THE EFFECT OF FINANCIAL LITERACY ON FINANCIAL BEHAVIOR OF MILLENNIALS IN JAKARTA

• Main Author: Rizki Maghfirani, Fadhilla
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/67027
• Institution: Institut Teknologi Bandung

In this era of digitalization, financial literacy should be seen as a fundamental right and universal need as without financial literacy, individuals and societies cannot reach their full potential. Indonesia scored 38.03% on the financial literacy index meaning that out of 100 people, only 38 are well-literate. Financial literacy affects everything from basic financial decisions to financial decisions that have a long-term impact. An individual's way of managing their finances is often associated with financial behavior. Millennials in Indonesia spend up to 50% of their income on a ‘4S lifestyle’ consisting of Sugar (food and beverages), Skin (beauty and personal care), Sun (travel), and Screen (digital screen consumption). The status of DKI Jakarta which is the center of government as well as the center of economic activity also adds to the impact on the development or movement of the wheels of economic, social and cultural life of society in general. With this condition, Jakarta is expected to be a reflection of financial literacy in Indonesia and other big cities. The purpose of this study is to determine the level of financial literacy of millennials in Jakarta, to determine the effect of financial literacy and demographic factors on financial behavior of millennials in Jakarta. The data is collected from 400 respondents. The research found that the financial literacy index of millennials in Jakarta is 80.01% which is categorized as high financial literacy. By using multiple linear regression, this research found that financial literacy, age, income, gender, and education simultaneously affect the financial behavior of millennials in Jakarta. Partially, financial literacy and income positively affect the financial behavior of millennials in Jakarta while age negatively affects the financial behavior of millennials in Jakarta. Gender and education are found to have no significant effect on financial behavior.