EWC661

FINANCIAL KNOWLEDGE AND FINANCIAL ATTITUDES AMONG UiTM PULAU PINANG

STUDENTS

Submitted to Mr. Lim Teck Heng

Prepared by: Group 7
Group: PEH2256C2

Date of submission: 8th May 2020

Name Matric No.
Nurnabila Maisarah Binti Idros 2018693608
Nor Hanis Hafizah Binti Azahar 2018400156
Normina Binti Zahari 2018265004
Nor Syahadah Binti Che Nasir 2018226924
1.0 Background of Study
This study will be conducted at Universiti Teknologi MARA Cawangan Pulau Pinang.

Financial literacy is key to financial market development today and individuals should
be prepared with strong financial awareness and attitudes in order to make a sound financial
decision. Unfortunately, young adults today, particularly university students are less capable
of managing their own personal finances (Chinen & Endo, 2012). Some of them may find
that they have trouble making ends meet and sometimes lack of money. Despite this, people
will search for external financial hub to meet their credit liability demands such as buying a
car or credit card spending (Borodich, S., Deplazes, S., Kardash, N., & Kovzik, 2010).

Young people in today’s university life frequently face difficulties because of their
restricted financial management capacities (Lusardi, Mitchell, & Curto, 2010) In comparison,
financially literate students are less likely to face financial difficulties because they are better
able to handle their debt and are more likely to make the right decisions about finances,
such as saving for the future. On the other hand, the cost of lack of financial literacy
contributes to financial indecision and is common among lowly-educated women. A poor
financial control would contribute, indicatively to troublesome cases such as spending
outside normal means (Sucuahi, 2013). The problem is, many young people have
insufficient financial management knowledge which leads to bad financial decisions or
attitudes (Borodich et al., 2010).

The Organization for Economic Cooperation and Development (OECD, 2005)

defined “financial education” as:

“The process by which financial consumers/investors improve their

understanding of financial products and concepts and, through information,
instruction, and/or objective advice, develop the skills and confidence to
become more aware of financial risks and opportunities to make informed
choices to know where to go for help, and to take other effective actions to
improve their financial well-being.”

In line with that, lack of financial literacy and money management may have serious effects
on an individual’s asset optimisation. Given the abundance and simple accessibility of
information in today’s world, most individuals seem financially illiterate and are under-
informed about the basic knowledge of finance. They also face difficult financial choices, as
they are burdened by the exposure to enormous student loans while in college, heavy
mortgage payments for housing/car loans and credit card debts (as young adults), higher
university fees and expenses for children (as parents), and higher inflation rates that deplete
their savings. This may delay their wealth accumulation at any point of their lives because of
the inauspicious financial baggage (Sundarasen, Rahman, Rajangam, & Sellappan, 2014, p.
1).

Moreover, higher education is not free in Malaysia and as education costs increase,
it is necessary to prepare ahead and consider the different options available to help fund
their education. The most popular types of financial aid are grants they don’t have to repay,
and the study loans they need to repay with interest. In Malaysia, there are loans that can
help to finance higher education for undergraduate students such as Perbadanan Tabung
Pendidikan Tinggi Nasional (PTPTN), Majlis Amanah Rakyat (MARA), Jabatan
Perkhidmatan Awam Malaysia (JPA), and many more. Loans aim to help the students fund
their study so that the students can develop their knowledge. If the students do not have
enough information about how to handle their finances, it may lead to other issues – such as
not having enough money to feed themselves. According to a survey of 25,632 students
from six public universities by the Muslim Volunteer Malaysia Association (MVM), 57% of the
students said they allocate RM5 per day for food, 44% live on instant noodles, 41%
consume only rice with fried egg and sauce (Ruxyn, 2016). This percentage shows the
severity of the financial management issue among undergraduate students, and this is
happening not only in Malaysia, but worldwide. Study at the U.S College finds that 36% of
students are considered “food deficient”, meaning that they do not get enough to eat (Hess,
2018). If students could not get enough food, how could they get enough nutrient to maintain
a healthy body, especially when they need to take part in activities and workloads
throughout their study year.

2.0 Problem Statement

Money plays an important role in one’s life that it is being use to buy necessities and to
survive daily life especially for university student. Living away from parents need them to be
independent and manage their financial well as they need to pay for academic fees and
other necessities. Since most Universiti Teknologi Mara Permatang Pauh students were
managing their finance in order to survive university life, there are several issues arises
regarding this. Among issues that need to be considered, the students need to be equipped
with proper financial knowledge to manage their money in university. Many students believe
that they were good in planning their financial, however there are students that do not know
how to manage their money well. Apart from that, financial attitude among students could be
affected with lack of financial knowledge. In responses to these issues, a study conducted to
identify financial knowledge and attitudes among students in University Teknologi Mara
Pulau Pinang Cawangan Permatang Pauh.

3.0 Scope of Study

This study is conducted to identify the financial knowledges and attitudes among
students of Universiti Teknologi Mara Permatang Pauh. 50 respondents were chosen
involving degree students from five different faculties available in Universiti Teknologi Mara
Cawangan Permatang Pauh which are Faculty of Chemical Engineering, Civil Engineering,
Mechanical Engineering, Electrical Engineering and Faculty of Hotel Management and
Tourism. These respondents consisting both female and male are 18 years old and above.
This study is carried out for 14 weeks, starting from March 2020 until July 2020.

4.0 Purpose of the study

The purpose of this study is to determine the effects of financial knowledge on financial
attitudes of UiTM Pulau Pinang students.

5.0 Objectives of the study

1. To identify the financial knowledge among students
2. To identify the financial attitudes of students
3. To determine the effects of financial knowledge on financial attitudes of students
6.0 Significance of Study
From this study, the findings would give benefits especially for students of Universiti
Teknologi Mara Pulau Pinang Cawangan Permatang Pauh as they can get an overview of
their financial knowledge and financial attitude. Apart from that, this study is important for the
students to identify the significance of having right financial knowledge to cope with life as
university students. Besides, this study would educate them that financial knowledge affects
the financial attitudes. Furthermore, from this study the Department of Students Affairs of
UiTM Cawangan Pulau Pinang would be having to provide students with proper financial
education such as financial management programs and many other that will help students to
plan their financial well..

7.0 Limitations of the study.

There are limitations during the study that we cannot control. The first limitation is the
respondents’ financial attitudes. In the article, Yong, Yew, & Wee,2018, also mentioned that
even with the highest financial education, one financial behaviour or attitude cannot be
guarantee and change. It is because attitude is individual’s habit and it will take times to
change them. Besides, the respondents’ financial attitudes cannot be predicted as many
factors may affect them. The factors are the country economy state, the family financial
background, policy structures and others. Besides, the study only focused on students of
UiTM PP. Thus, the findings cannot be generalized to other populations. Besides, this study
used a multiple-choice type of questionnaire. This type of survey would restrict the
respondents to express their thoughts and perspectives. Although the ‘other’ answer choice
was also included, not all the respondents will write out their explanations. Although there
are limitations to this study, it will not downgrade the importance of this study and will be a
bridge for further studies in the future.

8.0 Definition of terms.

1) Financial knowledge
• Financial knowledge is the ability of people for knowing conditions,
practices, rules and norms required for performing financial duties which
involve a wide range of daily activities such as managing and controlling the
credit card, preparation of budget, purchasing insurance and investment.
(Nur Fazleena Binti Azmi & Ramakrishnan, 2018)

2) Financial attitude
• Financial attitude is defined as a state of mind, opinion, and judgment of a
person about finances (Pankow, 2003)

8.0 Literature review

Financial knowledge
Financial knowledge is very crucial in this current high standard of living. It is
because everything needed money. Therefore, basic or advanced financial knowledge is
needed to have a good financial attitude and to survive in this challenging life. Examples of
financial knowledge included knowledge on budgeting, saving, (Étude, Les, & Financières,
2009) bank accounts, investments, mutual funds, mortgages, credit cards, loans, insurances
and taxes (Shaari et al., 2013). However, Yong et al., 2018 said that the today’s Malaysians
have poor financial knowledge and incompetence in making proper financial decisions
despite all the measures done by the government and private sector. They also mentioned
that the changing consumer habits and simple access to get the personal loans, credit cards
and high-cost debts are the factors that cause common bankruptcy among young
generations. In addition, the current living standard will continue to increase from time to
time, thus the young generations need to be well prepared for the future. However, Yong et
al., 2018 also mentioned that only 40% of Malaysians are well-prepared after their
retirement. Thus, they concluded that the financial knowledge of Malaysian is lower than the
rest of the world that also have multiple races and ethnics. In Malaysia, the financial
education has already been introduced in the early education level such as schools. With the
results of current Malaysians knowledge and attitude, it shows that the financial education
should be improved and revised for a better output. In the meantime, it should be noted that
with the improved financial education program, it still does not guarantee 100% that all
Malaysian will practice good financial attitude. It is still depending on their behaviour,
personal preferences and economic circumstances. Yong et al., 2018 also added that the
financial knowledge does give impact to the awareness among youths and it may affect their
financial attitudes approximately. Therefore, there is nothing to lose with higher financial
knowledge programs implemented in the future. If an individual fully incorporated his
financial knowledge and financial attitude, it may result in better financial management
practices (Yong et al., 2018).
Financial knowledge can be obtained from many sources. The sources may come
from a financial background and the experience from the financial education (Yong et al.,
2018). Financial background is defined as the proper education and example shown by the
family, especially the parents. Parents give a big impact to their children financial knowledge
and they are responsible to ensure their children have decent financial attitudes at an early
stage. Next, the financial education program is meant by the program that has been
introduced in schools and colleges as part of the curriculum. Families, educational institutes
and authorities should work together in helping the young generation to realise the
importance of financial knowledge and practice good financial attitudes. This is because it
will affect their money management throughout their lives (Étude et al., 2009). Besides, they
should encourage the young generation to save more, train them not to be reckless with
needless, impromptu buying and to be goal-oriented (Yong et al., 2018). The problem is that
the financial education program that had been conducted in Malaysia never targeted the
young generation especially students (Étude et al., 2009). This will lead the young
generation to make mistakes in their financial decisions and have negative thoughts towards
existing financial programs or activities. Today’s young generation lacks self-control,
especially with their money. Most of them tend to spend their money on needless expenses
(Étude et al., 2009).

Financial education
Étude et al., 2009 mentioned that sometimes the financial education programs that
were done in the university were normally targeted for business or finance students. This is
due to the limited budget provided or lack of interest from students from other courses. This
kind of problems should be mend as all the students must learn financial knowledge and to
avoid the stereotype that only business/finance students are good in financial management.
Nevertheless, business major students indeed have a higher level of financial knowledge
than the other major students. Malaysia government had introduced the National Higher
Education Fund (PTPTN) to helps all the universities students and help to reduce the burden
of their parents (Shaari et al., 2013). Therefore, all universities students should have good
financial attitudes to avoid unnecessary spending behaviour and fully utilize their money.
Students get experiences or indirect financial knowledge when they were performing their
responsibilities such as paying their personal bills, use credit cards, workings, savings,
budgeting monthly expenses and managing their student’s debts (Shaari et al., 2013).
Investment is one of the financial knowledge that gives profits in the form of interest, income,
or appreciation value of the instruments (Shaari et al., 2013). However, the participation in
the stock market are usually among the older generation aged from 40 years old and above
and less participation from the university students. We can say that this is due to low
financial knowledge experience by most university students.

Financial attitude
Financial attitudes are divided into two perspectives which are future and non-
impulsiveness attitude and achievement orientation attitude (Yong et al., 2018). Example of
good financial attitudes are budgeting, control over one’s spending, practise living within
means, continuous monitoring of expenses, saving practices and future planning such for
old age and unexpected expenses (Yong et al., 2018). Example of bad financial attitudes are
overdraft on a checking accounts, failing to pay off credit cards and overconfidence on their
financial knowledge (Robb & Woodyard, 2011). Saving as mentioned is one of the good
financial attitudes and it is important to develop it in the early stage. Shaari et al., 2013
mentioned that it is important to stress the reasons to save rather than ways to save to the
young generation so that they know why they were told so. Besides, keeping a written
budget also was not common among the young generation and it should be changed. It is
because, by written budget, we could plan our shopping, plan our spending and saving
regularly (Shaari et al., 2013). These days, there is an increase in the number of students
taking loans for higher educations. Therefore, a student should have a good spending habits
to avoid low repayment rate for their student loan debt, bankruptcy, receiving government
help and making a bad financial decision (Shaari et al., 2013).
Bad financial attitude will lead to financial problem. University students who practice
bad financial attitude usually have problem such as trouble of making ends meet during the
end of months and shortage of money (Yahaya et al., 2019). Due to these financial
problems, they will resort to the easy method such as borrowing from friends or family or
using credit cards. Without adequate financial knowledge, this kind of trend may result in
early bankruptcy among students. This is because we know that not all the graduated
students will get work offer right after their graduation and the students cannot pay all the
debts immediately. However, with savings, budget spending, investment and remaining
unused student loan, students may able to pay their debts in time. Besides, with the used of
mathematical skills and numeracy, the students could enhance their financial knowledge and
reduce their indebtedness or avoiding bankruptcy (Fazleena, Azmi, & Ramakrishnan, 2018).
Fazleena et al., 2018 also mentioned that most of the university students can perform good
financial attitudes although not majoring in business or finance since they already learn
additional mathematic or modern mathematic before entering university. Fazleena et al.,
2018 also show in their article how people with financial knowledge manage their finances.
From their research, the result shows that most of the respondents thought carefully before
buying and pays their bills on the dot (Fazleena et al., 2018). This behaviour shows that
most of the respondents have full control of themselves and less involved with debts. They
also mentioned how most of the respondents got and enhanced their financial knowledge.
The respondents obtained the financial knowledge from personal experiences, personal
readings, seminars and classes (Fazleena et al., 2018). They also stated that most of the
respondents have higher savings and less expenditures. These practices may help them if
unexpected incidents happen. Lastly, Fazleena et al., 2018 also brings out the positive
impacts of financial knowledge. The impacts such as an increase in savings, correct
financial decisions, have decent investments, asset management, have insurances, well
managed the debts and credit cards, understands the current economic situation and his
financial circumstances (Fazleena et al., 2018).
Financial knowledge and financial attitudes among university students is a topic that
has been studied by many researchers. However, article of study among students of UiTM
Pulau Pinang have not been done yet. Therefore, the following research question is raised.
Research question: What is the effect of financial knowledge on financial attitudes of
UiTM PP students?
10.0 Methodology

This study will be conducted at UiTM Pulau Pinang. The subjects of this study will be
50 undergraduate students from various faculty namely the Faculty of Chemical
Engineering, Faculty of Mechanical Engineering, Faculty of Civil Engineering, Faculty of
Electrical Engineering and Faculty of Hotel and Tourism required to complete the survey.
They are 18 years old and above.

A quantitative method will be conducted to meet the aims and objectives of this
study. We use questionnaire as the research instrument for collecting the information from
the respondents. Due to current Covid-19 issue, this method is more effective rather than
interviewing them face-to-face. This questionnaire will be given to each of the respondents.
There are 4 sections in the questionnaire. Part A is about the general information of the
respondents. In Part B, there will be a division of three parts according to each objective
respectively. Part 1 will be about objective 1, part 2 will be about objective 2, and part 3 will
be about objective 3. Each part consists of between eight to fourteen questions. The Google
Form link will be distributed by each of the members of this group. The first platform to
distribute the link is on Telegram where there’s a group with all the UiTM Pulau Pinang
students in it. This research will be conducted between May 2020 and July 2020. This study
will use descriptive analysis in analysing the data (Dhand, 2015). The analysed data will be
converted from frequency count to percentages and present in charts using Google Sheet or
Microsoft Excel application. For the proposed timeline, we will use Gantt Chart in this report
as a valuable method for providing timeline details about plans. Table below shows the
target plan of our report writing for every week.

Table 1: Grantt Chart

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