INTERNATIONAL JOURNAL OF RESEARCH AND INNOVATION IN SOCIAL SCIENCE (IJRISS)  
ISSN No. 2454-6186 | DOI: 10.47772/IJRISS | Volume IX Issue XII December 2025  
Uncovering the Financial Literacy among Self-Employed Young  
Adults of Tangaza University in Kenya  
Chriss Buddy Fredrick1,Michel Mutabazi2  
1Tangaza University, Centre for Leadership and Management, Kenya  
2Amref International University, Department of Health Systems Management and Development, Kenya  
DOI: https://doi.org/10.47772/IJRISS.2025.91200025  
Received: 12 December 2025; Accepted: 20 December 2025; Published: 31 December 2025  
ABSTRACT  
Financial literacy plays a crucial role in self-employment and entrepreneurship. The lack of financial literacy  
presents significant obstacles to the financial stability of self-employed young adults, impeding their ability to  
effectively navigate entrepreneurship. This study assessed the level of financial literacy among self-employed  
young adults at Tangaza University, it identified the key financial opportunities and challenges faced by young  
entrepreneurs, determined the attitudes and practices of self-employed young adults, and explored the effects  
of financial literacy on the performance of the young adults' businesses. Using a descriptive cross-sectional  
research design, the study selected 60 students and 20 staff members through purposive sampling and  
employed semistructured questionnaires for data collection. The findings indicate a moderate level of financial  
literacy, with a mean score of 66%. Key challenges include exchange rates and managing tax obligations,  
while the opportunities were market access and networking. Loan accessibility was both a challenge and an  
opportunity. Young adults had positive attitudes towards continuous learning and improvement, financial  
empowerment and were optimistic about self-employment. Financial literacy had a significant effect on the  
performance of their enterprises. Recommendations include targeted interventions to enhance specific financial  
competencies such as auditing, financing mechanisms, and tax management. Similar longitudinal action  
research is recommended in other settings such as rural areas.  
Keywords: Self-employment, Young adults, Financial Literacy, Generation Z, Performance  
INTRODUCTION  
Financial literacy is acknowledged worldwide as a critical life skill, necessary for managing the complexities  
of the modern financial environment. According to the Global Financial Literacy Excellence Centre (GFLEC,  
2021), financial literacy equips individuals with the ability to make informed financial decisions, ranging from  
budgeting to investing. The World Bank (2016, 2019) underscores the worldwide importance of financial  
literacy in promoting economic development and alleviating poverty. It is imperative to recognize that  
financial literacy is not solely a Kenyan issue but a worldwide concern. Small businesses, acknowledged as  
essential to the Kenyan economy, have generated employment opportunities and contributed to GDP growth  
for numerous years.  
Many small business owners in Kenya fall into the self-employed category. Notably, there has been a  
noticeable and consistent decrease in new business ventures since the economic challenges of recent years.  
Conversely, there has been a notable surge in self-employment, with many Kenyans transitioning from formal  
employment to self-employment. In recent employment statistics, it was found that from 2017 to 2020, 18  
million Kenyans, accounting for 25% of the workforce, transitioned from traditional full-time employment to  
working for themselves (Kenya National Bureau of Statistics, 2021). This change led to a rise in the number of  
self-employed individuals, reaching around 30 million, which constitutes roughly one-fourth of Kenya's labour  
force (Kenya National Bureau of Statistics, 2021).  
In the context of Africa, the need for financial literacy is even more pronounced. The African Development  
Bank (AfDB, 2017) has highlighted the importance of financial literacy to promote economic growth and  
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development across the continent. The challenges and opportunities faced by self-employed young adults in  
Kenya are not unique; they resonate with many other African nations.  
The shift towards self-employment in Kenya initially stemmed from widespread job layoffs and high  
unemployment rates during economic downturns. The ascent of the digital economy, specifically the gig  
economy, has further propelled self-employment in Kenya. Projections indicate that traditional employment  
might become a minority by 2027, with the gig economy expected to influence the Kenyan workforce  
significantly.  
In Kenya, the matter of financial literacy among self-employed young adults holds particular regional  
significance. The National Strategy for Financial Education in Kenya acknowledges the necessity of improving  
financial literacy among the youth. The specific circumstances and challenges met by self-employed young  
adults in Kenya are closely linked to the national economic and educational context.  
Recently, the transition from conventional employment to self-employment in Kenya has been significantly  
driven by the inclination of 56% of Generation Z individuals toward independent work rather than traditional  
employment (Kenya Youth Employment Report, 2022). Moreover, the elderly population in Kenya is  
increasingly embracing self-employment as a source of income generation (Kenya Elderly Employment  
Survey, 2023).  
The increasing trend of self-employment among young adults in Kenya necessitates an understanding of their  
financial literacy levels. Despite the critical role of small businesses in the Kenyan economy, many young  
selfemployed individuals lack essential financial knowledge, affecting their business success and personal  
financial stability.  
Purpose and Objectives  
The purpose of this study was to investigate the level of financial literacy among self-employed young adults  
at Tangaza University and how financial literacy affects their business performance and overall economic  
stability. By focusing on a specific demographic within a university setting, the research seeks to provide  
tailored recommendations for enhancing financial literacy among young entrepreneurs.  
The following objectives drive this research:  
1.  
2.  
To assess the level of financial literacy among self-employed young adults at Tangaza University.  
To identify the key financial opportunities and challenges faced by self-employed young adults at  
Tangaza University.  
3.  
4.  
To determine the attitudes and practices of self-employed young adults at Tangaza University towards  
financial literacy and self-employment.  
To explore the effect of financial literacy among self-employed young adults at Tangaza University on  
the performance of their businesses.  
LITERATURE REVIEW AND THEORETICAL FRAMEWORK  
Financial literacy encompasses a multifaceted understanding comprising knowledge, abilities, attitudes, and  
actions, enabling individuals to make informed financial decisions and achieve their financial objectives  
(OECDINFE, 2012). Assessing financial literacy involves gauging the depth of economic information, the  
frequency and quality of monetary behaviour, and the level of confidence and satisfaction in managing  
financial matters among individuals (Huston, 2010). Beyond being a personal attribute, financial literacy is  
shaped by social and institutional factors, including the availability, accessibility, and affordability of financial  
products and services, and the legal, regulatory, and educational frameworks governing the financial system  
(Atkinson and Messy, 2012).  
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Self-employment represents a form of entrepreneurship where individuals work for themselves rather than  
being employed by others. People may choose self-employment for various reasons, including necessity,  
opportunity, passion, or a desire for a specific lifestyle (GEM, 2019). There are different types of self-  
employments, such as solo self-employment, dependent self-employment, and hybrid self-employment. These  
classifications depend on the level of autonomy, dependence, and diversification of income sources  
(Eurofound, 2017).  
Engaging in self-employment can have both beneficial and detrimental effects on individuals and society. On  
the positive side, it can lead to increased income, empowerment, innovation, and the creation of new jobs.  
Conversely, it may result in reduced social protection, security, and overall stability (OECD, 2017).  
Financial situation is shaped by various personal, background, and environmental factors, including age,  
gender, education, culture, social norms, and economic conditions (OECD, 2018). These elements contribute to  
individuals' perceptions of their financial situation, influencing their sense of financial security and satisfaction  
(CFPB, 2015). While acknowledging the broader context of financial literacy, this research emphasizes the  
specific mechanisms through which financial literacy and self-employment influence economic outcomes  
without delving into the aspects of financial situation itself.  
The relationship between financial literacy, self-employment, and financial success is intricate and dynamic,  
involving multiple causal and feedback mechanisms, moderating and mediating variables, and direct and  
indirect effects. Various theoretical models and frameworks, such as human capital theory, the resource-based  
view, social cognitive theory, and the capability approach, have been proposed to explain and predict this  
relationship.  
However, these models and frameworks often have limitations, such as being overly general, overly specific,  
too linear, or too static, and may not adequately capture the nuances and variations of this relationship in  
different contexts and populations. Hence, there is a requirement for a more thorough and context-specific  
theoretical framework to direct empirical exploration into how financial literacy, self-employment, and  
financial achievement intersect among self-employed young adults in Kenya.  
Klapper and Lusardi (2015) in Italy conducted a noteworthy study on financial literacy among young people in  
Europe. The research aimed to assess financial literacy levels among young adults aged 18 to 34 in Italy. The  
results uncovered a troubling deficiency in financial knowledge, as many participants showed a poor grasp of  
fundamental financial principles like compound interest and inflation. The research underscored the necessity  
for tailored financial education initiatives aimed at enhancing the financial literacy of young Italians. It  
emphasized the potential advantages of enhanced financial knowledge in facilitating informed financial  
choices and fostering financial stability over time.  
In the United Kingdom, a study by Fernandes, Lynch, and Netemeyer (2014) investigated financial literacy  
among university students. The research found that a substantial number of students exhibited inadequate  
financial literacy, particularly in areas related to credit management and asset knowledge. The research  
highlighted the significance of incorporating financial education into school curricula to provide young people  
with essential skills for navigating intricate financial environments.  
These European studies collectively underscore the challenges young people face in acquiring essential  
financial knowledge. They underscore the urgent requirement for specific interventions and educational  
programs aimed at enhancing financial literacy among young adults. This empowerment will enable them to  
make informed financial decisions and nurture their long-term financial health (Klapper & Lusardi, 2015;  
Fernandes et al., 2014).  
Specific studies on financial literacy among segments of young people in Africa are limited. However, one  
study that provides insights into financial literacy among African youth is the Global Financial Literacy  
Excellence Centre’s (GFLEC) Financial Literacy around the World study, which included data from South  
Africa. The findings indicated a substantial gap in financial literacy, with a significant portion of the surveyed  
population lacking basic financial knowledge. Key areas of concern included understanding interest rates,  
inflation, and risk diversification. The research stressed the importance of tailored financial education  
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programs to enhance the financial literacy of young people in South Africa, thereby improving their capacity to  
make well-informed financial choices and attain financial stability (GFLEC, 2021).  
Given the limited specific studies available, there is potential for more comprehensive research on financial  
literacy among young people in various African countries to address the unique challenges and opportunities  
within the continent. Continued efforts in this direction could contribute significantly to the development of  
customized financial education programs that meet the specific requirements of African youth.  
Specific studies on financial literacy among young people in Kenya are also limited. However, one notable  
study is "Financial Literacy and Wealth Building among Youth in Nairobi, Kenya" by Mbugua, Ritter, and  
Churchill (2018). The study engrossed in assessing the financial literateness heights and wealth-building  
behaviours of youth in Nairobi. Findings indicated that a substantial portion of the surveyed youth exhibited  
low points of financial literacy, chiefly in areas related to budgeting, savings, and investment. The study  
revealed a correlation between higher financial literacy and more positive wealth-building behaviours.  
Additionally, it identified factors such as educational attainment and parental influence as significant  
determinants of financial literacy among the youth in Nairobi. The researchers highlighted the importance of  
developing specialized financial education initiatives that target the challenges and knowledge deficiencies  
observed among youth in Kenya. They recommended that these interventions prioritize improving financial  
literacy to empower young individuals to make informed financial decisions and enhance their overall  
financial health (Mbugua et al., 2018).  
As far as the theoretical framework is concerned, this study is grounded on the Capability Approach Theory  
and the social cognitive theory.  
The Capability Approach, as articulated by Sen (1999) in Development as Freedom, serves as the foundational  
theory shaping this study. This approach posits that development should focus on enhancing individuals'  
capabilities to lead lives they value, achieved through expanding freedoms and opportunities (Sen, 1991). In  
the context of this study, within the capability approach, financial literacy is conceptualized as a core capability  
enabling individuals to make informed financial decisions and attain their financial goals. It strengthens  
individuals' capacity to effectively manage their finances, make sound financial choices, and navigate  
economic challenges.  
Self-employment is conceptualized as a functioning within the capability approach, representing the actual  
achievement or outcome of individuals who work for themselves rather than for an employer. It encompasses  
income generation, empowerment through entrepreneurial activities, innovation, and job creation. Financial  
literacy and self-employment are interconnected in their influence on each other and on broader outcomes.  
Financial literacy enhances the skills and attitudes necessary for effective financial management among  
selfemployed individuals. Self-employment, in turn, provides economic empowerment and opportunities that  
may influence financial behaviour and attitudes. External and contextual variables such as accessibility to  
financial services, regulatory frameworks, and economic conditions, play roles as mediators and moderators in  
influencing the connection between financial literacy, self-employment, and broader outcomes.  
In addition to the capability approach, Social Cognitive Theory (Bandura, 1986) provides insights into the  
cognitive, behavioural, and environmental factors that influence individuals' financial decisions and  
behaviours. Social Cognitive Theory emphasizes that individuals' financial behaviours and attitudes are shaped  
by observational learning, personal factors (such as self-efficacy in financial matters), and environmental  
influences (such as social norms and economic opportunities). Financial inclusion theory highlights how social  
and environmental factors can either facilitate or impede individuals' access to and usage of financial services,  
thereby influencing their inclusion or exclusion from financial systems. Social Cognitive Theory enriches the  
understanding of how financial literacy and self-employment behaviours are learned, reinforced, and  
influenced by social interactions, educational opportunities, and environmental conditions.  
The capability approach and Social Cognitive Theory provide a robust framework for exploring the complex  
interplay between financial literacy, self-employment, and outcomes among self-employed young adults in  
Kenya.  
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The conceptual framework employed in this study is informed by the OECD/INFE Toolkit for Assessing  
Financial Literacy and Financial Inclusion (2018), which defines the essential variables and their  
interrelationships.  
Independent Variables  
Intermediate Variable  
Dependent Variable  
Socio-Demographic  
characteristics  
Financial literacy  
Performance  
Business  
of  
Age  
Religion  
Gender  
Occupation  
Education  
Family  
Knowledge  
Skills  
Attitudes  
Practices  
Financial  
Non-financial  
background  
Marital status  
Figure 1: Conceptual Structure  
The Figure 1 above illustrates the intricate connections between socio-demographic variables, financial  
literacy, and business performance. It offers a structured view to comprehend the hypothesized relationships  
and pathways outlined in this study, enhancing clarity in understanding their interplay.  
METHODOLOGY  
This study adopted the descriptive cross-sectional research design (Mugenda and Mugenda, 2019). The study  
was conducted at Tangaza University, located in Nairobi, Kenya. This institution was chosen for its distinctive  
setting, characterized by a diverse student population and the fact that no such study had been done there  
before. This setting offered crucial insights into the financial challenges faced by self-employed young adults  
in a university environment. The unique demographic and socioeconomic background of Tangaza University's  
student body offered a rich field for examining the interaction between financial literacy, self-employment  
dynamics, and business education.  
The target population for this study included self-employed young adults currently enrolled or working at  
Tangaza University. This particular demographic was selected to facilitate a thorough exploration of how  
financial literacy, dynamics of self-employment, and financial commercial skills interact within this specific  
group. According to statistics from the Tangaza Student Registration Office, the university hosts approximately  
1,800 students across various institutes and disciplines, along with a staff population of about 300, comprising  
both lecturers and administrative personnel.  
The sampling strategy employed a purposive selection method and ensured equal gender representation of  
40/40, targeting 20 students from each of the three main faculties—School of Theology, School of Arts and  
Social Sciences, and School of Education—resulting in 60 students. Additionally, 20 staff members were  
included, bringing the total sample size to 80 participants. This approach-facilitated representation from  
diverse academic disciplines and staff categories, thereby enabling a comprehensive exploration of financial  
literacy across various groups.  
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The purposive sampling was structured as follows:  
Faculty  
Number  
of  
participants  
School of Theology  
20  
20  
20  
20  
80  
School of Arts and Social Sciences  
School of Education  
Staff  
Total  
Table 1  
Inclusion criteria involved students and staff of Tangaza University aged between 18 and 35 years. Exclusion  
criteria were non-university individuals and those outside the specified age range.  
Information was gathered through a well-organized questionnaire designed for quantitative data and  
semistructured interviews for qualitative insights. The questionnaire incorporated items from established  
financial literacy scales, ensuring the reliability and relevance of the data collected.  
The questionnaire was tested in a pilot study with a small sample of self-employed students to assess its clarity,  
relevance, and effectiveness. Feedback from this pilot test led to adjustments that enhanced the instrument's  
validity, ensuring it accurately measured what it was intended to. Test-retest reliability was assessed by  
administering the questionnaire to a subset of participants twice, with an interval between administrations. The  
consistency of responses was analysed to ensure the reliability of the instrument, confirming that it produced  
stable and consistent results over time.  
The research utilized a mixed-methods strategy to gather data, blending self-administered electronic surveys  
with in-person semi-structured interviews. The electronic distribution of questionnaires leveraged a versatile  
and widely accessible platform, facilitating a user-friendly experience for participants. This method ensured  
convenience and efficiency in collecting data from self-employed young adults. Furthermore, in-person  
semistructured interviews were conducted to delve into the intricacies of participants' financial journeys,  
enhancing a holistic grasp of the distinct obstacles and achievements encountered by this group.  
After the questionnaires were filled out, a thorough editing phase was carried out to ensure accuracy and  
uniformity. The gathered data underwent analysis using SPSS V.20.0. Mean scores and standard deviations  
were calculated based on a Likert-type scale, and the findings were presented using tables and graphs to  
facilitate comprehensive analysis and comparison. The qualitative data collected from interview guides was  
analysed using conceptual content analysis, a method suitable for systematically and objectively identifying  
specific message characteristics. As delineated by Creswell (2014), content analysis involves making  
inferences by systematically discerning trends within the data.  
Ethical considerations were crucial throughout the study. All participants provided informed consent, and  
assurances of confidentiality and anonymity were upheld. The study followed ethical guidelines to safeguard  
the rights of all participants involved. This included safeguarding the privacy of participants' data and ensuring  
that their participation was voluntary and based on a clear understanding of the study's objectives.  
RESULTS  
4.1 Social-Demographic Characteristics  
Table 2 below offers a thorough summary of the demographic profile of the participants. It highlights key  
aspects such as age distribution, gender, academic program enrolment, enterprise management status, religious  
affiliation, marital status, and place of residence.  
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Demographic Category  
Frequency  
Percentage (%)  
Age  
18-24  
25-30  
31-35  
Total  
30  
29  
21  
80  
37.5  
36.3  
26.3  
100  
Gender  
Male  
Female  
Total  
40  
40  
80  
50.0  
50.0  
100  
Academic Program  
Certificate  
2
2.5  
Diploma  
13  
55  
8
16.3  
68.8  
10.0  
97.5  
Bachelor's Degree  
Postgraduate Diploma/Masters/PhD  
Total  
78  
Are you presently managing your enterprise on your own?  
Yes  
No  
Total  
50  
28  
80  
62.5  
37.5  
100  
Religion  
Christian  
Muslim  
73  
6
91.3  
7.5  
Others  
1
1.3  
80  
100  
Total  
Marital Status  
Single  
Married  
52  
27  
79  
65.0  
33.8  
98.8  
Total  
Rural or Urban residence  
Rural  
Urban  
19  
61  
80  
23.8  
76.3  
100  
Total  
Table 2  
The demographic summary indicates that a significant portion of respondents, specifically 59 (73%), were  
aged between 18 and 30. The gender distribution was purposively balanced. The majority were enrolled in a  
Bachelor's Degree program, predominantly self-employed, primarily identified as Christian, and  
predominantly lived in urban areas.  
4.2 Financial Literacy Assessment  
Table 3 below presents an evaluation of the respondents' self-assessed financial literacy levels. It provides  
insights into how individuals rate their financial knowledge and skills on a numerical scale from 1 to 10.  
Category  
Frequency  
Percentage (%)  
How would you rate your overall financial literacy?  
1
2
3
3
0
3
3.8  
0
3.8  
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4
3
3.8  
5
13  
8
16.3  
10.0  
26.3  
26.3  
5.0  
6
7
21  
21  
4
8
9
10  
4
5.0  
Total  
80  
100  
Table 3  
The overall mean score on financial literacy was found to be 6.6 out of 10, that is 66%.  
Financial Skills  
Table 4 presents respondents' levels of confidence across various financial skills. It offers a detailed view of  
their self-assessment in areas such as budgeting, saving, investing, among others.  
Statement  
Agree  
54(67.5%)  
Neutral  
Disagree  
8(10.0%)  
10(12.5%)  
8(10.0%)  
11(13.8%)  
5(6.3%)  
Total  
I am confident with Budgeting  
I am confident in Saving  
I am confident in Investing  
I am confident in Debt Management  
I am confident with Financing  
18(22.5%)  
25(31.3%)  
23(28.8%)  
32(40.0%)  
46(57.5%)  
31(38.8%)  
80(100%)  
80(100%)  
80(100%)  
80(100%)  
80(100%)  
80(100%)  
45(56.3%)  
49(61.3%)  
37(46.3%)  
29(36.3%)  
I
am  
confident  
in  
Reading  
and 37(46.3%)  
12(15.0%)  
interpreting financial statements  
I am confident with Auditing  
23(28.8%)  
38(47.5%)  
34(42.5%)  
19(23.8%)  
11(13.8%)  
80(100%)  
80(100%)  
I
am  
confident  
in  
my  
Resource 35(43.8%)  
mobilisation skills  
I am confident in my accounting skills  
40(50.0%)  
30(37.5%)  
10(12.5%)  
80(100%)  
Table 4  
Confidence levels vary across financial skills, with budgeting being the most confident area and auditing being  
the least.  
Formal Financial education or training  
Table 5 presents the respondents' exposure to formal financial education or training. It provides insights into  
whether the participants have received structured financial learning.  
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Statement  
Yes  
No  
Total  
Have you ever received any formal financial education or 31(38.8%)  
training?  
49(61.3%)  
80(100%)  
Table 5  
Notably, only 38.8% have received formal financial education or training.  
4.3 Financial Challenges and Opportunities  
The following Table 6 outlines the key financial challenge faced by respondents as well as the key opportunity  
they have identified. This data sheds light on the financial landscape encountered by the participants.  
Main financial challenge experienced  
Accessing loans  
Frequency  
Percentage (%)  
18  
22  
12  
18  
9
22.5  
27.5  
15.0  
22.5  
11.3  
1.3  
Taxation  
Inflation  
Dollar rates  
Lack of knowledge of financial matters  
Others, Specify  
1
Total  
80  
100  
Main opportunity identified  
Loan accessibility  
Subsidies  
17  
4
21.3  
5.0  
Taxation relaxation  
Availability of market  
Cheap labour  
4
5.0  
17  
10  
15  
2
21.3  
12.5  
18.8  
2.5  
Networking and partnerships  
Government contacts  
Supportive community or ecosystem  
Flexible work arrangements  
Others, Specify  
3
3.8  
7
8.8  
1
1.3  
Total  
80  
100  
Table 6  
Challenges predominantly revolve around taxation, loan accessibility, and fluctuations in rates. Conversely,  
opportunities included market availability and networking and partnerships.  
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4.4 Attitudes and Practices  
Table 7 below provides insights into respondents' attitudes and practices related to financial literacy and  
selfemployment. It highlights varying perspectives, such as optimism about self-employment and continuous  
learning, alongside financial practices like budgeting and capital budgeting. These attitudes and practices are  
shown to have a significant impact on financial decision-making processes.  
The main attitudes towards financial literacy and self-employment  
Frequency  
Percentage (%)  
Financial literacy is difficult to have  
4
5.0  
Financial literacy is not important for the success of self-employment  
3
3.8  
I am optimistic about self-employment  
28  
2
35.0  
2.5  
Financial literacy is for financial people only  
Self-employment is less important than a job  
1
1.3  
Continuous learning and improvement  
23  
5
28.8  
6.3  
Seeking professional advice  
Building financial resilience  
2
2.5  
Embracing financial empowerment  
10  
2
12.5  
2.5  
Incorporating financial education into business practices  
Total  
80  
100  
Main financial practice  
Budgeting  
47  
18  
8
58.8  
22.5  
10.0  
7.5  
Capital budgeting  
Reporting  
Audit  
6
Others, Specify  
1
1.3  
Total  
80  
100  
Influence of attitudes and practices on Financial Decision-Making  
1
0
0
2
0
0
3
29  
31  
20  
80  
36.3  
38.8  
25.0  
100  
4
5
Total  
Table 7  
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Respondents expressed varied attitudes towards financial literacy and self-employment, with optimism and  
continuous learning being prominent. Financial practices include budgeting, capital budgeting, and reporting,  
while attitudes clearly influenced financial decision-making with an average score of about 4/5.  
4.5 The Effect of Financial Literacy on Performance of Their Businesses  
Table 8 shows the perceived effect of financial literacy on enterprise performance among respondents,  
detailing frequencies, and percentages of varying perceptions. It underscores the significant role financial  
literacy is perceived to play in business outcomes.  
Impact of Financial Literacy on Enterprise Performance  
Frequency  
Percentage (%)  
It does not affect at all  
Somehow affects  
Extremely affects  
Total  
7
8.8  
38  
35  
80  
47.5  
43.8  
100  
Table 8  
Majority of respondents reported the considerable effect of financial literacy on enterprise performance,  
highlighting its crucial role.  
DISCUSSION  
The study aimed to evaluate the level of financial literacy among young adults who are self-employed. Results  
indicated a moderate level of financial literacy, with a substantial number rating their overall financial  
knowledge between six and eight. However, variations in confidence levels across specific financial skills were  
observed. These discrepancies highlight the need for targeted interventions to enhance specific competencies.  
For instance, while many respondents felt confident in basic budgeting, fewer were comfortable with more  
complex tasks such as investment decisions or understanding financial statements. This observation aligns with  
previous studies (Lusardi & Mitchell, 2016; Hastings et al., 2013).  
The study identified several financial challenges faced by self-employed young adults. Key issues included  
difficulties accessing loans, high interest rates, and taxation burdens. These obstacles impede the economic  
stability and growth potential of small enterprises. Specifically, the stringent requirements for securing loans  
were a significant barrier, as many young entrepreneurs lack the collateral or credit history needed to qualify  
(Block & Wagner, 2020).  
Conversely, the research also highlighted opportunities that these young adults can leverage. Market  
availability and networking emerged as critical opportunities for fostering entrepreneurial success. The  
presence of supportive networks and mentorship programs can significantly enhance business growth by  
providing access to resources, knowledge, and market linkages. For example, networking events and industry  
associations were noted as valuable platforms for business development (Shane & Venkataraman, 2020).  
Respondents exhibited a mix of perspectives towards financial literacy and self-employment. Many  
respondents expressed optimism and a willingness to learn, recognizing the importance of financial literacy in  
managing their businesses effectively. However, some held negative views, perceiving financial literacy as  
complex and challenging. This duality in attitudes underscores the need for targeted educational initiatives that  
are both engaging and accessible (Coleman, 2013).  
The study revealed that financial practices among respondents included budgeting, capital budgeting, and  
reporting. However, the depth and effectiveness of these practices varied significantly. For instance, while  
most participants engaged in basic budgeting, fewer implemented sophisticated financial planning or  
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performance monitoring techniques. This gap indicates a need for practical training and tools to enhance  
financial management skills among young entrepreneurs (Churchill, 2019).  
The research investigated the link between financial literacy levels and business performance, uncovering a  
notable connection between the two. Most respondents attributed either a moderate or an extreme influence of  
financial literacy on their enterprise performance. Enterprises demonstrating higher levels of financial literacy  
exhibited superior performance, characterized by enhanced financial management, strategic planning, and  
effective risk management practices (Lusardi & Tufano, 2015; Kantis et al., 2014).  
The results indicated that businesses whose owners had higher financial literacy levels exhibited more robust  
health, characterized by better cash flow management, profitability, and growth. The suggests that enhancing  
financial literacy could be a strategic lever for improving business outcomes among self-employed young  
adults as seen in previous studies (CFPB, 2015).  
CONCLUSION AND RECOMMENDATIONS  
The research revealed that the participants exhibit a moderate level of financial literacy with a mean score of  
66%. However, there are specific areas, such as investing and debt management, where confidence and  
competence are relatively low. This indicates a need for focused educational efforts to bolster these particular  
skills.  
Participants identified several financial challenges, including limited access to loans and heavy tax burdens.  
Conversely, opportunities such as the availability of markets for goods and services were also noted. These  
findings suggest a need for policies and programs that can mitigate financial barriers and leverage available  
opportunities to support young entrepreneurs.  
The study revealed that young adults had positive attitudes towards continuous learning and improvement,  
financial empowerment and were optimistic about self-employment. Positive practices included budgeting,  
saving, investing, and accounting while more sophisticated financial planning practices were less common. A  
significant number of self-employed young adults were not confident with auditing, accounting, reading and  
interpreting financial statements, debt management, and resource mobilization. Most young adults confirmed  
that financial literacy had effects on the performance of enterprises.  
Based on the findings, the following recommendations are proposed to enhance financial literacy and support  
the entrepreneurial success of self-employed young adults at Tangaza University.  
Tangaza University should develop and offer tailored financial literacy programs focusing on specific  
competencies such as auditing, investing and debt management, where most young adults lack confidence.  
These programs should be designed to meet the unique needs of young entrepreneurs and be integrated into the  
university's curriculum.  
The government should provide opportunities for self-employed young people to access credit and should  
create a tax regime that enables young entrepreneurs to succeed. The university should initiate longitudinal  
action research to monitor the enduring effects of financial literacy interventions on the sustainability of  
businesses. This will provide valuable data to inform and improve future financial literacy programs and  
initiatives, ensuring they effectively meet the needs of young entrepreneurs.  
The findings presented in this chapter illuminate the complex dynamics of financial literacy among  
selfemployed young adults and underscore its significant effects on entrepreneurial pursuits. Future research  
could explore the longitudinal impacts of financial literacy programs to assess their long-term efficacy in  
improving business performance. Moreover, exploring how digital financial tools contribute to improving  
financial literacy could offer valuable insights into contemporary educational strategies.  
Overall, the study underscores the necessity for targeted financial literacy programs tailored to the needs of  
selfemployed young adults. By addressing identified gaps and leveraging opportunities, these programs can  
foster a more financially literate and successful entrepreneurial youth population in Nairobi County and in the  
country at large.  
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