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FINANCIAL LITERACY AND FINANCIAL WELL-BEING AMONG EMPLOYEES

OF H COMPANY

HAROLD C. HINAGPIS

· Volume III Issue I

ABSTRACT

The main thrust of this study was to find the impact of financial literacy on the financial well-being among employees of H Company. The goal was to propose a Financial Literacy Program.

The researcher used a descriptive correlational method to gather quantitative data to further describe and to assess the relationship between financial literacy and the financial well-being among employees of H Company. Meanwhile, the company had a total number of 1603 rank and file employees. Stratified random sampling technique was utilized as the sampling design. In gathering the data, this study used a researcher-made instrument which was based on Financial Literacy and Financial Well-Being Framework. 

The data gathered from the first and second sections as described in the preceding paragraph were processed using the Statistical Package for Social Sciences (SPSS) version 20.0, developed by the International Business Machine (IBM), to determine the significant relationship between financial literacy and financial well-being. 

The findings suggested that respondents recognize that managing their finances does not have to be difficult. Setting achievable financial goals for themselves, no matter what stage of life they are in, is a wise choice. These smart financial goals are their first steps toward a stable and fiscally balanced future. Additionally, employee respondents became aware that saving for retirement on a paycheck-to-paycheck basis will seem daunting at first. Investing in the future, on the other hand, entails setting aside funds for both short- and long-term goals

KEYWORDS : Financial literacy, financial well-being, financial goals

INTRODUCTION

Financial literacy has been an ever-increasing necessity in life, especially in economic and financial domains, whether people are financially knowledgeable helps greatly in explaining various financial or economic behavior. Decision-making of economic agents is highly shaped by their financial literacy regarding understanding of fundamental financial topics. Over time, individuals have increasingly been more active agents who are responsible for their financial planning than ever before. This increased responsibility fundamentally could have stemmed from a humanistic need-preserving self, since recent crises predominantly damaged the naive and the inexperienced. 

There have been some studies revealing that financial knowledge made a difference in investment risk perceptions. More specifically, Diacon (2016) detected significant differences between financial experts and laypeople who have less financial knowledge compared to financial experts. Accordingly, lay people tended to have more risk-averse than financial experts and to be exposed to affiliation bias (i.e., finding suppliers and salesmen more credible than laypeople). Also, these people viewed as having less financial knowledge think it more likely that financial products are too complicated. 

Meanwhile, financial well-being is subjective in nature because it is based on how an individual perceives it rather than how it is objectively denoted. This implies that only the individual can assess his/her well-being. Someone cannot evaluate another person's financial well-being. This means that the perception is personal and that individuals may experience high or low financial well-being regardless of their objective financial position. For example, individuals on the same income level can have different assessments of their 8 financial well-being depending on their personal preferences and values. How an individual perceives his/her financial well-being is affected by an extensive list of factors. For example, various studies have included personal demographic characteristics such as gender, age, education, marital status, and family structure (Joo & Grable, 2016; Malone et al., 2017) that affect a person's assessment of his/her financial well-being. Similarly, someone's financial knowledge and efficacy (Shim et al. 2017; Vosloo, Fouche, & Barnard 2016), financial attitudes toward matters such as money or debt (Norvilitis, Szablicki, & Wilson, 2016), financial dispositions like materialism, and willingness to take risks (Gutter & Copur, 2015), and financial behavior regarding areas like budgeting, saving, and compulsive buying (Joo & Grable, 2016; Shim et al., 2017) can all affect the perception of financial well-being. 

The study discovered the relationship between financial literacy and financial well-being of the employees in company H by presenting the importance of financial education to employees and also put emphasis on the value of return on financial investments. Financial education is also another focus as a great number of organizations and institutions have realized the importance of it as having a great impact on employee’s financial well-being.

The study assessed the current financial well-being of its employees and to provide recommendation to the management and promote financial literacy and financial well-being for its employees.

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