FINANCIAL LITERACY: SPENDING HABITS OF BIPSU’S ACADEMIC

SCHOLARS

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A Thesis
Presented to
The Faculty of School of Arts and Sciences
Biliran Province State University
Naval, Biliran

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In partial fulfillment
Of the Requirements for the Degree
Bachelor of Science in Business Administration

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ELIZALDE B. SUMAYA JR.

KRIZZA MAE A. ASUBAR
JAYRA SABITSANA
IRISH CABALLES
 2024
CHAPTER I

INTRODUCTION

Background of the Study

Spending habits are not a static phenomenon among university

students and constitute financial behavior that depends on the level of

financial knowledge and financial attitudes(money management capabilities)

(Nadome, 2014). Students who are experiencing freedom from the protection

of parents and guardians for the first time, and making financial decisions for

themselves for the first time, face the huge task of planning and managing

their finances. This become more challenging when expenses far exceed

available income (Nadome, 2014). The disposable income of students has

been greatly reduced by the increase in the cost of university education

globally.

According to the report on Financial Literacy around the World: Insights

from the Standard and Poor’s Ratings Services Global Financial Literacy

Survey by Leora Klapper, et. al. (2015), people without an understanding of

basic financial concepts are not well equipped to make decisions related to

financial management. People who are financially literate can make informed

financial choices regarding saving, investing, borrowing, and more.

 The Philippines is at the bottom 30 in the Financial Literacy Survey

Standard and Poor’s research in 2015 found out that there are only 25% of

Filipinos are financially literate, making it challenging for the country to gain

access to other sophisticated financial services (The Manila Times, 2015). A

new World Bank survey, Enhancing Financial Capability and Inclusion in the

Philippines - A Demand-side Assessment (2015), revealed that about six of

10 Filipinos (59 percent) say that they plan how they spend the money they

earn or receive. Fifty seven percent of those who plan or budget their

expenses say that they have money left after paying for basic expenditures,

compared to forty two percent of those who do not plan their spending. To

have shelter, money is needed and to have food, money is needed too, yet,

dealing with money and handling of finances is not taught in schools. The

people who are well educated on how money works are the ones who are on

top of any businesses. Some, however, did not finish school and do not have

any college degree yet, they are successful in managing their own finances.

Chen & Volpe (1998) in their Analysis of personal financial literacy

among college students, surveyed 924 students from 13 American colleges,

through a written questionnaire. They found evidence of an inadequate level

of financial knowledge among college students’ population, suggesting that

this results from the young age of the respondents. That, at an early stage of

the life cycle they are exposed to a limited number of financial issues related

to general knowledge, savings and borrowing, and insurance and also from a

systematic lack of a sound personal finance education in their college

curricula. Investment was found to be the poorer area in terms of knowledge,

and the most vulnerable individuals are the women, the individuals younger

than 30 and with little professional experience.

As such, this study aims to determine the spending habits and

describe the financial practices of the Biliran Province State University

academic scholars students, as based on our scooping it’s shows that most

students are not financial literate when it comes to spending as they tend to

spend their money on their needs as to their wants while and through this

study we want to help them and further develop a plan to help them manage

their financial resources.

Objectives of the Study

This study aimed to find out the financial literacy skills of BiPSU

Academic Scholars pertaining to their spending habits.

1. Demographic profile of the respondents in terms of

1.1 Age

1.2 Sex

1.3 Civil Status

2. Determine the aspects of financial literacy of BiPSU Academic Scholars

pertaining to their spending habits and as to their:

 2.1 Financial knowledge

2.2 Financial skills

2.3 Financial values

3. Identify the level of financial literacy of BiPSU Academic Scholars

4. Identify the relationship between the demographic profile of the

respondents and aspect of their financial literacy.

5. Develop financial literacy training or workshop.

Framework of the Study

This study takes hold of the following theoretical framework as it main

and strong foundation in the course of it’s proceedings.

Theoretical Framework. This study is anchored in “Social Learning

Theory by Huston and Ooms,(2009), “Financial Socialization Theory” by

Shehan, (1960), and “Financial Education Theory” by Lusardi A., & Mitchell,

O. S. (2014).

Social Learning Theory suggests that individuals acquire knowledge

and behaviors through observation, imitation, and social interactions. In the

context of financial literacy, family and peer influences are crucial. Previous

research has shown that children whose parents have higher financial literacy

tend to exhibit higher levels of financial literacy themselves. Consequently, the

theory emphasizes the role of socialization processes and social interactions

in shaping an individual’s financial literacy.

Financial socialization theory suggests that relationships among

individuals influence the financial information the individuals receive which in

turn results in financial literacy among them. This explains why financial

information literacy is regarded as a prerequisite for financial literacy among

individuals. It is argued that child-parent financial interactions influence the

child’s financial literacy level. This is because, in a family, parents are the

most influential source of knowledge regarding how personal finances are

best managed. The high financial status of parents was also found to

influence their children’s attainment of greater financial literacy levels. It was

reported that students who follow friends’ financial advice achieve higher

financial literacy rates than other students.

Lastly, Financial Education Theory, on the other hand, emphasizes the

importance of financial education in improving the financial literacy and

decision-making skills of individuals. In the context of this study, financial

education theory can be used to explore the effectiveness of financial

education programs in enhancing the financial literacy.

Importance of the study

Considering this research endeavor, the researchers believe that the

study will particularly benefit the following:

 Academic Scholars (Primary Beneficiaries): Scholars themselves are

the main focus of the study. The findings can help them understand their

financial behaviors, develop better money management skills, and adopt

responsible spending habits.

University Administration: The administration can use the study’s

findings to develop support programs, such as financial literacy seminars or

workshops, to assist students in managing their finances effectively.

Scholarship Providers: Government agencies, private organizations, or

university departments providing scholarships may benefit from insights into

how financial aid is used, enabling them to optimize scholarship structures or

offer additional support.

Future Researchers: Future researchers can use the findings as a

basis for further studies on financial behavior, student well-being, or

socioeconomic influences on spending habits.

Scope of Delimitation

The study will focused on Academic Scholars beneficiaries of one of the

university in Biliran. This would measure financial literacy using a

standardized financial literacy assessment tool(Likert scale). This study will be

limited to (40) forty respondents who are Academic Scholars beneficiaries.

This will be limited to a specific sample of Academic Scholars and may not be

representative of the entire Academic Scholars beneficiaries.

Definition of Terms

Spending habits: Regular patterns of expenditure that reflect an

individual’s priorities, values, and lifestyle, influencing financial decisions and

allocation of resources.

Financial literacy: The ability to understand and apply basic financial

concepts, such as budgeting, saving, investing, and managing debt, to make

informed decisions.

Financial practices: Methods, traditions, and cultural influences shaping

financial decisions, including saving, investing, borrowing, and spending.

Financial resources: Available assets, income, credit, and funding

sources that facilitate financial transactions and support economic activities.

Academic Scholars: Individuals pursuing advanced education,

research, and academic excellence in various fields, contributing to

knowledge and intellectual discourse.

 Financial behavior: Actions, decisions, and attitudes related to earning,

saving, investing, borrowing, spending, and managing financial resources.

Budgeting: A systematic process of allocating and managing financial

resources to achieve specific financial goals.

Review of Literature

According to the research of Bristol and Mangleburg (2004), as cited by

Noor Zaihan (2016), peer influence is defined by the degree to which peers

affect a person’s state of mind, thinking, and behavior. Zaihan (2016) found

that although the parents or guardians have formed positive financial behavior

in their children, peer socialization angle still exists in children’s saving’s

behavior since the saving behavior of students could influence the association

in spending exercises during the social time and exchanging ideas about

financial management matters among their peers. However, a study

conducted by Jamal, Ramlan, Karim, And Osman (2015) proved that peers’

influence is critical in deciding the student’s savings ability Jamal et al. (2015)

stated that peer influence could also affect persons’ financial Behavior. On the

other hand, Alwi, Amir Hashim, and Ali (2015) Stated that Generation Y is

always influenced by peer force when making any decisions. Besides,

Ogonowski, Montandon, Botha, and Reyneke (2014) also mentioned that

social Influence with closer peers has the most critical impact in forming the

bad or good attitude of Gen Y in terms of physical And social distance.

Moreover, Amer Azan and Abdul Jamal (2015) also agreed that besides

parenting factors, peer pressure could also affect individuals’ financial

behavior. As stated in The study of “Household debts are self-inflicted” (2013),

in Malaysia, the most apparent cause that ruined the youngsters In managing

their finances.

A spending habit Is a set of repeated and sometimes unconscious

routines and practices that revolve around the use of money to buy

experiences, services, and things (Grossman, 2021). The aforementioned

subject has been the subject of several papers, studies, and research projects

among students worldwide. According to Nadome (2014), spending patterns

have never been consistent, particularly among university students who are

frequently experiencing independence for the first time. Although most

children in the Philippines remain to live with their parents during their senior

high school and College years, their needs have significantly increased in

Comparison to the previous generations. Dr. Saravanan and Devakinandini’s

(2014) stated in his study wherein it investigates how socioeconomic status

influences pocket money expenditure that, most young people are influenced

by society and spend their money. Therefore, They should understand the

importance of money and how to manage it properly. According to Abawag,

Ancheta, Domingo, Rabina, Saclote, and Taguinod, (2019) in the Philippines,

the majority of their respondents’ monthly allowance is spent on food.

Specifically, when it comes to personal needs and academic purposes,

spending is restricted. According to their research, gender, course, year level,

and ethnicity are all determinants of spending behavior differences. Male

students are more careless with their spending based on the research study

conducted in the University of Saint Louis in Tuguegarao City, Cagayan.

Rees and Westra (2021) argue that lifestyle is a western concept which

is meaningful only to the citizens of affluent countries, not to those whose

main concern is mere survival because of their absolute poverty. From this

perspective, lifestyle refers only to variants of consumerism, a largely

materialistic way of life that assumes: (1) that what one wants Is entirely a

matter of choice; (2) that almost all choices are within one’s grasp; and (3)

that consumer choices can and should be ranked hierarchically from the most

to the least desirable, according to what the mass media and corporate

enterprise determine is most worth having and doing. However, Perdido,

Infante, Fesalbon, and Tanalas, (2016). In their study about the spending and

saving habits of university students included the disbursements from monthly

allowances of the students enrolled in accountancy, business And office

Administration programs. The researchers list the precedence relating in the

expenditures of the students, such as The food, travel, clothing/accessories,

electronic gadgets, groceries, beauty products and services, school supplies,

Cellular phone load, books and magazines. Moreover, results of the

study showed the top five priorities where students from the college of

business spent their monthly allowance were clothing/accessories (41.1%),

school supplies (37.8%), books (36.7%), beauty products (32.2%), and beauty
services (27.8%).

According to Research Publish, Nurdian S… Lyna L…,& Jariyah

(2017). This research aimed to identify the effects of financial literacy and

financial confidence on financial behavior. As for the results, this research

found that financial literacy and perceived financial confidence has a direct

effect on financial behavior. The higher the level of knowledge of students, the

more they improve their financial [Link] are confident that they can

create the best financial investments. In addition, their scheduled investments

in the future are anticipated to gain enormous income and thus determine

their financial behavior. This research has a similarity to the context of the

study in which students are considered as the respondents. While this study

focuses on financial literacy, it can support in interpreting the data gathered in

the survey, particularly the spending behavior with regards to problems

encountered on spending practices.

It Is impossible to separate peoples’ spending patterns from their daily

lives because of the swift evolution of the fiercely competitive global corporate

environment. As a result, decision-making has grown more difficult (Stym,

2020). Because of their exposure to marketing initiatives, internet service

providers, and electronic buying options, students are affected by this problem

(Stym, 2020). A pattern of behavior known as terrible spending habits involves

an inability to control ongoing expenses. The social learning hypothesis

postulates people learn spending habits from their parents and other
influential people (Luelle, 2018). According to Ollau et al. (2020), a young

adult’s purchasing habits significantly impact how long their financial

resources will last. Instead of investing in long-term financial plans, young

people spend their money quickly on consumables (Decena & Abellanosa,

2022). Institutions should promote and encourage increased student financial

[Link] people engage in Compulsive Spending, an excessive form of

consumer purchasing, and as a result, are typically profoundly in debt

(Ridgway, 2018). Because compulsive buying activity and obsessive-

compulsive behavior share many traits and symptoms, including a lack of

impulse control, some authors (Kinney, 2018) examine impulse buying in

terms of what might be better defined as compulsive buying behavior.

According to Paine (2012), students tend not to know what to value

first, and they tend to spend it on things that are not Important. That is why it

becomes inevitable for people to overspend when they buy things because

they do not prioritize The significant ones. On the other hand, not knowing

what to prioritize is the time when financial planning comes in Timbang (2015)

discussed that, financial planning is helpful for both short-Range and long-

range plans. Financial planning serves as a basis for the operations or the

allocation of funds the person Has to undergo. Budgeting, in one word, is

financial planning. ‘Financial literacy is both an important life skill and a critical

Intellectual competency’ and ‘an essential component of a college degree.’

(Kezar and Yang, 2015). It is not mandatory to be a professional to be

financially Literate, but one needs to be a person who can maximize present
money to gain financial stability. Logically speaking, students must learn how

to handle money as they are expected to earn at a later stage in their lives.

Acheampong, Kyei-Baffour, Hanson-Cobbinah, and Osei (2015), found that

Almost half of the population surveyed is financially illiterate.

One reason for the low level of knowledge is the systematic lack of

personal finance education in the college curricular. Given the lack of financial

education, it is not surprising that the results show that university students

have inadequate knowledge of personal finance. In a 2013 study titled “The

Relation between Financial Literacy, Financial Well-Being, and Financial

Concerns”, a team of researchers came to the conclusion that there was a

positive correlation between age, marital status, and sex, as well as education

level, and the variables of financial wellbeing and financial literacy. It has also

been stated that a higher story of financial well-being follows financial literacy

(Kalantarie-Taft, Zardeini-Hosein, and Mehrizi, 2013). Financial illiteracy is a

growing concern in both society and the economy. College students, with the

amount of money entrusted to them, are the main subjects of the unwise use

of Funds. To satisfy or solve the problem of financial illiteracy among

students, exposure to sessions, training, and workshops Is necessary. They

ought to have access to the internet because, as was discovered, the majority

of pupils find their Foundation, information, and understanding there.