The relationship between financial literacy, economic measures and delayed gratification in South African high school learners

Abstract

This study’s primary aim was to quantitatively measure financial literacy levels in South African (SA) high school learners, an exercise which had not been done before. Differences in literacy levels were identified for different demographic and psychographic profiles and between four categories (General Finance Knowledge, Saving, Spending, and Debt). Another aim was to compare SA and US financial literacy levels, based on the 2006 Jump$tart Coalition’s Personal Financial Survey of High School Seniors. Finally, the study aimed to determine if financial literacy and the ability to delay gratification are related. A quantitative survey was conducted amongst 12th grade learners consisting of different population groups and genders in seven public or private, rural or urban schools in South Africa. The sample comprised 536 respondents, of which 508 submitted useable responses. The results indicate significant differences in financial literacy levels of 12th graders from different schools, population groups, and public vs. private schools, but not across different genders. Significant differences exist between different psychographics, and between financial literacy categories. An unclear relationship exists between financial literacy and propensities for debt, saving and spending, suggesting the need for further research. As expected, SA financial literacy levels are poor and lower than for US youth. Finally, financial literacy and ability to delay gratification are unrelated. A model is proposed relating SA financial literacy to the major conclusions from the tested null hypotheses. The results should enable SA business, educational settings and government to understand the impact of demographic, psychographic and educational differences on financial literacy and the need for improvement in financial literacy.