Assesment of financial literacy rates in Turkey and the effects of financial literacy on budgeting behavior: Application for İstanbul province

Today, the expansion of a free market economy has caused financial instruments to become complex and to vary of financial products and services, so this has increased the significance of financial literacy for developed and developing countries. Since individuals who are financially literate take quality, safety, health, financially affordability into consideration while purchasing financial products and services, so exhibit conscious financial attitude and also have a habit of saving, take control of their spending, direct their savings to right investment channel for increasing their income. While these individuals contribute to effective personal finance management at the microeconomic level, they play an important role in the economic growth and development of countries at the macroeconomic level. Particularly after the global financial crisis in 2008, the level of financial literacy of individuals has become significant in Turkey. Many researchers have conducted various studies aimed at examining the level of financial literacy of individuals, and have observed that overall level of financial literacy are low. Therefore, many financial literacy educations and activities are conducted by state and independent institutions and organizations in order to increase the level of financial knowledge and financial awareness of individuals. In this context, the aim of our study is to measure the financial literacy levels of households residing in Istanbul, to examine the budgeting behaviors and to determine whether the budgeting behavior differ significantly compared to the financial literacy levels. So, a survey study was conducted with 257 participants. As a result of the study, budgeting behaviors of households did not differ significantly compared to their financial literacy levels. Also, the relationship between the financial literacy levels of households and their demographics was examined by applying the Chi-Square Test. According to the result, male participants, participants aged 25-34, participants who have higher level of income and education, had higher levels of financial literacy. The relationship between the budgeting behaviors of households and their demographics was examined by applying independent sample T-Test and one way Anova Test, it was found that the budgeting behaviors of households did not differ significantly compared to their demographics (excluding gender).