The Role of Financial Literacy in Poverty Reduction

The study examined the nexus between financial literacy and poverty reduction using the survey research method with data generated from five hundred and twenty-five households randomly selected from three densely populated sub-urban areas across three geographical regions in Nigeria. The Likert-type research instrument was used to elicit the opinion of respondents on a number of research statements and data generated from the survey was analyzed and evaluated based on the method of means. The result indicates that financial literacy affects the quality of financial decisions made by households and that poverty results from poor financial decisions. Based on the findings, the study concludes that financial literacy is a potential instrument of poverty alleviation. It is therefore recommended that financial literacy should be promoted in all its ramifications through the introduction of financial education as a part of core curriculum at all levels of the school system and as part of informal education propagated at home and other educational media. Also, it is one thing to gather knowledge but it is another to engage it productively. It is advised that wisdom be applied in household financial management to achieve prudence in the procurement and deployment of financial resources