IMPROVING FINANCIAL LITERACY OF 1ST YEAR STUDENTS

IN COLLEGE THROUGH FINANCIALMANAGEMENT PRACTICES

Introduction

Financial Literacy is one of the most concerned issues now a day’s in a

developing countries. But, since the effects of financial literacy in a societies

are greatly essential. Therefore, Schagen and lines (1996) has defined

personal finance in literature as the understanding to use the financial

knowledge in our daily economic activities. According to Noctor, Stoney and

Stradling (1992) financial literacy is the used of financial management and the

ability to make effective decisions. Several authors suggested that the low

levels of financial literacy of the population had favored the financial crisis

started in the late 2000s Boeri and Guiso (2007); Gerardi et al., (2010).

Additionally, the report of the Bangko Sentral ng Pilipinas (BSP)

reveals that only 20 percent of Filipinos have actively uses a proper savings

such as bank account. According to the World Bank (2012), 2.5 billion people

remains “unbanked” and the three quarters of the poor people worldwide do

not have a bank account.

Furthermore, Phil am life wanted to help the future clients in Davao to

manage their financial well-being including investment schemes to answer

their financial needs in the future like preparing for college education. And on

top of that, the country’s top insurance in terms of assets and revenues has

handled hundreds of financial advisers to advise young Filipinos on how to do

their financial planning properly. In line with this, the Nationwide Research

Commission of Maya, M. P. (2016), Davao City is the utmost in terms of

savings and investments in Mindanao.

 Lastly, financial literacy is a wide topic to be studied. In accordance to the

place the researchers selected the …College particularly in the 1st year, the

researchers generated to conduct action research to determine the financial

literacy and the financial management practices of the said respondents.

Background

According to Potrich, et.al (2015), they describe financial literacy as a skill

that helps individuals to become more confident and efficient decisions in the

monetary context in their lives. In addition, according to Criddle (2006),

individuals who are financially literate should be knowledgeable about the

choice of many alternatives in order to establish their financial goal.

Despite from its significance, many studies of the world indicate that much

of the world’s population still suffers from financial illiteracy that will lead to

complex financial scenario, it is according to Potrich, et.al. (2015).

This study is trying to help the people especially the 1 st year students

in order to become financially literate by determining what is the best financial

management practices is appropriate in their level of financial literacy. This is

because financial literacy is important in individual’s financial decision.

Statement of the Problem

The following are the statement of the problem:

1. What is the level of financial literacy of 1 st year students in College in

term of:

a. Financial Attitude

b. Financial Behavior

c. Financial knowledge
 2. What is the best financial management practices is appropriate in their

level of financial literacy in term of:

a. Financial Attitude

b. Financial Behavior

c. Financial Knowledge

Hypotheses

1. The level of financial literacy of 1st year students is very low.

Review of Related Literature

Money related information will be thought of equitably, subjectively, and
generally. Money related education and Monetary behaviors themselves
incorporate fundamental cash administration (budgeting), investment funds,
and credit behavior measures that would impact one‘s credit score.
Financial Literacy
Financial management plays a large role in the amount of debt an
individual accumulates. It is obvious that to decrease the debt problem,
people must make smarter financial decisions. However, it is not that simple.
To have sound financial management practices, one must first have financial
literacy.
Financial literacy has been defined in many ways Percy and Arnott-Hill
(2014). Looking at many proposed definitions, the commonly held idea is that
financial literacy is one’s knowledge of basic financial concepts and the ability
to use this knowledge to make apt financial decisions in everyday life.
Financial literacy has been widely studied over the past few decades.
Throughout research, it is evident that financial literacy is a key component in
making important financial decisions (Percy and Arnott-Hill, Lusardi and
Mitchell (2014), Lusardi and Tufano (2009).
Lusardi and Tufano (2009) found that only around one-third of the
population understands basic financial concepts such as compound interest
and credit cards. In addition, the President’s Advisory Council on Financial
Literacy found that “far too many Americans do not have the basic financial
skills necessary to develop and maintain a budget, to understand credit, to
understand investment vehicles, or to take advantage of our banking system”
Hastings,J. S., & Mitchell(2011). With the exorbitant amount of financial
decisions young adults and adults must make, this lack of financial literacy is
a problem. Young adults that are fresh out of high school must make
decisions regarding student loans, bank accounts, credit cards, and how to
survive as financially independent individuals. Likewise, adults must
continually make decisions in regards to budgeting, investments, retirement
plans, savings, and more.
A large body of past literature indicates that financial knowledge can
help individuals to plan for better retirement life Brown & Graf, (2013); Lusardi
& Mitchell, (2008).
Conceivably, formulating a retirement plan is a complex and
challenging process which requires certain financial knowledge Lusardi &
Mitchell (2008).
There is evidence which suggests that financial literacy can encourage
individuals to practice healthy financial management Hilgert, Hogarth, &
Beverly (2003); Nyamute & Maina (2011). This is as those who are financially
illiterate might not know the proper way of implementing financial
management practices Robb & Woodyard, (2011).
In reality, budgetary education will offer assistance people to memorize
the 407 significance of monetary administration as well as the negative results
of destitute budgetary administration, and consequently advance normal
execution of financial administration in everyday life Nyamute & Maina,
(2011).
Researchers have as it were as of late endeavored to characterize the
concept. Artisan and Wilson (2000) characterized budgetary education as a
“meaning-making process” in which people utilize a combination of abilities,
assets, and relevant information to handle data and make choices with
information of the budgetary results of that decision.
Financial management Practices
Monetary administration hone alludes to a set of practices related to
cash administration, credit administration, budgetary arranging, ventures,
protections and retirement and bequest arranging Dowling, et al (2008). Past
ponders have found that person positive budgetary administration hones have
been the single most powerful determinant of family dissolvability status and
monetary fulfillment Donnelly, et al. (2012).
Sparing conduct happens when current wage surpasses current
utilization and so when add up to assets increment. Not sparing is the inverse
of sparing. Sparing leads to resource collection as long as sparing is more
noteworthy than not sparing. Individuals might basically make stores quickly
after accepting pay, sometime recently making any other buys or installments.
As the taken a toll of living are getting tall, individuals confront with pay
precariousness and individuals (particularly workers' obligation) is expanding
and it is getting difficult to discover work openings, insufficient investment
funds expanded uneasiness among direct and low-income family Cho (2009).
This phenomenon has concerned customers of the ampleness of their
investment funds, which might cause their sparing rate declined over time.
Whereas, Hurd and Zissimopolous (2000) detailed that approximately 70% of
respondents spared as well small inside the past 20 to 30 a long time. Low-
income individuals (family) tend to have moo sparing rate which seems lead
to wellbeing problems.
College understudies nowadays developed up in a time that bolstered
more tolerant states of mind towards obligation Roberts and Jones (2001).
Hence, we would anticipate college understudies to report positive states of
mind towards the to utilize credit cards.
Danes and Hira (2000) inspected individuals’ information, convictions,
and behaviors with respect to the utilize of credit cards and found that
individuals who embraced utilizing credit cards for installment buys were more
likely both to utilize credit cards and bring about back charges compared to
individuals who did not support the utility of credit cards for installment buys.
Bar-Shalom, Y., & Li, X. R. (2005.), in analyzing full of feeling, cognitive, and
behavioral states of mind of 137 college understudies, found that
understudies, for the most part, held favorable demeanors toward credit card
utilize. Encourage, understudies who claimed credit cards were more likely to
hold favorable behavioral demeanors toward credit card utilization than
understudies who did not claim credit cards.
 At long last, more visits utilize of credit card was related with more
favorable by and large and emotional demeanors toward credit card utilize. In
a isolated consider, Hayhoe et al. (2000) inspected the affiliation of emotional
demeanors toward credit card utilized in 480 college understudies to investing
propensities, budgetary hones and Borden, L. M., Lee, S. A., Serido, J., &
Collins, D. (2008) 29:23–40 25 123stress levels. They found that understudies
with positive emotional states of mind toward credit card utilize were more
likely to buy merchandise; such as dress, excitement, travel, and nourishment
absent from domestic with credit cards compared to understudies with less
positive emotional demeanors. In expansion, full of feeling states of mind
towards credit card utilize were related with how understudies felt after they
made a credit card buy; particularly, understudies with less positive emotional
states of mind toward credit card utilize were more likely to feel too bad that
they obtained merchandise compared to understudies with more positive
states of mind.
Moreover, agreeing to Norton (2003), within the Joined together States,
credit is in some cases respected as a resource or elective pay when people’s
states of mind toward utilizing credit cards are positive. Norton (2003)
contended that it is getting to be popular for individuals who don't have
satisfactory cash accessible to utilize exceptional credit equalizations and
think they will be able to pay the adjust back afterward. However, the credit
adjusts in credit cards isn't their resource; utilizing credit cards whereas
incapable to quickly pay a charge in full is borrowing cash. Subsequently,
individuals’ favorable or positive states of mind toward utilizing credit cards
without the capacity to reimburse, adjust may lead to money related
challenges.
Person Characteristics Influencing Budgetary Information, Demeanors,
and Behavior In spite of the fact that most investigate finds that the lion's
share of college understudies oversee they utilize of credit viable (e.g., 59%
pay off their credit card obligation debt obligation month to month; there are a
few college understudies at hazard of not being able to reimburse their
obligations, either sense of a need of money related information, involvement,
or stores Kaminsky, G., Lyons, R. K., & Schmukler, S. L. (2004)The
relationship of statistic variables to viable credit behaviors has not been
broadly inspected, Kaminsky, G., Lyons, R. K., & Schmukler, S. L. (2004.), in
spite of the fact that a few thinks about have looked for to recognize contrasts
between people who are more likely to lock in in successful administration of
their funds and those who are not.
Significance of the Study

As this action research was an attempt to address to Financial Literacy

in relation to Financial Management Practices of the students, the significance

of the study was therefore premised on the following: The study is expected to

be a contribution to the field of research and education.

Students. The result of the study could develop students and can

make them financially literate. Furthermore, the study can serve as a guide to

learn the basic lifelong experiences in worthy and responsible use of finances.

Future Researchers. This research can also be helpful to those future

researchers as their guide for conducting a research that is relevant to the

topic which is about financial literacy.

Definition of Terms

Financial Literacy refers to the attitudes, behaviors and knowledge of

individuals towards their financial decisions.

Financial Attitude refers to the individual’s characteristics towards their

financial practices or action.

Financial Behavior refers to the human behavior that is relevant to

money management. 

Financial Knowledge is the individuals’ financial awareness and

understanding about the financial concepts and as well as the understanding

to solve financial problems.
 Financial Management Practices refers to the set of methods or

standard procedures in carrying out financial reporting, budgeting and other

activities related to individuals finances.

College is the private school institution located at …

Methodology

This section discusses the research design, research

subject/participation, target population, research procedure, research

instrumentation, data gathering procedure and statistical treatment.

Research Design

This study utilized the descriptive method of research. Descriptive

method is a method used in order to determine what is the best financial

management practice is appropriate in their level of financial literacy.

Target Population

The respondent of this study will be 1 st year students. A total of thirty

three (71) students, sample of 30 students were included in investigation by

using Slovin (2000) formula to calculate sample size. This formula was used

in every study conducted to get the effective sample mean in a certain study.

The formula is n= N (1+(N)(e)²).

Respondents No. of Respondents

1st year BSBA students in … 73
Table 1
Frequency Distribution of Respondents

Data Gathering Procedure

The following procedure is observed in data gathering:

 1. Asking Permission to Conduct a Study. The researchers wrote a

letter asking permission from the president of 1 st year.

2. Question Construction. The researchers was adapted the survey

questionnaire from the other study where it was related to this study which

was answered by the respondents to gather information needed from this

study.

3. Distribution of the Questionnaire. After the construction of the

questionnaire, the researchers personally administered the distribution of

questionnaire to particular respondents.

4. Retrieval of the Questionnaire. Questionnaires were retrieved after

the respondents finished answering. This has been than during the

convenient schedule of the researchers and the respondents.

5. Collection and Tabulation of Data. The retrieval questionnaires were

tallied, collated and recorded accordingly. After that, the results were

analyzed interpreted statistically computed by the researchers and checked

by the group of statistician to provide the exact information that significantly

answered the questions of the study.

Research Instruments

The data were taken through research survey questionnaire that was

adapted from Opoku, A. (2016). Financial literacy among Senior High School

Students evidence from Ghana (Doctoral dissertation) in which the level of

financial literacy of 1st year is evaluated. On the other side, the basis for

financial management practices was adapted from Opoku, A. (2016).

Financial literacy among Senior High School Students evidence from Ghana
(Doctoral dissertation), the basis for determining on what are the best financial

management practices is appropriate in their level of financial literacy.

Statistical Treatment

Below was the statistical tool used in this study:

Mean. This test will be used to determine the level of financial literacy of

1st year BSBA students.

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