An Empirical Study on the Influence of Financial Literacy on Savings and Investment Behaviour Among Young Adults

Author

Harini Kota, Dr. Meda Srinivasa Rao


Abstract

 This study examines how financial literacy, measured through financial knowledge, financial attitude and financial behaviour, influences the savings and investment habits of young adults, and whether income level changes this relationship. Design/methodology: A structured questionnaire using a five-point Likert scale was administered to young adults aged 18–26 years, and the data were analysed in Microsoft Excel using descriptive statistics, Cronbach's alpha, Pearson correlation, chi-square tests of independence, one-way ANOVA and multiple linear regression, including an interaction (moderation) model. Findings: Composite financial literacy was high (M = 4.00 on a 5-point scale) and significantly and positively predicted both savings habits (β = .53, R² = .28) and investment habits (β = .70, R² = .49). Financial knowledge was the strongest predictor of savings (β = .74), while financial attitude was the strongest predictor of investment (β = .68). Income level significantly moderated the literacy–savings relationship (interaction B = .46, p < .001) but not the literacy–investment relationship (p = .51). Chi-square tests showed no significant association between literacy level and actual investment participation (χ² = 3.81, p = .149), whereas employment status, residence and income were associated with investing. Mediation by financial self-efficacy could not be tested because the instrument did not measure it. Originality: The study links the three dimensions of financial literacy separately to savings and investment habits among young Indian adults and tests income as a moderator. Implications: Financial education for young adults should combine knowledge building with attitude formation and income-sensitive guidance.



Keywords

financial literacy; financial knowledge; financial attitude; financial behaviour; savings habits; investment habits; young adults; income level; India



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References


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