Effect of Financial Literacy on Spending Habits: A Descriptive Study

among ABM Students at ACLC College of Ormoc

A Research Paper
Presented to the Senior High School Faculty of
ACLC College of Ormoc City, Inc.

In Partial Fulfillment
Of the Requirements for the Inquiries, Investigation, and Immersion subject
Senior High School Department
Accountancy Business and Management

By

Aballe, Pinky D.
Armentano, Abigael E.
Bulado, Elvie Jane L.
Diano, Vincent L.
Guido, Trisha Mae B.
Laude, Natalie Nhez A.
Magsico, Princess Lea V.
Pepito, Erich Jane E.
Rafael, Rnyle V.
Seranias, Danica Rose M.

April 2024
 APPROVAL SHEET

This research paper entitled, “Effect of Financial Literacy on Spending Habits: A

Descriptive Study among ABM Students at ACLC College of Ormoc” prepared, and
submitted by Pinky D. Aballe, Abigael E. Armentano, Elvie Jane L. Bulado, Vincent
L. Diano, Trisha Mae B. Guido, Nathalie Nhez A. Laude, Princess Lea V. Magsico,
Erich Jane E. Pepito, Rnyle V. Rafael, Danica Rose M. Seranias, in partial fulfillment
of the requirements for the subject in INQUIRIES, INVESTIGATION, AND
IMMERSION has been examined and recommended for acceptance and approval for
ORAL EXAMINATION.

RESEARCH COMMITTEE

________ _ROBERT CAINDOC__________________

Research Adviser

________ PANEL 2 PANEL 3

Member Member Member

JANICE D. AYA-AY
Chair

PANEL OF EXAMINERS

Approved by the committee on Oral Examination with a grade of PASSED/FAILED.

JANICE D. AYA-AY
Chair

PANEL 1 PANEL 2 PANEL 3

Member Member Member

______ _ROBERT CAINDOC__________

Research Adviser
Accepted and approved as partial fulfillment of the requirements for the subject in
INQUIRIES, INVESTIGATION, AND IMMERSION.
Date of Oral Examination PASSED/FAILED: April 18 , 2024.

JUDIE ROSE C. ALICAYA, LPT

SHS Coordinator
 ABSTRACT

This descriptive study investigates the relationship between financial literacy and

spending habits among ABM (Accountancy, Business, and Management) students at

ACLC College of Ormoc. The research aims to explore whether a higher level of

financial literacy correlates with more prudent spending behavior among students. A

mixed-method approach was employed, involving surveys and interviews to gather data.

Results indicate that a significant portion of students possess only basic financial literacy,

with limited understanding of concepts such as budgeting and saving. Furthermore, the

study reveals a direct correlation between higher financial literacy and more responsible

spending habits, suggesting a need for enhanced financial education programs within the

curriculum. The findings underscore the importance of equipping students with essential

financial knowledge to promote healthier financial behaviors in their personal and

professional lives.
 ACKNOWLEDGEMENT

We extend our heartfelt gratitude to all individuals and organizations who contributed to
the completion of this study titled "Effect of Financial Literacy on Spending Habits: A
Descriptive Study among ABM Students at ACLC College of Ormoc."
First and foremost, we express our deepest appreciation to the administration, faculty, and
staff of ACLC College of Ormoc for their unwavering support and assistance throughout
the research process.

We are also grateful to the ABM students who willingly participated in this study,
providing us with insightful responses and invaluable data. Their cooperation and
enthusiasm greatly enriched our research findings.

Furthermore, we acknowledge the assistance of Sir Robert Caindoc, Tine Matuguina for
their expertise in data analysis and interpretation, which significantly contributed to the
quality of our research outcomes.

Last but not least, we would like to thank our families, friends, and colleagues for their
understanding, encouragement, and patience during the duration of this research
endeavor.

This study would not have been possible without the collective efforts and support of all
those mentioned above. Thank you.
 TABLE OF CONTENTS

TITLE PAGE i

APPROVAL SHEET ii

ABSTRACT iii

ACKNOWLEDGEMENT iv

TABLE OF CONTENTS v

LIST OF TABLES vi

LIST OF FIGURES vii

Chapter Page

I INTRODUCTION

Background of the Study 1

Statement of the Problem

Hypotheses

Significance of the Study

Scope and Delimitations of the Study

Definitions of Terms

II THEORETICAL BACKGROUND

Review of Related Literature and Studies

Theoretical Framework

Conceptual Framework

III RESEARCH METHODOLOGY

Research Method
 Research Design

Research Environment

Sampling Method

Research Respondents

Research Instruments

Research Procedures

IV PRESENTATION, ANALYSIS, AND INTERPRETATION OF

DATA

V SUMMARY OF FINDINGS, CONCLUSION, AND

RECOMMENDATIONS

BIBLIOGRAPHY

APPENDICES

Transmittal Letter

Consent Form

Questionnaire

Result

Curriculum Vitae
 LIST OF TABLE

(only include this if you have tabular presentations)

Title Page
 LIST OF FIGURES

Title Page
 Chapter I

INTRODUCTION

Background of the Study

Financial literacy is increasingly recognized as a crucial skill for individuals to

navigate the complexities of modern financial systems and make informed decisions

about their personal finances (Lusardi & Mitchell, 2014). In today's society, where

consumerism and access to credit are prevalent, understanding financial concepts such as

budgeting, saving, investing, and debt management is essential for financial well-being.

The spending habits of individuals, particularly among students, play a significant

role in shaping their financial future (Fernandes, Lynch Jr, & Netemeyer, 2014). As

students transition into adulthood, they often face the challenge of managing their

finances independently for the first time. Therefore, exploring the relationship between

financial literacy and spending habits among students is pertinent to understanding how

financial knowledge influences financial behavior.

This study intends to fill is the lack of specific research on the effects of financial

literacy on spending habits among ABM students in a college setting. While studies have

explored the broader relationship between financial literacy and financial behaviors, there

is a need for focused research on how financial literacy specifically impacts the spending

habits of students studying business and finance-related subjects. By conducting a

descriptive study among ABM students at ACLC College of Ormoc, we aim to contribute

to the understanding of how financial literacy influences spending decisions and

behaviors in a college environment.

 This descriptive study aims to investigate the effect of financial literacy on

spending habits among ABM (Accountancy, Business, and Management) students at

ACLC College of Ormoc. By examining the financial literacy levels and spending

behaviors of students, this research seeks to identify patterns and correlations that can

provide insights into the effectiveness of financial education programs and inform

strategies for improving financial literacy among young adults.

Understanding the factors that influence spending habits among students can have

implications for educational institutions, policymakers, and financial institutions

(Mandell & Klein, 2009). By promoting financial literacy initiatives tailored to the needs

of students, educators can empower them to make informed financial decisions and

cultivate responsible financial behaviors that will benefit them throughout their lives.
Statement of the Problem

The primary objective of this research is to examine the effect of financial literacy

on spending habits among ABM students at ACLC College of Ormoc. Specifically, the

study aims to address the following objectives:

The research seeks to answer the following questions:

1. What is the level of financial literacy among ABM students?

2. How do ABM students allocate their spending across academic expenses, food,

and personal needs?

3. Is there a significant relationship between the level of financial literacy and

spending habits among ABM students?

Hypothesis

H0:There is no significant relationship between the level of financial literacy and

the spending habits of ABM students at ACLC College of Ormoc.

H1:There is a significant relationship between the level of financial literacy and

the spending habits of ABM students at ACLC College of Ormoc.

Significance of the Study

This study is significant in the following key areas:

Personal Financial Well-being: This research contributes to enhancing the

financial well-being of students by exploring how financial literacy impacts their

spending habits and overall financial health.

Future Researchers: The findings of this study can serve as a valuable

foundation for future research on financial literacy and consumer behavior, inspiring

further investigations in related fields.

Teachers: The findings of this study would benefit the teachers by being aware of

their student's level of financial literacy and spending habits, they will be able to know

what necessary skills they need to focus on in teaching their students.

Parents: The findings of this study will enable parents to determine how

financially literate their children are and to arm themselves with the information they

need to help their children become financially literate.

Educational Institutions: The study highlights the importance of integrating

financial literacy education into the curriculum to equip students with essential financial

skills, benefiting educational institutions like ACLC College of Ormoc.

Empowering Students: The research has the potential to empower students to

make informed financial decisions, develop responsible financial behaviors, and strive for

financial independence and stability.

 Overall, the study has implications for promoting financial well-being, guiding

future research, improving educational practices, and empowering students to make

sound financial choices.

Scope and Delimitations of the Study

The scope of the study includes focusing specifically on ABM students, analyzing

their financial literacy levels, and exploring their spending behaviors. Data will be

collected through surveys, interviews, or questionnaires to assess financial literacy and

spending habits. The analysis will investigate how financial literacy impacts spending

habits and may provide insights into ways to enhance financial education and encourage

responsible spending among students.

However, the study has certain delimitations to consider. These include potential

limitations in sample size due to resource constraints, which may affect the

generalizability of the findings to a wider population of ABM students. External factors

such as economic conditions or individual circumstances of participants could also

influence spending habits and may not be fully accounted for in the study. Additionally,

the study's timeframe may be limited, focusing on a specific period and potentially not

capturing long-term changes in financial literacy and spending behaviors. Furthermore,

biases in data collection methods, participant responses, or researcher interpretations

could introduce potential distortions in the study results. These scope and delimitations

provide a framework for understanding the specific boundaries and considerations of the

research study on financial literacy and spending habits among ABM students at ACLC

College of Ormoc.
Definition of Terms

Financial Literacy - refers to the capacity to comprehend and use a variety of

financial concepts and abilities, such as personal financial management, budgeting, and

investing.

Spending habits - is the way you are used to paying money for things, the things

you spent money for and how much you are used to spending, all of which is hard to

change.

Financial Knowledge – this refers to the sufficient knowledge about facts and

personal finances and is the key to the personal financial management behaviors.

Financial behavior - defined as how good a household or individual manages

finances such as Saving habits, Budgeting habits, Debt Management Habits, and

Spending Habit.
 Chapter II

THEORETICAL BACKGROUND

Financial literacy encompasses grasping fundamental financial skills and

concepts. It involves not only acquiring knowledge but also effectively applying it in

one's own life. Individuals with financial literacy possess the understanding and

confidence needed to make informed financial decisions, enabling them to manage their

money responsibly, borrow and save wisely, and plan and invest for the future. Given the

increasing complexity of finances due to technological advancements and societal

changes, the significance of financial literacy is more pronounced than ever.

Consequently, it's imperative for college students to graduate with a strong foundation in

financial knowledge. However, financial literacy rates are declining, reflected in

Americans' financial behaviors—savings rates are dropping, debt is rising, and wages

remain stagnant. College students who prioritize financial literacy can overcome these

challenges and achieve financial comfort in the future.

According to Mason and Wilson (2000), financial literacy involves a "meaning-

making process" wherein individuals utilize a blend of skills, resources, and contextual

knowledge to process information and make decisions while considering the financial

consequences. From this definition, it can be inferred that financial literacy entails
decision-making using a mix of skills, resources, and contextual knowledge to assess

information and make financially sound choices.

Financial literacy is a fundamental competency necessary for navigating modern

society. It encompasses understanding credit card and mortgage interest, insurance, and

saving and investing for the future. Garman & Forgue (2000) define financial literacy as

possessing the factual knowledge and vocabulary essential for successfully managing

personal finances. Proficiency in personal financial management and market

understanding indicates a greater ability to manage a family's financial resources

(Godwin, 1994). Individuals are more likely to achieve their financial goals with

adequate knowledge. Conversely, a lack of personal financial knowledge constrains

financial management and may lead to financial difficulties, resulting in diminished

financial well-being.

A report released by the Wisconsin Hope Lab in 2018, examining 43,000 students

across 66 colleges and universities, revealed concerning findings: 36% of university

students struggle to afford enough food, while 42% of community college students

experience hunger or inadequate nutrition (Goldrick-Rab, Richardson, Schneider,

Hernandez, & Clare, 2018). Acquiring financial literacy presents a promising avenue for

enhancing the financial capacity of today's youth (Duquette, 2018). Students often lack

clarity regarding their priorities and may spend on non-essential items, leading to

overspending (Paine, 2012). Financial planning becomes crucial in such scenarios. As

outlined in "Financial Management" by Ferdinand L. Timbang (2015), financial planning

facilitates both short-term and long-term decision-making, serving as a foundation for

fund allocation.
 In essence, financial literacy boils down to 'budgeting.' It is not mandatory to be a

finance professional to possess financial literacy; rather, it necessitates the ability to

optimize current funds to attain financial stability. Given that students are expected to

earn income in the future, it's crucial for them to learn money management skills. A study

by Acheampong, Kyei-Baffour, Hanson-Cobbinah, & Osei (2015) found that nearly half

of the surveyed university students lack financial literacy, partly due to the systematic

absence of personal finance education in college curricula.

Another study by Mohd Rahim Ariffin and Zunaidah Sulong (2017) delves into

the financial literacy level and students' perception of saving behavior, indicating a

positive correlation between saving behavior, parental socialization, and peer influence

with financial literacy. Conversely, self-control exhibits a negative correlation. In the

Philippine context, where commodity prices are soaring and money holds significant

value, prudent spending is crucial, underscoring the importance of budgeting (De

Guzman et al., 2012).

Regarding spending habits, poor spending patterns stem from a lack of self-

discipline characterized by continued overspending. According to social learning theory,

spending habits are acquired from parental and influential figures' behaviors (Fluellen,

2013). Childhood experiences, including parental money management approaches and

lessons, significantly shape spending habits (Hadzic & Poturak, 2014). Socialization

agents such as family and peer groups exert considerable influence on individuals'

attitudes toward money (Hadzic & Poturak, 2014). Pillai et al. (2010) emphasize that

young adults' spending habits play a pivotal role in the sustainability of their finances and

are critical to financial prudence. Financially literate students typically allocate a greater
proportion of their funds to durable goods like housing, education, and investments rather

than to consumables, highlighting the desirability and recommendation for universities to

enhance students' financial literacy (Shaari et al., 2013).

Theoretical Framework

As individuals mature, their financial decision-making undergoes a

transformation. According to the Life-Cycle Theory of Consumption, financial behavior

evolves with age and is shaped by the balance between goods and services consumed

relative to their needs and desires.

The basic financial knowledge an individual possesses is derived from principles

learned both at home and through various institutions, influencing their financial conduct.

How one perceives these foundational financial principles directly affects their spending

behavior. Additionally, factors such as gender and age play a role in shaping behavior.

Gender influences decision-making due to differing personalities and characteristics

among sexes. Meanwhile, age significantly impacts behavior as individuals' needs and

preferences evolve over time.

Conceptual Framework

The following diagram shows the independent and the dependent

variables of the study which help grasp and understand what the research is

about. The conceptual framework is formulated to explain the relationship

between dependent variable and independent variables. In this study, spending

habits are regarded as dependent variable whereas; demographic profile and

financial literacy are categorized as independent variables.

Figure 1. Conceptual Framework.

Demographic Profile
Spending Habits
 Sex
 Age  Academic
purposes
 Food
 Personal
Needs

FINANCIAL LITERACY
Independent Variable Dependent Variable

Chapter III

RESEARCH METHODOLOGY

This chapter presents the research methodologies used in the study. This covers

the research design, locale of the study, respondents of the study, research instrument,

validity of the research instrument, reliability of the research instrument and data-

gathering procedure.

Research Method

The research methodology for examining the relationship between financial

literacy and spending habits is currently unavailable. However, a general outline of how a

study could be conducted includes a quantitative research design, sampling a

representative sample of individuals with financial knowledge or literacy, data collection

using validated tools, data analysis using statistical techniques like correlation and

regression, and interpretation of results to understand the relationship between financial

literacy and spending habits.

Research Design
 Descriptive-Correlation design method of research will be used in this study. The

descriptive- correlation is simply defined as a relationship between two variables. The

whole purpose of using correlations in research is to figure out which variables are

connected. This method provides essential knowledge about the concepts used in the

study as well as their relationship with each other. Hence, this research type is deemed to

be the most appropriate for the perceived since this involved assessment of the given

condition.

Research Environment

The study will be conducted at ACLC College of Ormoc, a higher education

institution located in Ormoc City, Leyte, Philippines. This school is chosen as the locale

of the study due to its student population and the availability of the Accountancy and

Business Management (ABM) strand under its Senior High School program.

Figure 2. Research Environment.

Source: Facebook page of ACLC College of Ormoc.

Sampling Method

To ensure a representative sample, a random sampling technique will be

employed. By using a random sampling technique, the study aims to ensure that every

ABM student at ACLC College of Ormoc has an equal chance of being selected for the

study. This helps to minimize bias and increase the generalizability of the findings to the

larger population of ABM students in the ACLC College of Ormoc. To implement the

random sampling technique, the researcher will obtain a list of all ABM students enrolled

in ACLC College of Ormoc. From this list, a predetermined sample size can be

determined based on the desired level of statistical power and precision. By employing a

random sampling technique, the study aims to ensure that the selected sample is

representative of the larger population of ABM students in ACLC College of Ormoc. This

will enhance the generalizability of the findings and increase the validity of the study's

conclusions.

Research Respondents

The research respondents for this study primarily consist of ABM (Accountancy,

Business Administration, and Management) students enrolled at ACLC College of

Ormoc. These students are chosen as they are likely to have a strong interest in financial

matters and may influence the economic landscape in the future. The study aims to gather

insights into the relationship between financial literacy and spending habits among this

specific population.
Research Instrument

The primary instrument used for data collection was a questionnaire, adopted

from previous research studies titled "Determinants of Saving Behavior among

University Students in Malaysia" by Thung et al. (2012) and "Spending Behavior of

Management Students of University of Saint Louis Tuguegarao, Cagayan" by Abawag et

al. (2019). The questionnaire comprised two parts: the first part assessed the financial

literacy of the respondents, while the second part focused on their spending habits related

to academic, food, and personal needs. A 4-point Likert Scale was utilized to gather

responses from the participants.

Research Procedures

In the initial stage, the researchers will prepare for the data collection process.

They will design a survey questionnaire using Google Forms, which will be the primary

tool for gathering information. To ensure the participants' rights and well-being, the

researchers will obtain informed consent from the ABM students at ACLC College of

Ormoc before administering the questionnaire. This step is crucial as it allows the

participants to understand the purpose of the study and their right to withdraw from the

research at any time without consequences.

Once the informed consent is obtained, the researchers will proceed with the

actual data collection. They will distribute the survey questionnaire through the Google

Forms link to the target population, ensuring that each participant completes the

questionnaire independently. This approach will help maintain the anonymity and
confidentiality of the responses, encouraging honest and accurate information. The

researchers will closely monitor the data collection process, ensuring that the

questionnaire is being filled out correctly and addressing any queries or concerns that

may arise.

After the data collection phase is complete, the researchers will move on to the

final stage of the procedure. They will analyze the collected data, focusing on the

participants' financial literacy levels and spending habits. This analysis will involve the

use of descriptive statistics to summarize and present the findings. The researchers will

also ensure the quality and validity of the data by conducting appropriate checks and

verifying the responses, if necessary. Finally, they will prepare a comprehensive report

detailing the study's findings, discussing the implications and contributions to the existing

literature on financial literacy and spending habits among ABM students at ACLC

College of Ormoc.
 Chapter IV

PRESENTATION, ANALYSIS, AND INTERPRETATION OF DATA

(introductory statement, what is shown in this chapter, present the findings based
on the sequence of the specific aims found in the Statement of the Problem. SOP #1
should be findings #1)
 Chapter V

SUMMARY OF FINDINGS, CONCLUSION, AND RECOMMENDATIONS

(3 sentences introductory statements, what is shown in this chapter)

Summary of Findings

Conclusion

Recommendations
 References

(follow this format, reference list must be in alphabetical order)

Adansi, J., & Oringo, J. (2019, November). Language games and acquisition of speaking

skills among students of junior high school in Hohoe Municipality, Ghana.

Research Gate.

https://www.researchgate.net/publication/337199618_Language_Games_and_Ac

quisitio

n_of_Speaking_Skills_among_Students_of_Junior_High_School_in_Hohoe_Mun

icipalit y_Ghana
 CURRICULUM VITAE

2X2

Name :

Email Address :

Contact Number :

Place of Origin :

Educational Background

Senior High Level : ACLC College of Ormoc City, Inc

: Brgy. Cogon, Ormoc City

: SY 2021-2023

Junior High Level :

:
 :

Elementary Level :

APPENDICES