FINANCIAL LITERACY, SAVINGS BEHAVIOUR AND FINANCIAL PROBLEMS AMONG COLLEGE STUDENTS IN BRAZIL

The main purpose of this work was to identify Financial Literacy Level among college students enrolled on Business Administration and Accountancy courses at the Federal University of Juiz de Fora (UFJF), located in the southeast of Brazil, and to try to correlate this level to savings behaviour and the possible existence of financial problems. Many authors discuss the current level of knowledge regarding financial subjects. Therefore, those authors’ contributions were crucial to understand the development of Financial Education studies all over the world. In this work, Financial Education was defined as a skill that one might have in order to obtain, understand and evaluate relevant information needed to make decisions taking into account the possible financial consequences. According to some authors, this concept should always be analysed from two perspectives: personal well-being and the well-being of society. The first perspective analyses the person’s future after a financial decision is made, and its possible impacts on a household budget. The second perspective is focused on the well-being of society, especially on overuse of the public system which may lead to public correction policies, such as an increase in the interest rates in order to restrain consumption and reduce inflation. In Brazil, it can be said that the education system almost ignores the subject “Money”. After coping for so many years with inflation, Brazilian people have not developed a financial planning culture and that may be due to a lack of solid Financial Education. In other parts of the world, the concept seems to be more mature, especially if we take into account the number of organisations created to promote Financial Education, such as the Financial Literacy Centre and the Council for Economic Education (USA), programs like the Start Right Coalition for Financial Literacy (Canada) and Jump$tart Coalition for Personal Financial Literacy (USA), and the Money Management Council (United Kingdom). After interviewing about 60% of Business Administration and Accountancy students, a low level of Financial Literacy was found among the majority of the respondents. Furthermore, just a small part of the students mentioned having received financial education at school or at home. The main results show a positive correlation between Financial Literacy and early exposure to Financial Education concepts at school. Results also show that students with higher financial knowledge were less likely to be in debt. Positive savings behaviour was found among those who belong to that group. No relevant differences were found regarding gender. Some implications of these results are also discussed.