Developing a framework of indicators to measure the impact of financial literacy interventions : a South African University case study
Abstract
In today’s challenging financial environment, making the wrong financial decisions early in life can be costly. University students often find themselves carrying large amounts of student loans and debt. This hinders the accumulation of wealth, causes anxiety and influences major labour decisions. It is important to ensure that university students are financially literate as they embark on financial and life cycle events. In this regard, targeting students at the entry-level of adulthood will contribute to ensuring that the next generation is well-resourced and versed in finances.
In the South African context, university students and the unemployed have lower levels of financial literacy compared to the formally employed, self-employed and pensioners that have above-average financial literacy levels. Scholars found that financial literacy education does not capture changes in personal finance knowledge, perception and behaviour, and are inadequate for assessing the impact of finance literacy interventions.
Despite various financial literacy interventions being implemented by private and public institutions in South Africa, the level of financial literacy in South Africa is still low. Research on financial literacy education has increased since the 2000s. However, there is no means to test whether these interventions have an effective impact. Literature suggests there is a need to evaluate whether these interventions’ efforts towards financial literacy are resulting in improved financial outcomes and overall financial well-being.
Furthermore, literature has not reached a consensus on what indicators should be used to evaluate financial literacy. Therefore, the purpose of this study is to develop a framework of indicators to evaluate the content and impact of financial literacy interventions.
A South African university financial literacy centre was used as a case study. The study’s methodology consists of a comprehensive literature review to identify indicators; focus group discussions to confirm and rank the indicators, and interviews with university students to determine their understanding and perception of financial literacy.
The case study interviews and focus group discussions were analysed in ATLAS.ti to identify themes and codes. Based on this thematic analysis, the study proposes four components to evaluate a financial literacy intervention. These are the content (knowledge and skill), perception and behaviour change) of the intervention and internal and external factors that influence perceived financial literacy. The framework was developed using the four evaluation components, participatory action research and the alignment of financial literacy indicators.
The findings pave the way for the advancement of existing knowledge in financial literacy theory as well as the evaluation of financial literacy interventions in similar environments. The theoretical contribution of the study (social learning, life cycle and the human capital theories) highlights the
interpretive lenses used to shed light on the study. The practical contribution is reflected in the development and application of the evaluation framework. Recommendations are made towards the improvement of the intervention used as the case study, as an example of the valuable insights that the application of the framework developed in this study can offer similar interventions.
This study also recommends that personal finance content should be added to tertiary-level education programmes geared toward creating well-rounded graduates who are future decision-makers, business owners, savers, taxpayers, parents and influencers in their communities. In line with the social learning theory and case study results highlighting parents’ impact on children’s personal finance literacy, each generation of parents should be encouraged to share their financial know-how and expertise with their children. This helps to promote behaviour change through a sustainable pattern of financial knowledge and skills transfer that benefit individuals, families, communities and the economy in general.
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