Effect of Financial Literacy on Saving Culture Among the Youth in Nairobi County

Abstract

Vision 2030 states that achieving the ambitious goals requires we increase the saving rate from 17% in 2006 to 30% by 2012 however the Central Bank of Kenya annual report shows that our savings are only at 7.07% as at 2019. This means that if the country goes on the same rate, we will not achieve the vision or development. One way of improving saving culture is by increasing financial literacy levels among the youths. For Kenya to attain its ambitious vision 2030, it must address key constraints notably the low saving to GDP ratio. The main objective of the study was to determine the influence of financial literacy on saving culture among youths in Nairobi County. The research was backed by three theories: namely; dual process theory, Life cycle theory and the goal setting theory. A descriptive research design was utilized. The population of the study was the 1,993,390 youths in Nairobi County. The sample was a 100 arrived at using snowball sampling technique. The study relied on primary data which was obtained using a questionnaire. The data analysis involved both descriptive and regression analysis. The regression results revealed that 38% of the variation in saving culture can be attributed to the 7 selected variables in this study. It was evident from the Anova table that the degree of significance was 0.000. This this value was less than the p value of 0.05. Consequently, the model was therefore statistically significant for predicting saving culture based on financial literacy practices. Individually, financial planning practices, debt management practices and education level were found to be significant determiners of saving culture while the other selected study variables did not have a significant effect. The study recommends the need for policy makers to come with guidelines and policies requiring education institutions to offer financial literacy courses at all levels. The government should also invest resources to boost financial literacy as this will be a sure way of enhancing saving culture.