Cognitive and personality predictors of financial literacy among adult Australians

Abstract

[Abstract]: Poor financial literacy has been identified as one of the major social problems facing modern society with debt levels rising and a demonstrable lack of understanding of financial issues among some sections of the population. This study explored the relationship between various demographic, cognitive, and personality variables and financial literacy among a sample of 94 equity scholarship students attending a regional university. Data were collected on demographic characteristics such as age, years of work, level of education, income, and years of working. Cognitive measures included the two scales of the Shipley Institute of Living Scale (SILS) as measures of crystallised (Gc), and fluid Intelligence (Gf), respectively. A numeracy test was also administered. The IPIP-NEO short form was used to measure personality factors including Neuroticism, Conscientiousness, Agreeableness, Openness, and Extraversion. Results of hierarchical regression analyses indicated that Years-of-work was the only demographic variable significantly related to financial literacy. Cognitive abilities contributed incremental variance when added at step 2. Personality factors contributed further incremental variance when entered at step 3. Among all these variables, Numeracy was most strongly related to financial literacy, suggesting that training programmes targeting numeracy skills are likely to prove most beneficial in overcoming problems associated with poor financial literacy.