Financial management practices among selected households in Nairobi
Akunga, Alice Bonareri
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This was a survey research with a two-fold purpose. One purpose was to investigate the financial management practices among selected households in Nairobi. The other purpose was to investigate how the socio-economic factors and financial management practices influence satisfaction with these practices. The major objectives of this study were to: 1) Identify the social economic characteristics of the low, middle and high income households; 2) Determine the financial management practices of the low, middle and high income households in Nairobi; 3) Investigate the differences among the low, middle and high income households in their financial management practices; 4) Examine the relationship between socio-economic factors, financial management practices and satisfaction with these practices. The data used in the study were collected using a questionnaire, which was given out to a sample of 250 members of low (100), middle (100) and high (50) income households. The data were analyzed using a computer. Data analysis procedures used were: frequencies, percentages, chi-square and pearson product moment correlation coefficient. Results showed that most of the family money managers were aged between 25-44 years old, with the majority of them being males. In most of the households, household members were found not to contribute any income towards the family expenditure. Most of the low-income earners were found to be labourers and housewives. On income, it was found out that though some households reside in estates categorized as low, middle and high-income estates they may not be actually earning those income brackets categorized as low, middle and high incomes. The study showed that although majority of the households’ budget for their family finances. They may not do this frequently; neither do they review their budgets frequently to determine whether and where adjustments need to be done. Majority of households who budget and review their budget less frequently were from low income category. Most respondents also reported that their budget seldom worked. Probably this is because even if they budget, they seldomly review their budget. Results also revealed that quite a number of the family money managers do not record nor control their expenditure. Credit use within households was high among the low-income earners. They were also found to get far behind in payments. Most households were also found to save low percentages of their total monthly income (below 20%). Generally the majority of households reported that they had financial goals. Most household money managers also reported that they communicated with others for example spouses, family members and friends on money matters. There were marked differences among low, middle and high income earners in their financial management practices namely: budgeting, review of budgeting, controlling expenditure, credit use, savings, financial goals, communication and satisfaction with financial management practices. However, no differences among low, middle and high-income earners were found in price changes, record keeping and expenditure patterns. It was evident from the results that majority of the respondents would like to learn financial management practices if given a chance. There was a strong positive relationship between age and marital status, and, age and household size. Education was also strongly related to income, household size, financial management Index, and satisfaction with financial management practices. There was also a positive significant relationship between the financial management Index and satisfaction with financial management practices. Negative significant relationships were noted between marital status and communication, household size and saving practices, income and credit use and satisfaction with financial management practices and credit use. From the findings of this study, the researcher concludes that, though households budget for their family finances, they do not review their budgets frequently neither do they keep their records of expenditure. Such tools would assist them achieve their financial goals as planned. Maybe, this is the reason why majority of the household reported that their budget seldom worked.