Effectiveness of Financial Literacy on Investment Decisions among the Students in Chitwan

Abstract

Financial Literacy is the knowledge of money management skills like budgeting and investing. Investment decision is the process of allocating financial resources to various assets or projects with the goal of generating future returns. This study explore how financial literacy affects investment decision with specific components, such as saving habits, spending habits, and understanding of financial products which influence investment decisions, especially among the students in chitwan. This study also understands that either make informed financial decisions or lead to the wrong decision on investment. This study adds new literature about the increased financial knowledge leads to smarter decision. This study further signifies the importance of saving habit, spending habit and understanding of financial product in investment behaviour. This study applied quantitative approach along with the connivance sampling method to understand the opinions and experience of students. The survey questionnaire is used as a research instrument to collect primary data from 212. The result shows saving habits showed a significant link with financial literacy (p = 0.002). However, other variables like spending habits (p = 0.706) and understanding of financial products (p = 0.968), are not significant with financial literacy. Essentially, while saving habits are important for financial literacy, spending habits and product understanding do not appear to have the same impact. This study would benefit to students, universities, banks and investors. The main aim was to determine if good money management leads to better investment choices and to determine which element of financial literacy is most influential.