The relationship between the education level & personal financial management

Adigozalov Zulfugar (2020) The relationship between the education level & personal financial management. Faculty of Finance and Accountancy.

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<p></p><div title="Page 4"><div><div><p></p><div title="Page 4"><div><div><p>Personal financial management is an intrinsic aspect of human lives that is underestimated. Indeed, it is not usual to find personal financial management in school and university curriculum in spite of its importance and practicality. First of all, it is helpful to control one's expenses, additionally, it is impossible to successfully save and invest without being competent in personal financial management. It also helps people to understand all their financial transactions and make proper financial decisions. Last but not least, people who are successful in personal financial management form specific financial habits that are significant for financial independence.</p><p>It is extremely important for people to realize that gaining knowledge about personal financial management is one of the ways to improve the quality of their lives. First and foremost, one will realize what happens to his or her money and how the financial system works. To be more specific, it will become clear why and for what a person is charged. Moreover, it will become possible to take control of money which, in turn, will let to reduce emotionally driven purchases and saving money as a consequence. Therefore, it is necessary to prioritize personal financial management and it is even more important to carry it out amongst children and the representatives of the young generation taking into account that they will surely need these skills in the future. One can argue that money is not the most important thing in life which is, undoubtedly, true. However, it is impossible to refute that money gives more opportunities to realize one’s ideas and potential.</p></div></div></div><div title="Page 5"><div><div><p>The thesis consists from 5 parts, the first one - the introduction, where the importance of the financial world is underlined at first. It is mentioned how crucial it is to be financially literate for governments, individuals, corporations and others, including how successful they can be if their financial steps are scrutinized in advance. Afterwards, the financial education topic is brought up, where the different sources of it are discussed and objectives examined. It is also mentioned that the high-quality education in most cases requires a strong financing, which is not usually available to the low and middle-income households, however different exceptions are shown as well. It is also not always the case to be a prestigious educational premises graduate to achieve brilliant successes in the life, and different remarkable people, such as Niki Lauda for example are explored. Afterwards, well known finance topic related literature authors’ works are discussed, such as Robert Kiyosaki’s “Rich dad, poor dad” and the “The millionaire next door by Thomas J. Stanley and William D. Danko. In the end my personal reasons and interest in the topic are tackled, followed by the goals and the objectives of the research.</p><p>The second part - literature review, where other researchers’ works and opinions about the topic are scrutinized. Different teaching styles and government actions are introduced and examined. Researchers were mainly interested in saving, investing, credits, borrowing and mortgage topics as well as a little of entrepreneurial activity was touched. Different tests have been conducted to determine if the level of financial awareness and the education provided influence the households, students in high school, universities, as well as the full-time employees. In most of the cases it shows itself to be useful, however not much and only for a short-term. Additionally, almost all of the researchers tend to conclude that there is a robust connection between the income level of the household and the financial literacy score of it.</p><p>The third part - methodology, where I begin with the small discussion about the importance of choosing the correct ways of the researching. Afterwards I talk about the method used for my research in the thesis and the reasons of choosing it, as well as the advantages and the disadvantages of it. Later, a short introduction is given to the survey used to collect the data, which consists from the three parts, which part is devoted to what areas of the financial knowledge check is brought up. Also, I mention what kinds of questions were used and for what purpose, as well as their benefits and limitations. The different ways of spreading the information of the survey are discussed as well.</p></div></div></div><div title="Page 6"><div><div><p>The fourth part of the thesis - data analysis, where the survey results are shared. A total of 92 answers were received from 13 different countries with Azerbaijan being dominant. An average age of the respondents is 24.5 years old and the male-female ratio is almost perfectly equal. Most of the respondents are master’s or bachelor’s degree owners, as well as students or full- time employees.</p><p>The final fifth part – conclusion, from the results obtained it is hard to make a robust one. On one hand side, the results showed that most of the participants are familiar with the financial literacy, received some financial education which touched some real-life examples and that the majority still remembers some of the material. Additionally, most of them are satisfied with the current job position and are willing to start their own businesses one day.</p><p>Moreover, it can be seen that most of the respondents are financially literate, as they regularly put money aside, are in possession of savings, can meet unexpected large expenses, do have a monthly budget and are familiar with basic accounting and finance terms. Other factors are confirming too, for example, most of them know exactly how much they are being charged for their every bank operation, or the fact that they keep track of their spending and are planning to invest later. Other than that, most of them never took a loan, and those who did, did it for important objectives, such as education for example, which was paid back, and the borrowers were satisfied with it.</p><p>On the other hand, the previously mentioned financial education did not have a notable effect on participants’ consumer behaviour or spending habits, which means that, most likely, participants continued to gain the needed knowledge from self-studying or in the following stages of their life. They strongly agree that financial education should be taught to the youngsters and are not satisfied with the level of financial education provided in their countries, as they also strongly supported the “I have to educate myself on my own” and seriously disagreed with the “Public education is useless” statement.</p></div></div></div><div title="Page 7"><div><div><p>From this particular study it could be concluded that most of the participants showed a decent education level as well as strong personal financial managements skills, which identifies the connection between them. However, there is no proof that low education level has a positive correlation with poor personal financial management skills, as the number of participants proving this theory is negligible.</p><p>It would be pertinent to emphasize that further research is required in order to make more precise results. The scale of these studies should be different which presupposes a larger number of participants for the study, including people from different strata. Therefore, if the subsequent researches will take into account these factors it would be possible to improve the results.</p><p>Finally, some limitations should be mentioned as well, as they are present. First and foremost, the results arrived mainly from Azerbaijan, so the research should not carry an international character. However, it should not be identified as Azerbaijan specific study as well, as the number of responses is too few to conclude the research as the country specific. Also, as mentioned before, an average age of the respondent is 24.5 years, so it could be concluded that the research was mostly conducted on the millennials’ opinion.</p></div></div></div><br /></div></div></div>


Budapest Business University


Faculty of Finance and Accountancy


Pénzügy Tanszék




Pénzügy és Számvitel szak angol nyelven


Konzulens neveKonzulens típusaAssignment, Scientific qualification, InstitutionEmail
Dr. habil. Sági JuditBelsőegyetemi docens, Pénzügy Tanszék,

Item Type: Thesis (UNSPECIFIED)
Uncontrolled Keywords: financial awareness, financial education, financial knowledge, financial literacy, personal finance, personal financial management
SWORD Depositor: Archive User
Depositing User: Archive User
Date Deposited: 2020. Sep. 11. 09:07
Last Modified: 2021. Mar. 29. 09:32

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