IMPACT OF FINANCIAL LITERACY ON EXPENDITURE, SAVINGS, AND INVESTMENTS AMONG DEPOSIT-TAKING SACCO MEMBERS IN WESTERN KENYA
Abstract
This study explored the impact of financial literacy on expenditure, savings, and investment behaviors among deposit-taking SACCO members in Western Kenya. SACCOs play a vital role in promoting financial inclusion and economic empowerment, yet many members face challenges in managing their personal finances effectively. Issues such as poor saving habits, unstructured expenditure, lack of investment strategies, and over-reliance on credit hinder financial stability and long-term wealth accumulation. Using a qualitative research approach, this study examined how financial literacy influences financial decision-making among SACCO members. The study was guided by the Behavioral Life-Cycle Hypothesis, which explains how psychological factors—such as self-control, mental accounting, and framing effects—shape financial behavior. A sample size of 397 SACCO members was selected from a target population of 50,000 deposit-taking SACCO members in Western Kenya, using Yamane’s formula to ensure statistical significance. Key findings indicated that financial literacy significantly affects financial behaviors. SACCO members with higher financial literacy: Save more consistently, benefiting from structured SACCO savings plans, Manage expenses efficiently, reducing financial wastage and prioritizing essential spending, Diversify income sources, engaging in multiple income-generating activities to enhance financial security, Make informed investment decisions, ensuring long-term wealth creation and financial resilience. The study recommended that SACCOs: Strengthen financial literacy programs to empower members with better financial decision-making skills, Encourage structured savings plans and offer incentives for consistent saving, Promote responsible spending habits through budgeting and expense management training, Facilitate income diversification strategies by providing business and entrepreneurship training and Offer investment advisory services to guide members toward sustainable investment opportunities.
Key Words: SACCOs, Savings and expenditure, Income Diversification, Financial Literacy
CITATION: Wamukota, M. & Luutsa, F. E. (2025) Impact of financial literacy on expenditure, savings, and investments among deposit-taking sacco members in western Kenya. The Strategic Journal of Business & Change Management, 12 (1), 330 – 342. http://dx.doi.org/10.61426/sjbcm.v12i1.3190
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DOI: http://dx.doi.org/10.61426/sjbcm.v12i1.3190
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