Financial insight and behaviour of household consumers in Port Elizabeth

Abstract

Financial literacy is a crucial factor affecting individuals, households, financial institutions and the broader economy of South Africa (Oseifuah 2012: 23–24). Lack of financial literacy has been cited by various commentators (Brink 2011: 3, Schüssler 2014: 1–2; Dempsey 2015: 1–3) as the main reason for poor saving rates, increasing consumer debt and inadequate retirement planning among South Africans. The purpose of this study was to investigate the financial insight and behaviour of household consumers in Port Elizabeth. Economists have urged South Africans to start living within their means, improve their money management skills and ensure they eliminate debt, which can be viewed as the symptoms of mediocre financial insight and behaviour. Addressing these problems requires empirical evidence. A research model guided the investigation. A field survey (n = 560 consumers) was conducted in Port Elizabeth. The survey revealed six factors for financial behaviour and one for financial insight. The negative results for most factors confirmed the need for improved financial literacy of Port Elizabeth consumers. Significant relationships between demographical variables and financial behavioural factors were further observed for the sampled population. Educators and training facilitators should focus in their financial literacy programmes on financial planning, executing, vigilance, discipline, control and outsourcing personal financial services. Marketers and providers of credit should act responsibly when dealing with consumers with inadequate financial literacy.

Keywords: Financial insight, behaviour, planning, vigilance, discipline, control, outsourcing, knowledge, illiteracy