Financial Literacy and Personal Financial Planning in Klang Valley, Malaysia

Int. Journal of Economics and Management 5(1): 149 – 168 (2011)

ISSN 1823 - 836X

Financial Literacy and Personal Financial Planning in Klang Valley, Malaysia

TaN HuI BooN*, HoE SIEw YEE aND HuNg woaN TINg University of Nottingham Malaysia

AbstrAct

This paper suggests that most individuals who have yet ensued personal financial planning were held back by their financial literacy level. In this paper, we link the financial literacy level of individuals with their engagement in personal financial planning. Primary data was collected within Klang Valley via self-administered questionnaire survey, and the relationship was examined using the cross tabulation method. The findings suggest that in contrast to their non-financially literate counterparts, the readiness of the financially literate individuals is reflected in their involvement in the multiple aspects of personal financial planning. However, further exploration into public’s perceptions revealed that even though many see the significance of setting financial goals and objectives in life, there remains a knowledge gap at an individual’s level that hinders one from effectively managing the financial affairs. Interestingly though, the public appeared to be hesitant in relying on the professionals in financial practices to realize their goals. There remain rooms for greater efforts from the various stakeholders to improve the current state of play and to ensure that the embedded benefits of personal financial planning are far-reaching. Keywords: Personal financial planning, financial literacy, education level

IntroductIon

As healthy financial well-being and better lifestyle is gaining priority amongst individuals, and increasingly globalized capital market offering variety of financial products and investment funds are found to be significant avenue in achieving such personal objectives, the personal financial planning is increasingly becoming a good practice if not already a necessity. In fact, a...