An Empirical Analysis Of Financial Literacy And Its Impact On Financial Wellbeing

Financial literacy has become a subject of considerable interest to researchers, policy makers, academicians, international organizations, governments and its agencies and other stakeholders in the context of global financial crisis and need for financial inclusion. Financial literacy facilitates the process of financial planning and inculcates understanding of financial products leading to effective use of financial services like Investing in financial products, saving for household expenses, budgeting, participating in the securities market, obtaining housing loan, engaging in real estate transactions, acquiring insurance, managing credit card, planning for taxes and ensuring pension and retirement security etc. The researcher has clearly proposed a unidimensional variable to quantify the level of Financial Literacy in Sikkim. The overall sample size is decided 200 for the analytical convenience of the research. The primary data has been collected by using a well structured questionnaires amongst the household's of Sikkim. The questionnaires were pre-tested before being administered . To examine the research data, an exploratory factor analysis was conducted using the SPSS (version 20.0) software. The results show that only 5 items load reliably in FL construct. Specifically, Behaviours towards Investment was found to exhibit the highest variance followed by Skill in dealing with finance , Financial Level of Awareness, Knowledge towards finance, Knowledge towards Investment, Behavious in dealing with financial situations and Attitudes towards Financial Plan. The low level of financial literacy is an obstacle in the path of making Sikkim a digital financial literacy state. For spreading awareness in financial literacy among household, door-to door service is essential. Financial literacy programmes can impart sizeable influence to the household for making good financial decision and adopting healthily financial practices.