https //iaeme com/Home/journal/IJMHRM 8 editor@iaeme com International Journal of Marketing and Human Resource Management (IJMHRM) Volume 13, Issue 2, May August 2022, pp 8–13, Article ID IJMHRM 13 02[.]
International Journal of Marketing and Human Resource Management (IJMHRM) Volume 13, Issue 2, May-August 2022, pp 8–13, Article ID: IJMHRM_13_02_002 Available online at https://iaeme.com/Home/issue/IJMHRM?Volume=13&Issue=2 ISSN Print: ISSN 0976 – 6421 and ISSN Online: 0976 – 643X DOI: https://doi.org/10.17605/OSF.IO/GQFUD © IAEME Publication AN OVERVIEW OF FINANCIAL LITERACY PRACTICE, RESEARCH, AND POLICY Hong Nhung Dao Thi Dong Nai Technology University, Vietnam ABSTRACT Financial literacy has drawn in the consideration of a wide scope of enormous banking corporations, grass-roots consumer government agencies, and community interest groups, and different organizations as of late Interested parties, including policymakers, are stressed that consumers come up short on working accept of financial concepts and miss the mark on instruments important to settler on the most ideal choices for their financial prosperity Such financial literacy incompliance can affect a person’s or family's everyday money execution as well as their ability to save for long-term goals like buying a home, seeking advanced education, or funding retirement Incapable money management can likewise prompt to manners that put clients in danger of genuine financial calamities The present tries to analyze financial literacy practices, research, and policies Key words: Financial Literacy, Personal Saving, Personal Finance, Household Finance Cite this Article: Hong Nhung Dao Thi, An Overview of Financial Literacy Practice, Research, And Policy, International Journal of Marketing and Human Resource Management (IJMHRM), 13(2), 2022, pp 8–13 https://iaeme.com/Home/issue/IJMHRM?Volume=13&Issue=2 INTRODUCTION In the current world, personal financial literacy plays an increasingly important role in the balance and prosperity of each individual in particular and the stability and development of the economy in general Financial literacy is the training and comprehension of different areas of finance, including themes connected with individual financial administration, money, and investments This topic centers around the capacity to actually conduct individual budgets like including the information to go with proper choices seeing individual budgets like investing’s, real estate, insurance, payments, etc tuition for college, retirement, budgeting, and tax planning Financial literacy also includes dominance of financial standards and ideas such as financial preparation, debt management, compounding profitable savings techniques, and the time value of money An absence of financial literacy can lead to settling on poor financial decisions, with unfortunate results for a person’s financial circumstances In ongoing many years, financial products and services have become progressively famous all through society While in past ages Americans had the option to buy merchandise https://iaeme.com/Home/journal/IJMHRM editor@iaeme.com An Overview of Financial Literacy Practice, Research, And Policy fundamentally with cash, today different credit items are normal, for example, debit cards, electronic transfers, credit Without a doubt, a 2019 overview from the Federal Reserve Bank of San Francisco observed that consumers favored cash for just 22% of exchanges, debit cards for 42%, and Mastercard for 29% Further items, for example, student loans, health insurance, mortgages, and self-directed investment accounts, also become more significant This makes it considerably more basic for people to comprehend how to capably utilize them While numerous abilities can fall inside the domain of financial literacy, common models contain household budget planning, figuring out how to oversee and repay debt, and assessing product adjusts These crafts frequently expect basically functioning information on key financial concepts, suchlike accumulating revenue and the time worth of cash c Given the significance of money in present-day culture; an absence of monetary education can significantly harm a person's drawn-out monetary achievement Tragically, research has shown that monetary ignorance is broad, with the Financial Industry Regulatory Authority (FINRA) guaranteeing that this rate is expected to 66% of Americans Not being monetarily keen can prompt a few entanglements, for example, is bound to collect unreasonable obligation trouble, through unfortunate spending choices or an absence of long-haul readiness Thus, this can prompt unfortunate credit, chapter 11, abandonment, and other adverse results Fortunately, there are presently more assets than any time in recent memory accessible for those hoping to instruct themselves about the universe of money Henceforth, this study gives an outline of monetary education and attempts to examine monetary proficiency practices, exploration, and arrangements CHANGING INTEREST IN FINANCIAL LITERACY There are many factors that affect the financial services market, which contributes to a complex market movement Therefore, it requires consumers to actively manage their finances Technological innovation and markets are increasing, competition is increasing, many services are launched by a wide range of providers Consumer problems such as pre-prime loans, high consumer debt or low savings rates also increase the urgency around financial literacy Demographic trends - population diversification - create difficulties for households, cultural and language barriers in establishing banking relationships More prominent admittance to credit for a more youthful populace, expanded employee responsibility for directing investments in employer-supported retirement and retirement plans 2.1 Change in Technology and Market Innovation Technological advances have greatly influenced almost every aspect of the distribution and processing of financial products and services over the past decade The Internet has become a means of communication and providing services It helps financial service providers market products and services to customers more effectively This innovation increases convenience for consumers, information is already available, and consumers can simply select and purchase products and services without geographical restrictions However, to benefit from such innovation, consumers also need financial literacy to be able to identify and access relevant information or assess the reliability of information sources Technological advancements help promote the ability to market products and services to consumers With a strong base of product and service information, consumers can easily search for products that match the characteristics and preferences of the household However, there are abuses that use technology, leading to consumer vulnerability to unscrupulous lenders Customers use products they don't need or don't fit their circumstances due to questionable sales tactics https://iaeme.com/Home/journal/IJMHRM editor@iaeme.com Hong Nhung Dao Thi The increasing variety of products offered by depository institutions is also one of the consequences of market renewal and competition in the industry ò financial services Basic deposit and credit products have grown rapidly and are highly specialized Besides, non-bank financial service providers such as short-term loans or check teller machines also increased significantly All in all, these remarkable developments give consumers more flexibility when it comes to creating the financial arrangements that best suit their needs 2.2 Change in Personal Finances One of the other factors that attracts interest in financial literacy is personal finance Changes in personal finances include a drop in personal savings rates, an increase in business bankruptcy filings, and an increase in consumer debt Household debt has increased rapidly Household borrowing outstrips individual income growth, thus creating a household debt service burden Although an increase in household income has helped support real consumer spending, the rapid rise in prices over the years has limited that support Overall, household savings accrued from spending cuts, or the personal savings rate, although no longer rising, have not fallen below pre-pandemic trends (Figure 1) Since 2019, the personal savings rate has skyrocketed, caused by the covid-19 pandemic, making people worry about their spending and safety By the last months of 2021, when the pandemic is under control, financial worries will be somewhat reduced, the personal savings rate will return relative to before the epidemic This information propose that consumers are helpless against monetary trouble when a financial shock happens like employment cutback or delayed disease Figure Personal savings rate over the years 2.3 Change in Consumer Responsibility In recent years, consumer responsibility for investments and credit management has increased Due to more flexible underwriting standards and greater competition among credit services, consumers' access to credit also increases, especially the younger population It is an easy fact to see that today, college students, or those who not have a occupation or other spring of income, can have a credit card A study found that more than 33% of students surveyed said they had a credit card before entering college, and another 46% would have one by their freshman year of college (GAO, 2001) That is why there is an increase in data on a young population that has difficulty managing debt Therefore, financial training is extremely https://iaeme.com/Home/journal/IJMHRM 10 editor@iaeme.com An Overview of Financial Literacy Practice, Research, And Policy necessary Having a financial understanding helps users have the right savings plan, understand their needs and goals, or risk in the future STATUS OF FINANCIAL LITERACY IN SOME COUNTRIES Financial products and services are being utilized as a instrument to advance financial inclusion worldwide As a result, financial products and services should be created and controlled with proper measures to combat risks and to ensure customer protection There are various ways to deal with finance literacy, at a macro level through financial regulations to accommodate digital finance, as in Cambodia and the Philippines, demonstrating the way that guidelines can interfere digital finance, hinder or promote digital financial growth In Cambodia, a single provider of financial products and services, Wing, covers 80% of the market, while banks and other financial organizations additionally offer portable banking services, internet banking and correspondent banking It is undeniably challenging to enter the financial market that they need to observe an accomplice bank must likewise follow a bunch of compliance procedures set by the authorities Interestingly, in the Philippines, there are in excess of 100 banks offering e-banking offices and 30 crypto guarantors Regulations sanctioned in 2009 list explicit activities that are precluded have permitted banks to reevaluate a wide scope of exercises without looking for an earlier endorsement from the controller This has empowered even country banks to expand linkages with different partners Distributed computing is additionally permitted and makes medium-sized banks available to foundations and assets However, even with regulations that allow the growth of financial products and services, the same environment could limit the growth of digital financial products and services As per The Better Than Cash Alliance, just 1% of the 2.5 billion exchanges each month in the Philippines is led electronically; This is consequence of the restricted interoperability of the domestic payment system The significant payment service providers have their own biological systems Accordingly, smaller institutions can’t partake, and the progression of assets is limited to money and checks; 36% of urban areas actually don't have the presence of financial institutions Japan's involvement with financial inclusion discloses opportunities and restriction in joining new financial services with financial education The Japanese government at first enlisted widows during World War II to sell life insurance and run financial education for their clients - independent business workers and provincial region workers Financial education is as well by Japan Post, one of Japan's primary life insurance providers Whenever private back up plans see the benefits coming about because of arriving at new customers, they are likewise more persuaded Regardless of the successful extension of financial services in Japan, financial literacy is as yet restricted whereas instructors themselves need financial training abilities In Malaysia, the Credit Advisory and Debt Management Authority (APKP) tracked down that the principal justification for defaults, at 52%, was poor financial preparation (Azaddin, 2016) Besides, the organization distinguishes need issues by age bunch: youth absence of intellectuality; moderately aged individuals need income, credit management and far away arranging capacities; and older people should be more proficient about retirement issues and retirement arranging To improve, the organization has created separate modules that address the requirements of various phases of an individual's life to outfit them with the consciousness they need to pursue suitable financial choices The poor face more serious endangers of adverse consequences on their lives in the even that financial errors are made https://iaeme.com/Home/journal/IJMHRM 11 editor@iaeme.com Hong Nhung Dao Thi IMPROVING FINANCIAL LITERACY CONTRIBUTES TO PROMOTING FINANCIAL INCLUSION IN THE DIGITAL AGE First, financial literacy ought to be remembered for the standard school educational program at all levels The best financial literacy has been displayed to have objectives customized to the requirements of each age group Teachers, nonetheless, need fitting preparation to convey successes Greater financial literacy increases workers' confidence, work ethic and productivity Second, create and execute devices to quantify digital financial literacy The OECD suggests that committed country overviews or composed global investigation be utilized to gather comparable, high-quality data on financial literacy levels (OECD, 2019) The international standardized survey of financial literacy has been developed by the OECD Enhanced surveys should be conducted as soon as possible to get a basic understanding of digital finance in each country The resulting data should be examined to recognize parts of financial literacy, particularly for vulnerable groups of people Furthermore, the data should be used to analyze the financial behavior of specific populations or groups in related areas, for example access and use of digital financial products and services for purposes of saving, borrowing, investing and buying insurance Third, develop financial literacy strategies and programs State run administrations must lay out and execute public techniques to guarantee an organized way to deal with financial literacy Systems incorporate require monetary specialist co-ops including Fintech organizations to reveal item data and related dangers to the public officially These viewpoints should be applied to the development and execution of public procedures and projects for financial literacy; Increase awareness of the importance of digital financial literacy, especially knowledge of how to use digital software, applications and platforms through digital devices such as smartphones, computers have been recognized to contribute to the promotion of financial inclusion in the digital age CONCLUSION The term financial literacy refers to a wide scope of significant financial skills and ideals Financially savvy individual is less inclined to financial hussy A solid foundation in financial literacy can assist with supporting different life objectives, like putting something aside for schooling or retirement, utilizing obligation mindfully, and maintaining a business An absence of monetary education can prompt various entanglements, for example, an unreasonably mounting obligation trouble, unfortunate spending choices, or an absence of of long-term preparation Accordingly, this can prompt unfortunate credit, insolvency, dispossession, or other adverse results Turning out to be monetarily clever includes learning and rehearsing an assortment of abilities connected with planning, obligation the board and settlement, and figuring out credit and speculation items Along these lines, this study has shown an outline of monetary education as well as its significance, consequently going to lengths to work on every individual's financial knowledge REFERENCES [1] Jabnoun, N., & Khalifa, A (2005) A customized measure of service quality in the UAE Managing Service Quality: An International Journal [2] OECD, 2019 Draft OECD Recommendation on Financial Literacy and Education Paris: OECD [3] Statistics on personal savings are from “Monetary Policy Report”, Board of Governors of the Federal Reserve System, February 25, 2022 https://iaeme.com/Home/journal/IJMHRM 12 editor@iaeme.com An Overview of Financial Literacy Practice, Research, And Policy [4] U.S General Accounting Office, “Consumer Finance: College Students and Credit Cards” Report GAO-01-773 (GAO, June 2001) [5] Atkinson, Adele, and Flore-Anne Messy "Assessing financial literacy in 12 countries: an OECD/INFE international pilot exercise." Journal of Pension Economics & Finance 10, no (2011): 657-665 [6] Stella, Gian Paolo, Umberto Filotto, and Enrico Maria Cervellati "A Proposal for a New Financial Literacy Questionnaire." International Journal of Business and Management 15, no (2020): 34-48 https://iaeme.com/Home/journal/IJMHRM 13 editor@iaeme.com ... editor@iaeme.com An Overview of Financial Literacy Practice, Research, And Policy necessary Having a financial understanding helps users have the right savings plan, understand their needs and goals,... financial products and services, Wing, covers 80% of the market, while banks and other financial organizations additionally offer portable banking services, internet banking and correspondent banking... development and execution of public procedures and projects for financial literacy; Increase awareness of the importance of digital financial literacy, especially knowledge of how to use digital software,