“A Study on Financial Literacy Among College Students in Bagalkot City”

“A Study on Financial Literacy Among College Students in Bagalkot City”

 

Sagar S. Chabbi

Assistant Professor

Basaveshwar Commerce College, Bagalkot

 

Ayisha Nadaf

M.Com Final Year

Basaveshwara commerce college Bagalkot

 

ABSTRACT

The purpose of this study is to assess the level of financial literacy among college students in Bagalkot city and to analyze their financial knowledge, attitude, and behavior. The study aims to contribute valuable insights to the development of effective financial education initiatives and strategies. Financial literacy plays a crucial role in empowering individuals to make informed financial decisions and achieve long-term financial well-being. However, there is a lack of comprehensive studies exploring the awareness and knowledge levels of financial literacy among the youth in specific geographical contexts like Bagalkot city. The research paper adopts a quantitative research approach, employing a structured survey questionnaire to gather data from a representative sample of young individuals residing in Bagalkot. The survey will assess their awareness levels regarding various financial concepts, including budgeting, saving, investing, debt management, and financial planning. Respondents in this study were College students and total 100 Research data was obtained by distributing online self-designed questionnaires.

 

KEYWORDS: Financial Literacy, Financial Knowledge, College Students Financial Awareness, Financial Education.

 

INTRODUCTION:

Financial literacy has emerged as a critical competency in the 21st century, enabling individuals to make informed and effective decisions regarding the use and management of money. It encompasses the knowledge and understanding of financial concepts such as budgeting, saving, investing, borrowing, and risk management. For college students, financial literacy is particularly significant as they transition from financial dependence to independence, often managing expenses, loans, and savings for the first time in their lives.

Despite the increasing complexity of financial systems and the availability of diverse financial products, several studies have shown that young adults generally possess low levels of financial literacy. This lack of awareness can lead to poor financial behaviors, including excessive debt, limited savings, and inadequate financial planning for the future. The college phase, therefore, represents a crucial period to develop sound financial habits and decision-making abilities that can influence long-term financial well-being.

 

RESEARCH GAP:

Although several studies have examined financial literacy among young adults, most existing research has focused mainly on general awareness or theoretical knowledge, without exploring how students actually apply financial concepts in real life. Many studies have been conducted in major cities or among commerce students, leaving a lack of evidence from smaller regions and mixed academic backgrounds. In the Indian context, rapid growth in digital payments, online banking, and easy access to credit has created new financial challenges for students, yet limited research has addressed how these changes impact their financial behavior. Moreover, very few studies have explored the combined influence of parental background, digital exposure, and financial habits on students’ overall financial literacy. Therefore, this study aims to fill these gaps by providing a detailed assessment of financial knowledge, attitudes, and behavior among college students in the selected study area.

 

NEED OF THE STUDY:

College students are at a crucial stage where they begin managing their own finances; yet research consistently shows that their financial literacy levels remain low, especially in areas such as budgeting, saving, borrowing, and investment planning. In the Indian context, the rapid growth of digital payments, increasing access to credit, and rising financial frauds have made financial knowledge more essential than ever. Despite these changes, financial education in colleges is still limited, leaving students unprepared to make informed financial decisions. Therefore, this study is needed to assess the current level of financial literacy among college students, identify the factors influencing their financial behavior, and highlight the gaps that must be addressed through effective financial education programs. The findings will help educators, policymakers, and institutions develop targeted initiatives to improve young adults’ financial well-being.

 

LITERATURE REVIEW:

Financial literacy is recognized as an essential life skill, especially for college students who are beginning to make independent financial decisions. According to OECD (2020), financial literacy includes financial knowledge, attitudes, and behaviors necessary for effective financial management. Lusardi and Mitchell (2014) emphasize that it is a fundamental skill required for budgeting, saving, borrowing, and investment planning.

Global studies reveal that young adults often lack adequate financial knowledge. Lusardi et al. (2010) found that many students struggle with basic concepts such as interest rates, inflation, and risk diversification. Mandell (2008) also reported limited understanding of credit and financial products among college students. In the digital era, the scope of financial literacy has expanded to include digital financial competence, as students increasingly use online banking and digital payment systems. However, research indicates that awareness of financial risks remains limited despite high usage of digital platforms.

In India, financial literacy levels among college students are generally moderate to low. Bhushan and Medury (2013) observed inadequate knowledge regarding insurance and investment options. Agarwal and Gupta (2018) found that commerce students perform relatively better than non-commerce students, while gender differences are also evident. Socioeconomic factors, parental influence, and academic background significantly affect financial literacy levels (Chen & Volpe, 2002; Singh & Kumar, 2020).

Several studies highlight the gap between financial knowledge and actual behavior. Remund (2010) noted that awareness does not always translate into responsible financial practices. Although structured financial education programs improve financial attitudes and behaviors (Xiao et al., 2014), such initiatives remain limited in many Indian institutions.

Overall, existing literature suggests that while awareness of financial concepts is gradually increasing among college students, significant gaps remain in practical application, digital financial understanding, and regional representation. This indicates the need for further research to assess financial literacy levels and influencing factors among college students in specific contexts.

 

OBJECTIVES OF THE STUDY:

·       To assess the level of financial literacy among college students in Bagalkot City.

·       To examine students’ knowledge regarding basic financial concepts such as budgeting, savings instruments, inflation, and investment diversification.

·       To analyze the financial attitude and financial behaviour of college students towards saving, spending, and managing money.

·       To study the relationship between selected demographic factors (gender, age, stream of study, and family income) and the level of financial literacy.

 

RESEARCH METHODOLOGY:

1. Research Design

The present study adopts a descriptive research design, as it aims to assess and analyze the level of financial literacy among college students in Bagalkot city. The study focuses on understanding students’ financial knowledge, attitudes, and behaviors, and identifying the key factors influencing their financial literacy.

 

2. Population and Sampling                                                                           

The population of the study comprises all undergraduate and postgraduate students enrolled in various colleges in Bagalkot city, Karnataka. A sample size of around 50-100 students is selected using the convenience sampling method. The sample includes students from different disciplines  Commerce, Arts, and Science, to ensure diversity in opinions and experiences.

 

3. Data Collection

The present study is based entirely on primary data. The required information was collected directly from college students in the selected study area. A structured questionnaire was prepared to measure students’ financial knowledge, financial attitude, and financial behavior. The questionnaire consisted of close-ended questions, making it easier to quantify and analyze the responses.

The data collection process involved personally distributing the questionnaire to students across different streams and years of study. Respondents were briefed about the purpose of the research, and their participation was completely voluntary. Care was taken to ensure that the

information provided by the participants remained confidential and was used only for academic purposes. The collected primary data formed the basis for the analysis and findings of the present study.

 

4. Scope of the Study

The study is limited to college students within Bagalkot city, Karnataka. The findings represent the financial literacy levels of students in this specific geographic area and may not be generalized to other regions.

 

Table 4.1 Demographic Profile of Respondents

                                                                                                                                                                                                              

Demographic Variable	Category	Frequency	Percentage (%)
Gender	Male	40	40%
	Female	60	60%
Age Group	Below 20 years	12	12%
	20–22 years	37	37%
	23–25 years	42	42%
	Above 25 years	9	9%
Stream of Study	Commerce	32	32%
	Science	43	43%
	Arts	25	25%
Level of Study	PUC	11	11%
	Graduate	26	26%
	Post Graduate	56	56%
	Others	7	7%
Family Monthly Income	Below 15,000	31	31%
	15,001 – 30,000	41	41%
	30,001 – 50,000	13	13%
	Above 50,000	15	15%
Total Respondents	N =	100	100%

The demographic profile of the respondents shows that a majority of participants are female (60%), while males constitute 40% of the total sample. In terms of age distribution, most respondents belong to the 23–25 years age group (42%), followed by 20–22 years (37%), indicating that the study largely represents young adults in their prime college years. With respect to stream of study, Science students form the largest group (43%), followed by Commerce (32%) and Arts (25%). Regarding educational level, more than half of the respondents (56%) are pursuing post-graduation, while 26% are graduates and 11% are studying at the PUC level. In terms of family monthly income, the majority of students (41%) belong to the Rs.15,001–Rs.30,000 income group, followed by 31% from below Rs.15,000 category. Overall, the sample represents a diverse group of students across different streams, education levels, and income backgrounds.

 

Table 4.2 Financial Knowledge Analysis of Respondents (N = 100)

Knowledge Question	Correct Answer	Correct Responses	Percentage (%)
Meaning of Budgeting	Planning income and expenses	77	77%
Not a Savings Instrument	Credit Card	50	50%
Meaning of Inflation	Rise in general price level	52	52%
Secure Use of Mobile Banking	Yes	87	87%
Advantage of Diversification	Reduces Risk	57	57%

                                                                          

The results show that 77% of students correctly understood the meaning of budgeting, indicating good awareness in this area. A high percentage (87%) reported that they know how to use mobile banking securely, showing strong digital financial awareness. However, only 50% correctly identified that a credit card is not a savings instrument, and 52% correctly understood the meaning of inflation, which suggests moderate understanding of these concepts. Additionally, 57% recognized that diversification helps reduce risk, indicating average investment awareness. Overall, students demonstrate moderate financial knowledge, with stronger understanding in budgeting and digital banking compared to other financial concepts.

Overall Financial Knowledge Level of Respondents 64.6%

This indicates overall Moderate Financial Literacy Level. Since most questions fall between 50–75% correct, majority of respondents fall under Moderate Literacy Category.

 

Table 4.3Financial Attitude Analysis of Respondents (N = 100)

Statement	Mean	Std. Deviation	Interpretation
Saving money regularly is important for my future	4.03	1.05	High Agreement
I prefer spending money now rather than saving in the future	2.87	1.2	Neutral / Slight Disagreement
I feel confident making financial decisions on my own	3.82	1.08	High Agreement
Understanding financial products is necessary for everyone	3.95	1.02	High Agreement
Managing money is stressful for me	2.96	1.18	Neutral

 

It presents the financial attitude of respondents based on likert scale analysis. The results indicate a positive attitude towards financial management among students. A majority strongly agree that saving regularly is important and that understanding financial products is necessary. Students also demonstrate confidence in making financial decisions. However, neutral responses regarding financial stress and spending preference suggest that some students still require guidance in effective financial planning. 3.52 is the average financial attitude score, showing amoderately positive attitudeamong students.

Table 4.4Financial Behaviour of Respondents (N = 100)

Behaviour Statement	Yes (Frequency)	Yes (%)	No (Frequency)	No (%)
I prepare a monthly budget for my expenses	57	57%	43	43%
I keep track of my daily spending	74	74%	26	26%
I save a portion of my income/allowance regularly	69	69%	21	21%
I compare prices before making major purchases	89	89%	11	11%
I use digital payment methods responsibly	87	87%	13	13%

It shows the financial behaviour of respondents. The findings indicate that a majority of students exhibit responsible financial practices such as budgeting, expense tracking, saving regularly, comparing prices, and responsible use of digital payments. The highest positive response is observed in digital payment usage (84%), followed by price comparison behaviour (81%). Overall, the results suggest that students demonstrate good financial behaviour.

The overall financial behaviour score of respondents is 77.2%. This indicates a strong level of financial behaviour among students.

This study constructs a Financial Literacy Index by integrating 3 key components, namely Financial knowledge, Financial attitude, and Financial behaviour, to assess the overall level of financial literacy. The financial knowledge score is measured out of 5, while the financial behaviour score is calculated based on 5 binary items, where “Yes” is assigned a value of 1 and “No” is assigned a value of 0, resulting in a maximum score of 5. The financial attitude component is measured using the mean of 5 Likert-scale items ranging from 1 to 5, which is considered directly comparable to the other components. To ensure uniformity and comparability, each component is given equal weightage. Consequently, the total maximum score of the Financial Literacy Index is 15. The combined index is computed by aggregating the scores of knowledge, attitude, and behaviour, and the results are presented in tabular form for analysis and interpretation.

Table 4.5Components of Overall Financial Literacy Index

Component	Maximum Score	Mean Score
Financial Knowledge	5	3.21
Financial Attitude	5	3.52
Financial Behaviour	5	3.82
Overall Literacy Index	15	10.55

This table Indicates that the Overall Financial Literacy Index of the respondents is 10.55 out of 15, which corresponds to 70.33%, reflecting a good level of financial literacy among college students. Among the three components, students scored highest in financial behaviour (3.82), suggesting strong practical habits such as budgeting, saving, and responsible use of digital payments. The mean score for financial attitude (3.52) shows a positive outlook towards financial planning and saving for the future. However, the comparatively lower mean score in financial knowledge (3.21) indicates that while students practice sound financial behaviour and maintain a positive attitude, there is still scope to improve their conceptual understanding of financial concepts. Overall, the findings suggest that students possess a fairly good level of financial literacy, with further improvement needed primarily in financial knowledge.

10.55 out of 15 (70.33%)This indicates a good level of overall financial literacy among respondents.

To classify above score in 3 categories of financial literacy is calculated under below

Score Range (Out of 15)	Literacy Level	Frequency	Percentage
0 – 7	Low	18	18%
8 – 11	Moderate	52	52%
12 – 15	High	30	30%
Total		100	100%

 

The findings reveal that the overall financial literacy index stands at 70.33%, indicating a good level ofliteracy among the students. A majority of respondents (52%) fall under the moderate literacy category,while 30% demonstrate a high level of overall financial literacy. However, 18% of the respondents arecategorized under low literacy, highlighting the presence of a section that requires attention. These resultssuggest that although students exhibit strong financial behaviour and maintain a positive financial attitude,there is still a need to strengthen their core financial knowledge to achieve a more comprehensivelevel of financial literacy.

 

Table 4.6Cross Tabulation: Gender vs Financial Literacy Level

Gender	Low	Moderate	High	Total
Female	22	22	16	60
Male	10	20	10	40
Total	32	42	26	100

Chi-Square Value (χ²) = 2.062
p-value = 0.357

 

The Chi-square test was conducted to examine the relationship between gender and financial literacy level. The p-value obtained is 0.357, which is greater than 0.05. Therefore, the null hypothesis is accepted. This indicates that there is no significant association between gender and financial literacy level. In other words, financial literacy does not differ significantly between male and female students.

Table 4.7ANOVA: Financial Literacy Score Across Streams

Stream	N	Mean Score	Std. Deviation
Arts	25	2.16	1.57
Commerce	32	3.31	1.55
Science	43	3.60	1.38

F-value = 7.740
p-value = 0.00076

 

One-way ANOVA was conducted to compare financial literacy scores among different streams of study. The p-value obtained is 0.00076, which is less than 0.05. Therefore, the null hypothesis is rejected. This indicates that there is a significant difference in financial literacy scores among students of different streams. Science students have the highest mean score, followed by Commerce students, while Arts students have the lowest mean score. This shows that the stream of study has a significant influence on financial literacy levels.

 

FINDINGS:

1.     The demographic analysis shows that the majority of respondents are female (60%) and belong to the age group of 23–25 years (42%), with most students from the Science stream (43%) and pursuing post-graduation (56%).

2.     The overall financial knowledge level of students is moderate (64.6%), indicating that while students understand basic concepts like budgeting, their knowledge of inflation, savings instruments, and diversification is comparatively lower.

3.     The financial attitude of respondents is moderately positive (mean score: 3.52), showing that students have a positive mindset towards saving, financial planning, and understanding financial products.

4.     The financial behaviour of students is strong (77.2%), indicating that most students follow good financial practices such as budgeting, tracking expenses, saving regularly, comparing prices, and using digital payments responsibly.

5.     The overall financial literacy index is 70.33%, which indicates a good level of financial literacy among college students.

6.     The Chi-square test reveals that there is no significant relationship between gender and financial literacy level, indicating that literacy levels are similar across male and female students.

7.     The ANOVA results show that there is a significant difference in financial literacy across different streams of study, with Science and Commerce students having higher literacy levels compared to Arts students.

8.     The study highlights that while students demonstrate strong financial behaviour and a positive attitude, there is still a need to improve their core financial knowledge.

 

SUGGESTIONS:

1.     Financial education should be included in the college curriculum to improve students’ understanding of basic financial concepts such as budgeting, inflation, and investment.

2.     Colleges should organize regular workshops and seminars to enhance financial awareness and decision-making skills among students.

3.     Students should be encouraged to practice budgeting, saving, and basic investment planning to strengthen their financial behaviour.

4.     Awareness should be created about the safe and effective use of digital payment systems to improve digital financial literacy.

5.     More focus should be given to improving knowledge in areas like savings instruments, inflation, and diversification where students showed moderate understanding.

6.     Special programs can be designed for students from non-commerce streams to improve their financial literacy levels.

7.     Students should be motivated to develop regular saving habits and basic investment awareness.

8.     Parents and educational institutions should guide students in managing money responsibly and developing good financial habits.

 

CONCLUSION

The present study on financial literacy among college students in Bagalkot City indicates that students possess a good overall level of financial literacy (70.33%), though there is still room for improvement. The findings reveal that students demonstrate strong financial behaviour (77.2%), such as budgeting, saving, and responsible use of digital payments, along with a moderately positive financial attitude (mean score: 3.52) towards saving and financial planning. However, their financial knowledge level is moderate (64.6%), highlighting gaps in understanding key financial concepts like inflation, savings instruments, and diversification. The hypothesis testing results further show that gender does not significantly influence financial literacy, whereas the stream of study has a significant impact, with Science and Commerce students performing better than Arts students. Overall, the study concludes that while students exhibit positive financial behaviour and attitude, there is a need to strengthen their financial knowledge through structured financial education programs, workshops, and curriculum integration to enhance their overall financial literacy.

 

REFERENCES:

1.     Prasanna Chandra (2017). Investment Analysis and Portfolio Management. McGraw Hill Education.

2.     Annamaria Lusardi & Olivia S. Mitchell (2014). The Economic Importance of Financial Literacy: Theory and Evidence. Journal of Economic Literature, 52(1), 5–44.

3.     Agarwalla, S. K., Barua, S. K., Jacob, J., & Varma, J. R. (2013). Financial Literacy among Working Young in Urban India. IIM Ahmedabad Working Paper.

4.     Reserve Bank of India (2020). National Strategy for Financial Education 2020–2025.

5.     OECD (2016). OECD/INFE International Survey of Adult Financial Literacy Competencies.

6.     World Bank (2017). Global Financial Inclusion (Global Findex) Database.

7.     National Centre for Financial Education (2019). Financial Literacy and Inclusion Survey in India.

8.     Securities and Exchange Board of India (2018). Investor Awareness and Protection Initiatives.