Financial Literacy: An Exploratory Analysis in Portugal

Abstract

This work aims to verify, through an exploratory factor analysis, which are the determinants of the financial literacy of the Portuguese over 18 years old. The quantitative method is used, by using a questionnaire survey, and 839 surveys were obtained. It is observed that the factors resulting from the exploratory factor analysis are: (1) planning and financial goals to 1-2 years, (2) long-term savings and (3) the taste for numerical calculation. We analyse the statistically significant differences between means regarding gender, school education, the existence of household budgets and age. It is concluded that it is important to obtain some financial training at the beginning and throughout life, to better be able to make the financial family planning, to make applications with better return and to reduce the financial risk of the family. It is concluded that the closer to the retirement age, the more people tend to save, since during retirement income usually decreases.

Financial Literacy: A Case Study for Portugal

“…Regarding financial knowledge, the conclusions of studies carried out in Portugal are in line with the conclusions already established by other studies-males have greater knowledge, in financial terms-corroborating the conclusions of other authors (Amonhaemanon 2022;Leippold et al 2022;Yeh 2022). The population's financial knowledge increases with income, as well as with the level of education (a precarious level of education is shown to be insufficient), with the older population, aged over 70, also being the least knowledgeable age group (Centeno et al 2021;Tavares et al 2022). The same authors also conclude that the population between the ages of 25 and 54 years old has better literacy.…”

“…However, even from the oldest definitions, it is possible to verify the persistence of the relationship between literacy and financial knowledge. It is possible to conclude that this knowledge is fundamental for the perception of current financial issues, given the gradual increase in available financial instruments and their consequent complexity (Tavares et al 2022); namely, due to the evolution of the population's standard of living, the evolution of the economy and its respective impact on personal finances.…”

“…This is evident in a wide range of concepts related to finance, economics, or currency (Sconti 2022). According to Tavares et al (2022), this knowledge is defined in broader concepts, identified as financially fundamental. From the simplest learning to the most complex and advanced, such as loans, investments, or retirement plans, it should be emphasized that, in general, knowledge in itself reflects all the financial instruction gained during the different stages of a person's life, which allows them to expand their vocabulary, to which they can be stimulated in their values, attitudes, or in various practical matters, to be observed in their society and in their day-to-day life (OECD 2021).…”

“…There is a need to understand and demonstrate the competence to apply knowledge in everyday life, considering different scenarios and plans, regardless of their probability (Orton 2007). The person must have the ability to make decisions with confidence or conviction, in order to establish effective management of their personal finances and ensure that they are not affected by financial crises or other events of convenience (Tavares et al 2022;Korankye and Pearson 2022).…”

“…Financial literacy is important at all stages of a human being's life and should be measured over time, with the literature pointing to an increase in efforts on the part of governments that still show low financial literacy globally (Tavares et al 2022;Lusardi 2019).…”