Increase of Financial Literacy and Entrepreneurship Motivation for Micro, Small, and Medium Enterprises Through Family Education, Formal Education and Social Environment

Abstract

Everyone has their own financial goals. In order to reach those goals, financial preparation is needed. Financial preparation moreover should be possessed by micro, small, and medium enterprises due to their uncertain income, beside of they should pay for labor expense. In order to prepare the financial, they need sufficient financial literacy so that they can plan the financial properly including choose appropriate investment strategy that is fitted with the personal risk profile. The financial challenge for micro, small, and medium entrepreneurs is because they have greater financial risk due to unstable income. Beside that, entrepreneurs also have temptation of consumptive lifestyle. Consumptive behavior is a common problem in cities. Various facilities available on big cities invite the citizens to spend their money for excessive purchasing. Consumptive behavior happened when a person spend his money to purchase nonproductive goods excessively only to satisfy short term desire. In order to protect themselves from consumptive lifestyle temptation, micro, small, and medium entrepreneurs should have sufficient financial literacy to realize their financial needs in the future. Moreover they have additional financial goal which is to develop their business. The purpose of this research is to discover the influence of family education, formal education in higher education and social environment on financial literacy of micro, small, and medium enterprises. Also to know whether those effects also influence entrepreneurship motivation. The sample used on this research is 300 micro, small, and medium entrepreneurs using purposive sampling method. The research applied multiple linear regression to identify the influence. The results showed that family education, formal, education, and social environment simultaneously and partially influence financial literacy and entrepreneurship motivation, and also financial literacy influence entrepreneurship motivation.