Influence of financial literacy on saving behaviour among small scale entreprenuers in Kisumu central constituency Kisumu county

Abstract

African nations still have to bring up residential reserve funds rates compared to their per capitaGDPs as they are doing poorly compared to their East Asian and Pacific partners and that ifAfrica saved more both household saving andas countries they would use those funds forinfrastructure instead of raising the funds through external debt. World Bank Development Indicators' most recent data reveals that the nation's Gross Domestic Savings as a proportion of GDP was 11.09 percent in 2017, 11.64percent in 2018, 11.25 percent in 2019 and 12.83 percent in 2020. This shows that the country’sdomestic savings is increasing but relatively low. As a result of this the country presents asignificantdevelopmentchallenge. Individuals need to learn the basic knowledge of financial areas so that people may make knowledgeable financial decisions about how to earn, spend, save, manage, and invest their money. The study's goal was to look at the impact of financial literacy on small-business owners in the Kisumu Central Constituency's saving habits. The study's particular objectives were to; establish theinfluence of debt management on saving behavior, examine the influence of budgeting practiceson saving behavior and establish the influence of investment management practices on savingbehavior among small entrepreneurs in Kisumu Central Consistency. The study wasguided by Life Cycle Theory, Financial Literacy Theory and Permanent income hypothesis.Correlational research design was employed in the study. The target population comprisedof 914 registered small entrepreneurs in Kisumu town central constituency who have been inbusiness for at least2years. The study adopted Yamane sampling technique. Open-ended and closed-ended structured questionnaires were employed to gather primary data. 28 questionnaires were used in a pilot study by the researcher to make sure the questions were reliable, valid, and pertinent. Statistical Package for Social Sciences was used for data analysis (SPSS) that were presented on figures and tables. The findings indicate that debt management and saving behavior among small scale entrepreneurs were strongly and positively correlated as shown by r= 0.952, statistically significant p=0.000˂0.05; budgeting practices and saving behavior among small scale entrepreneurs strongly and positively correlated (r=0.919, p=0.000˂0.05); investment management practices and saving behavior among small scale entrepreneurs were very closely associated and positively skewed (r=0.91, p0.0000.05). According to the study's findings, small-scale business owners in Kisumu Central Constituency have a high and favorable correlation between debt management, budgeting techniques, investment management strategies, and saving habit. Therefore, the study suggests that components of financial literacy include debt management, budgeting techniques, and investment management should be imparted among small scale entrepreneurs in Kisumu central constituency, Kisumu County. This will enable them to make financial decisions and thus realize saving behavior.