Measuring financial literacy: Developing and testing a measurement instrument with a selected group of South African military officers

Are South Africans financially literate, and how can this be measured? Until 2009 there was no South African financial literacy measure and, therefore, the aim was to develop a South African measurement instrument that is scientific, socially acceptable, valid and reliable. To achieve this aim a contextual and conceptual analysis of financial literacy that indicated the importance of financial literacy, the scope and impact of financial literacy education, and uncovered an acceptable financial literacy definition and its constituent concepts, was applied. A rigorous five-step process was then followed in developing a questionnaire that measures financial literacy knowledge, behaviour and attitude. This draft questionnaire was applied at the South African Military Academy (SAMA) to firstly determine and improve its validity and reliability, and secondly to measure the financial literacy levels of school leavers. Experts and users found this measurement instrument to be valid, and internal consistency levels of above .7 registered its reliability. On average the first-year SAMA students achieved scores of 55.55%, 69.85%, and 77.11% for financial literacy knowledge, behaviour and attitude. As a result it is postulated that there is now a scientific and socially relevant, valid and reliable South African financial literacy measurement instrument available.