INFLUENCE OF FINANCIAL LITERACY ON FINANCIAL MANAGEMENT PRACTICES: A SURVEY OF DAIRY FARMERS MANAGED BY K-UNITY SACCO IN LIMURU SUB COUNTY, KIAMBU COUNTY

Abstract

The purpose of this research was to investigate the influence of financial literacy on financial management practices; a survey of dairy farmers managed by K Unity SACCO in Limuru sub county, Kiambu county. The objective of the study was to investigate how financial literacy affects financial management of persons operating in the informal sectors in this case looking at dairy farmers. The researcher sought to find out whether investment practices, saving culture, budgeting practices loan management and the planning of unexpected expenses does affect financial management practices. The field of financial literacy has been understudied more so in the developing economies, and especially in the informal sector. The researcher targeted dairy farmers managed by K Unity SACCO. The researcher adopted descriptive research design to study 375 dairy farmers drawn from a population of 6000 dairy farmers. The study used structured questionnaire which were administered with the help of 5 research assistants using structured interviews. The researcher conducted a pilot test of 20 questionnaires in order to ensure that the questions to be asked were relevant, valid and reliable. Data analysis was done using Statistical Package for Social Scientists (SPSS) to generate descriptive statistics (frequencies, percentages, cross tabulations) that were presented on figures and tables. Further analysis was done using inferential analysis. The study revealed that there was positive relationship between investment practices and financial management of dairy farmers in Kenya. Financial management of dairy farmers in Kenya was found to be significantly influenced by saving culture. The study established that budgeting practices positively influence financial management of dairy farmers in Kenya. The study found that debt management practices will positively influence financial management of dairy farmers in Kenya. The study recommends that the management of K Unity Sacco should considered offering investment training to their members before disbursement of loans. The study recommends that employees should use their financial literacy knowledge and experience gained in the Sacco society to develop a saving culture. The study therefore recommends that the management of K Unity Sacco should create awareness to its members in the effects of debts on their finances and how they can manage their debt in a realistic manner and understand the cost of their.