THE EFFECT OF FINANCIAL LITERACY ON SAVINGS AND INVESTMENT OF PUBLIC SECTOR WORKERS IN THE AJUMAKO ENYAN ESSIAM DISTRICT

ABSTRACT The interest in financial literacy has increased globally because it enhances financial security, wealth creation and excellent portfolio choice for the individual. The study was set up to investigate financial literacy and the practice of saving and investment by public sector workers in the Ajumako Enyan Essiam district of the Central region of Ghana. Frequency distributions, percentage, contingency tables and bar charts have been employed to show the results in the study conducted. Despite the high financial literacy rate among the public sector workers in the district, this is not reflective in savings and investment. There is need for more education on financial literacy and application of the knowledge acquired. The result indicates that over 95 percent of the respondents know what a personal budget is. The respondents who prepared a monthly budgets were 72% whilst 28% did not prepare budgets. In fact 52% of these workers who prepare budgets did not follow it every month leading to 76.3% of the workers having their incomes falling short of expenses. Financial institutions should also develop attractive investment products to encourage public sector workers to invest. Other sources of income generating avenues should be exploited by those whose incomes can barely cover expenses for the month. Education by the state and the financial institutions should be stepped up for the workers to see the importance of using budgets to control their expenses and most importantly its effect on saving and investment.