Financial literacy and behaviour among the black community in Nelson Mandela Bay

South Africa has a poor savings culture. This means that South Africans do not save enough income for a later stage resulting in a relative large number of South African consumers living in debt and using more credit than what they have saved. Almost half of the South African consumers were in debt during the year 2010 and had a negative credit record. Thus consumers in South Africa are not living only in poor conditions but are also open to exploitation by the informal economy. Lenders in the informal economy are known as ‘loan sharks’ because they charge consumers interest rates of between 40 and 60 percent. This is because low income consumers have less access to savings products and credit facilities from the formal economy. These factors are more prevalent among the black consumers, as they use informal credit providers. The sources of credit for black consumers in the informal market are social networks such as friends and family. Furthermore, black consumers have low levels of knowledge regarding issues such as bad debts. Black consumers are also more likely to experience financial problems than other racial groups. This means that black consumers may need to improve their levels of financial knowledge, financial skills and adopt positive financial attitudes to manage their financial problems without obtaining more debt. Thus, financial education may be the way of ensuring that black consumers improve their financial decision-making ability and their financial behaviour. Therefore, the purpose of this study is to investigate the relationships between financial literacy, financial inclusion and financial behaviour among the black community in Nelson Mandela Bay. To achieve the purpose of this study, a literature review was conducted on financial literacy, financial education, financial inclusion and financial behaviour. This was followed by an empirical investigation to establish the relationships between financial literacy, financial inclusion and financial behaviour. In this study, a quantitative research approach was adopted as necessitated by the purpose of this study and also to be able to collect a vast amount of perceptions from the black community. The sample of this study consisted of low to middle income black consumers living in Nelson Mandela Bay