DETERMINANTS OF FINANCIAL CAPABILITY AMONG YOUNG EMPLOYEES IN MALAYSIA
Current high levels of individual indebtedness and increasing focus on individual responsibility for financial planning shows that there is a growing need for better financial capability particularly among the young adults. The purpose of this study is to identify the levels of financial literacy, financial capability and financial problems of young employees for both public and private sector in Malaysia and to determine the relationships between financial literacy, financial problems, and money attitude with financial capability among the young employees. The sample size was comprised of 446 young employees age 40 and below drawn from the central zone of Malaysia, selected through a multi stage sampling technique. Data were collected through self-administered questionnaires. Results of the study showed that the respondents consisted of 163 males (36.5%) and 283 females (63.5%) with mean age of 32 years old. Most of the respondents represented middle income group (earning monthly income between RM 1,500 to RM 3,000) and had secondary education level. Only 15.3% of the respondents had high level of financial literacy and 69.2% of them had moderate level of financial capability. Results of Pearson Correlation indicated that there were significant relationships between financial literacy (r= .120*, p≤ 0.05), financial problems (r= -.187**, p≤ 0.01), money attitude (r= .251**, p≤ 0.01) with financial capability. The multiple regression results showed that there was no influence of demographic characteristics (household income, education level, and marital status) toward financial capability of young employees. However, financial problems and money attitude had significant influence toward financial capability whereby the money attitude become a major contributing factor to the financial capability (r2 =.105, p=.000). By understanding more about the factors hindering and promoting the financial capability, it is hoped to help young employees to become financial prudence and in the long run could decrease the number of young employees declared bankruptcy.
Keywords: Financial Literacy, Financial Problems, Money Attitude, Financial Capability