Youth Financial Literacy Short Scale: Proposition and validation of a measure

Abstract

We propose a short instrument for measuring financial literacy among young adults: Youth Financial Literacy Short Scale (YFLSS). An instrument with questions on financial knowledge, financial attitude, and financial behavior was applied with 1126 young Brazilians, whose dimensions and items were analyzed using exploratory factor analysis, structural equation modeling and hierarchical cluster analysis. The scale proposed allows for developing an indicator that defines whether an individual has a high or low level of financial literacy. Financial behavior is what most impacts young people, representing 53.6% of financial literacy, followed by financial attitude. Financial knowledge represents only 11.1%. These results show what will make a difference in order to have a financially literate society is the effort to put these lessons into practice and change the behavior of young people. Regarding the limitations, the scale was developed in the context of application on paper and self-administered, changes in these parameters may require adaptations of language and format. Despite construction efforts, the Youth Financial Literacy Short Scale still needs cross-cultural validation. Finally, the YFLSS is a breakthrough in literature because it was built specifically for young audiences and it is a short instrument with only 12 questions to measure the three dimensions of financial literacy: financial knowledge, attitude, and behavior.

Keywords

• G4
• G5