CHAPTER II

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter provides thorough related literature and studies that provide a strong

structure in order to support, cover, and obtain knowledge for the development of the study.

RELATED LITERATURE

Budgeting is essential for someone's financial security, helping to ensure people can pay

everyday expenses such as lease, education cost, pell grants, debt, and leisure. According to My

Great Lakes (2015), it is a proactive approach to financial organization, where allows planning

for both short- and long-term expenses. It ensures that people don't spend more than they earn.

Budgeting is a simple, effective way for people with various incomes and expenses to keep their

finances in order.

Budgeting is vital for students because it allows them to plan for unforeseen expenses and

school costs. Budgeting aids students in achieving their academic and financial objectives

(Federal Student Aid, 2014). The first step in making a budget plan to make students' aspirations

a reality is to write them down. It necessitates difficult decision-making, but creating goals will

make the difficult decisions a little simpler. Students should define short-, medium-, and long-

term goals and measure their progress toward reaching them as they develop a budget.

However, budgeting allowances and expenses are one of the difficulties that students

encounter. This is especially problematic when a budget item's estimated value varies (Stollak,

2011). Several things influence how they budget their money, including age, personality
attributes, and expertise (Norvilitis et al., 2006). Students are less likely to be in debt if they have

a better understanding of their financial responsibilities and status. Micomonaco (2003), in

"Borrowing Against the Future: Practices, Attitudes, and Knowledge of Financial Management

among College Students," stated that many students do not create a budget plan or calculate

credit card payments based on their actual spending, which makes problems on their budgeting.

Thus, many students should have proper ways of budgeting to avoid overspending.

Assessing student behavior is a simple but effective way for students to reduce their

spending and improve their budgeting (IJCRT, 2020). Students can accomplish this by creating a

behavior chart. According to the International Journal of Creative Research Thoughts (IJCRT),

this behavior chart is a tool for keeping a consistent record of the students' behavior and creating

reinforcement for the same kind of behavior. When it comes to handling and adjusting student

behaviors, these charts are invaluable. It is critical that university students learn about finance

and budgeting throughout their adolescence phase, as this is their best chance of success in later

life. However, building a proper budgeting knowledge base is insufficient. Consistent success

necessitates a healthy and positive attitude and supportive parents who encourage a responsible

financial attitude.

Kidwell and Turrisi (2004) proposed that budgeting intent is ascertained by attitude,

subjective norm, perceived control, affect, and past behavior by combining the Theory of

Planned Behavior with two additional cognitive constructs. A few other researchers, such as

Sandberg and Conner (2008), contend that affect, or an individual's feelings about the intended

behavior, is a great indicator of intent to obtain the behavior, but this is controversial in the

literature. Kidwell et al. (2003) discover a weakly substantial inverse relationship among

budgeting intent and respond to the statement, "It makes me feel good to have a budget of my
finances," implying that budgeting is interpreted as an undesirable task. Kidwell and Turrisi

categorized affect about budgeting as positive or negative. Positive affect is inconsequential, but

negative affect conveyed as worry or concern strongly influences budgeting intent.

RELATED STUDIES

One of the most persistent challenges that students face today is the enormous difficulty

in controlling their budgets. The current level of the budgeting problem is, once again, not

completely figured out and resolved. As a result, many studies have focused on determining

students' budgeting ways and behavior. Some researchers discovered the factors and effects of

improper budgeting or spending in their lives.

In his study, Armstrong Opoku (2015) discovered that senior high students in Kumasi

Metropolis were less knowledgeable and inexperienced with personal financial planning and

budgeting issues. Senior high school students' incompetence limits their ability to make sound

financial decisions making them more likely to face financial problems in the real world. Minor

financial issues can become overwhelming due to a lack of financial literacy, leading to financial

stress, affecting other aspects of life such as personal relationships or work performance.

In studying students' spending habits in Miri, Jin Jin (2017) found that the students prefer

to spend their own money on food because they are students who require various foods to

survive in the academic workloads. The researcher also revealed that the gender preferences

were greatly affected the budgeting of students' allowance, where the proportion of young female

respondents end up spending money on shopping because it is a woman's thing, they enjoy

exploring new things, and shopping can help them feel better when they are sad. On the other
hand, a proportion of young male respondents love spending money on entertainment over other

activities because men prefer to play games, and half of those who play video, computer, or

online games believe that it keeps them from studying.

According to Singh et al. (2020), their study of Student Budgeting and Spending

Behavior depicts a clear picture: more than half of the students in 138 universities in Delhi and

Mumbai in India are living on a relatively limited budget to pay their bills and support their

lifestyle, which often goes unmaintained. The majority of these students' spending is on their

lifestyle and entertainment, which impacts their allowance budgeting. The researchers discovered

that students consider dining out to be their most unavoidable expense, preceded by movies.

However, an intriguing finding was also revealed: when faced with a budget deficit, more

students reduced their daily expenditure than those who asked their parents for money. Students

also prefer to save a portion of their monthly allowance, usually in cash or in the bank,

demonstrating good budgeting habits.

Another study conducted by Jeevitha and Kanya (2019) supported student budgeting and

spending behavior analysis. Their research looked into why, where, what, and how students

budget their money in India as a result of the cultural shift to westernization and the introduction

of malls. Jeevitha and Kanya also investigated the various saving and spending options available

to students and how they manage their budgets with limited allowance and high expenses in the

city of Coimbatore. The researchers found that students are portrayed as financially secure and

emotionally free in the West area, but this is not the case in entire India. Even after being

financially completely reliant on parents until the age of 15-25, there is a significant difference in

students' spending and budgeting habits. They have become more brand-conscious and have

begun to spend more money on lifestyle and entertainment, affecting their budgeting.
REFERENCES:

Federal Student Aid. (2014). Budgeting. Retrieved from

[Link]

International Journal of Creative Research Thoughts (2020). Student Budgeting and Spending

Behaviour. An International Open Access, Peer-Reviewed, Refereed Journal, 8(7), 2426–

2434.

Jeevitha, P. & Kanya, P.R. (2019). A Study on Saving and Spending Habits of College Students

with reference to Coimbatore City. International Journal of Research and Analytical

Review. - Coimbatore: International Journal of Research and Analytical Reviews, 2019. -

1: Vol. 6. - pp. 463z-466z

Jin Jin, I.T. (2017). A Study of Spending Habits Among College Students in Miri. [Student's

Thesis, Twintech International University College of Technology, KL]

(2017/APR/TIUCT/BBAFA/02)

Kidwell, B., Brinberg, D., & Turrisi, R. (2003). Determinants of money management behavior.

Journal of Applied Social Psychology, 33(6), 1244-1260.

Kidwell, B., & Turrisi, R. (2004). An examination of college student money management

tendencies. Journal of Economic Psychology, 25(5), 601-616.

Micomonaco, J.P. (23 April 2003). "Borrowing Against the Future: Practices, attitudes, and

knowledge of financial management among college students." Virginia Polytechnic

Institute and State University.

[Link]

Norvilitis, J. M., Merwin, M. M., Osberg, T. M., Roehling, P. V., Young, P., & Kamas, M. M.

(2006). Personality factors, money attitudes, financial knowledge, and credit card debt in

college students. Journal of Applied Social Psychology, 36, 1395-1413. Quinn

Opoku, A. (2015). Financial Literacy Among Senior High School Students. [Master's Thesis]

Kwame Nkrumah University of Science and Technology.

Sandberg, T., & Conner, M. (2008). Anticipated regret as an additional predictor in the theory of

planned behavior: A meta-analysis. British Journal of Social Psychology, 47(4), 589-606.

Singh, S., Gupta, S., Jain, S., Kabra, S., & Gupta, S. (2020). Student Budgeting and Spending

Behaviour. International Journal of Creative Research Thoughts (IJCRT). An

International Open Access, Peer-Reviewed, Refereed Journal, 8(7), 2426–2434. ISSN:

2320-2882

Stollak, M. (2011). Student Budgeting and Spending Behaviors: A Comparative Study. Journal

of Behavioral Studies in Business. 3.