An investigation into the financial and debt literacy and overindebtedness of third level students in Ireland

Abstract

The significance of financial literacy and debt literacy to success, both at the family and national levels, cannot be overstated. The core concern of financial literacy is the understanding of key financial concepts such as inflation, interest rates, purchase decisions, financial liability, personal financial planning, and investments. Today, knowledge of these concepts among students has remained quite low. Overwhelming evidences from credible studies have proven, beyond any reasonable doubt that students’ financial knowledge is inadequate. The principal aim of this study was to establish the financial literacy, debt literacy, and over-indebtedness of students in Ireland. An exhaustive literature review provided crucial data and information that laid a strong foundation for the study. Using online survey that collected data from 472 third level students in Ireland, the study revealed that indeed financial literacy and debt literacy are low amongst college students. The study further established that gender influences financial literacy and debt literacy with females lagging behind on these areas. It further established that there exist some weak relationship between age and financial literacy and debt literacy of students. Additionally, marital status was established to influence financial literacy and debt literacy among college students with the divorced and married participants found to be more financially literate as compared to engaged and single participants. Irish students were found to score slightly below the international average in terms of financial and debt literacy. The study recommends the incorporation of financial studies in the school curriculum. Additionally, it recommends the change of media for communicating financial literacy information to students from traditional means such as newspapers and magazines to the internet and social media, which were preferred sources by most participants in the study. Since the study established that many students have false confidence in their financial literacy skills, it further recommends the introduction of weekly financial challenges in schools to awaken the “sleeping” students to finally solve the disheartening level of financial illiteracy of college students in Ireland.