Effect of Financial Literacy on Personal Financial Management of Employees in Law Firms in Mombasa County in Kenya

Abstract

The study investigated the effect of financial literacy on the personal financial management of employees working in law firms in Mombasa County, in Kenya. The study applied descriptive research design on a target population of 66 Law firms as per law society of Kenya directory 2017. A census of all law firms within Mombasa County was analyzed. A self-administered questionnaire was given to the respondent’s one in each law firm to an employee other than the proprietor or partners in case of a partnership. The first part of the questionnaire covered the demographic variables. The second part covered financial literacy and personal financial management questions respectively on a 5 point Likert scale. Statistical inferences were drawn by the use of ANOVA (Analysis of variance) and tabulations of the study variables. The study found out that the financial literacy positively affects personal financial management among the employees working in law firms in Mombasa County. The study a strong linear relationship amongst the investment decisions, the budgeting decisions, the retirement plans and the saving plans on personal financial management on the employees working in law firms in Mombasa County. The retirement plans had the highest regression coefficient. The coefficient of determination R square was 0. 617. The reliability analysis was done by use of Cronbach’s coefficient alpha. The overall regression model was significant at 95% level of significance. The study recommends that the proprietors of law firms should come up with a financial literacy programs aimed at addressing the financial wellbeing of their employees. The firms should introduce financial planning programs emphasizing the importance of saving plans. The study faced numerous limitations. Some of the respondents failed to return all the questionnaires and some even gave incomplete questionnaires.