DETERMINANTS OF PERSONAL FINANCIAL MANAGEMENT DECISIONS: A COMPARISON OF SELF-EMPLOYED GENERATION X AND GENERATION Y IN EMBAKASI EAST CONSTITUENCY OF NAIROBI, KENYA
Abstract
Personal financial management (PFM) decisions greatly influence living standards, the performance of organizations, and by extension, the economy. Since every generation is unique, Generation X and Y more often than not demonstrate different decisions on PFM. The general objective of the study was to investigate and compare the determinants of personal financial management decisions among the self-employed Generations X and Y in Embakasi East constituency of Nairobi, Kenya as guided by four independent variables; financial knowledge, demographic factors which are age, education level, marital status and income level; financial attitude and financial locus of control (LOC). Out of a target population of 5,440 individuals, a sample of 372 was selected whereby 304 individuals were Generation X and 68 were Generation Y. The response rate was 82.26%. The study findings indicated that in general, financial knowledge, financial attitude, financial locus of control, and level of income were positively and significantly associated with PFM decisions of self-employed Generation X and Y in Embakasi East constituency while gender and marital status had no significant influence. The comparative results showed that financial knowledge has a significant influence on PFM decisions for both Generation X and Y. On the other hand, financial LOC did not have a significant effect on PFM decisions for both generations. Whereas financial attitude significantly influences PFM decisions of Generation X, it did not have a significant effect on PFM decisions for Generation Y. The study concluded that most Generation X and Y business owners in Embakasi East are low income earners but are knowledgeable about the basic financial concepts. In addition, most self-employed Generation X and Y are risk averse. The study recommended that government agencies, micro finance institutions and banks should increase specialized financial education programs for each generation with a focus on Generation Y in order to not only create, but also increase awareness and encourage risk diversification.
Keywords: Financial Management Decisions, Generation X & Generation Y
References
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Lai, M.M., & Tan, W.K. (2019). An empirical analysis of personal financial planning in an emerging economy. European Journal of Economic Finance and Administrative Science, 16(1), 99,111
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Mbuthia, A.N. (2011). Households’ saving decisions in Kenya. The school of economics of Kenyatta University. International Journal of Business and Management, 6(2), 125-145
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Modigliani, F., & Brumberg, R. (1954). Utility analysis and consumption function: An interpretation of cross-section data. Franco Modigliani, 1(1), 388-436
Mohd, R., Mohamad, S., Nor, N. &Kamarudin, N. (2015). Measuring financial intelligence of Malaysian Gen Y: A preliminary study. Durresamin Journal, 1(4), 2204-9827.
Mokhtar, N., Husniyah, A. R., Sabri, M. F., & Talib, M. A. (2017). Financial well-being among public employees in Malaysia: A preliminary study. Asian Social Science, 11(18), 49-54.
Mwathi, A.W. (2017). Effects of financial literacy on personal financial decisions among Egerton University employees, Nakuru County, Kenya. Journal of Finance and Economics, 10(11), 231-255
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Nwibo, S. U. & Alimba, J. O. (2013). Determinants of Investment Decisions among Agribusiness Investors in South-East, Nigeria. Journal of Business and Management (IOSR-JBM), 8(6), 60-67
O’brien, R.M. (2007). A caution regarding rules of thumb of variance inflation factors. Quality - and quantity, 41(5), 673-690.
OECD INFE (2011) Measuring Financial Literacy: Core Questionnaire in Measuring Financial Literacy: Questionnaire and Guidance Notes for conducting an Internationally Comparable Survey of Financial literacy. Paris: OECD.
Okech, T.C., & Munyoki, I. (2012). Empirical analysis of personal debt among the youth in Kenya. The case of graduates in Kenyan Universities. International Finance Journal, 7(43), 312-322
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2021-06-15
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Onyango, A. A. . (2021). DETERMINANTS OF PERSONAL FINANCIAL MANAGEMENT DECISIONS: A COMPARISON OF SELF-EMPLOYED GENERATION X AND GENERATION Y IN EMBAKASI EAST CONSTITUENCY OF NAIROBI, KENYA. African Journal of Emerging Issues, 3(3), 83–104. Retrieved from https://ajoeijournals.org/sys/index.php/ajoei/article/view/183
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