Financial Literacy and Financial Planning: Innuendo for Financial Well-Being of Informal Sector Workers

Abstract

This research sought to find out types of financial instruments informal sector workers have towards their future; willingness to prepare for retirement; elements that encourage informal sector workers to financially plan; and how financial literacy and financial planning influence the financial well-being of informal sector workers in Cape Coast and Elmina. The study employed quantitative method, where primary data was obtained in the month of August, 2022 by serving questionnaires to 408 participants in Cape Coast and Elmina, respectively. The data was analysed using SMART-PLS to observe the relationship between the variables. Path analysis was performed by the use of structural equation model (SEM). From the analysis, the study found a positive significant relationship between financial literacy and financial planning; financial literacy and financial well-being; and financial planning and financial well-being. The study also found a significant positive relationship between number of dependents and financial planning. These imply that if informal sector workers become financially literate and financially plan more, it will help enhance their financial well-being. It is, therefore, recommended that policymakers, financial institutions, and the government promote financial literacy and financial planning of the informal sector workers and also come up with/intensify existing financial policies that would better the financial well-being of the informal sector workers even when the number of their dependents rise.