Financial Literacy on Investment Decisions Among Public Secondary School Teachers Under Teacher Service Commission in Meru County Kenya

Abstract

In Kenya, the education sector receives the greatest share of the national budget, with a sizable amount going toward teacher wages because of their high employment rates. The purpose of this study was to assess how financial literacy affected the investment choices made by public secondary school teachers in Meru County, Kenya. As stated in the Solution SACCO annual report for 2022, it aimed to comprehend the difficulties teachers encounter when preparing for their financial future and the part financial literacy plays in this regard. The study specifically examined the influence of debt management knowledge, saving literacy, budgetary skills, and risk diversification on the investment choices of these teachers. The research was grounded in several theoretical frameworks, including Financial Literacy Theory, Prospect Theory, Dual Process Theory, and Goal Setting Theory, which provided a foundation for the review of related literature. The analysis was conducted in accordance with the conceptual framework and goals of the study. 1,825 teachers working in public secondary schools throughout Meru County were part of the target group. Both primary and secondary sources of data were used in the descriptive study approach. Purposive sampling was utilized in the study to choose schools from Meru County's nine sub-counties, and 328 respondents were chosen by simple random selection. Thirty teachers in Tharaka Nithi County, or 10% of the sample size, participated in a pilot study of a self-administered questionnaire to verify the validity of the research instruments. The questionnaire was improved by academic supervisors' feedback, which cleared up any misunderstandings and removed unnecessary items. The distribution and collecting of surveys were accomplished utilizing the drop-and-pick approach. Following collection, the data was examined for flaws, including typographical errors and unanswered questions. After being coded, the data was analyzed using the Statistical Package for Social Sciences (SPSS). Regression analysis, ANOVA tests, and coefficients of determination were used to investigate correlations and develop the model equation before the results were displayed in tables. Pearson correlation analysis was used to evaluate hypotheses, and descriptive statistics such as mean and standard deviation were computed. Reports, frequency distribution tables, and infographics provided summaries of the results. With an R2 value of 0.691 from the multiple regression analysis, financial literacy variables accounted for 69.1% of the variation in investment choices made by Meru County's public secondary school teachers. Specifically, knowledge in debt management, saving, and risk diversification demonstrated significant positive effects on investment decisions, with coefficients of 0.045, 0.363, and 0.340, respectively, and p-values below 0.05. Conversely, budgetary literacy showed a positive but statistically insignificant relationship with investment decisions, as reflected in a p-value of 0.138 and a coefficient of 0.078. According to the data, teachers in public secondary schools often follow good financial habits, such as avoiding loan defaults, closely examining credit terms, making timely loan repayments, and using unsecured loans sensibly. The study suggested encouraging teachers who work for the Teachers Service Commission (TSC) to adopt a saving and investing mindset. It also emphasized the need for more studies to examine non-financial aspects that can affect educators' investment choices.