial concepts is particularly low among women, the less educated, and those living in East Germany. Therefore, it is suggested that economically weaker groups have been excluded. Lack of financial information led to further losses.