CHAPTER 2

REVIEW OF RELATED LITERATURE

This chapter presents the related literature and studies which covers the study of
correlation of school allowance with the academic performace of students in CINHS.

FOREIGN LITERATURE

According to Asri, Abu Bakar, Laili and Saad (2018), stated that although students do
not have a commitment on paying monthly debt instalments like other households,
however, their status as students requires them to pay their education fees, rents and
other essentials, by which they received the financial from loans, scholarships or their
families. In addition, students who come from under privileged or low-income families
might affect their academic performance. Many past research has been done to show a
relationship between financial problems and the students' academic performance.

According to Olufemioladebinu, Adediran and Oyediran (2018), the parent’s income

or social status has positively affected the students' academic performance in an
examination. This can be further supported by a previous study by Olufemioladebinu et
al. (2018) explained that students who come from low socio-economic family status tend
to show a poor academic performance compared to students who come from a better
family background status. To add, according to Asri et al. (2018) stated that students
who come from a high economic status are able to have a stimulating learning
environment. Hence it is possible for those who have a better family financial
background to excel well and achieve a better academic performance compared to
those students who come from low-income families.

According to Nnamani, Dikko and Kinta (2019), they mentioned that financial
problems of the students extremely contribute to the students low academic
performance, which therefore leads to the low quality of education in many ways. As
stated in this early literature, financial problems lead to the financial stress which will
eventually influence the low academic performance of the students. A study from
Widener (2019), they mentioned that financial stress has been consistently related to
the students' low academic performance. According to a study by Asri et al. ( 2018),
mentioned that there are many factors that contribute to students academic
performance. According to Dang and Bulus (2020), stated that many Americans are
affected by the economic downfall. Even college students often worry about their
finances, which then this financial worry may affect their academic performance as the
students are dividing their attention between financial and academic.

Asri et al. (2018) added that when a highly motivated student encounters a financial
problem, the student will turn the problem into motivation for them to achieve success.
Therefore, whatever problems that come, which include financial problems, should not
hinder the students if they want to succeed academically. According to Widener (2019)
mentioned that there are two ways of how a financial problem could affect the
students academic performance which are health problems and having to work part-
time. Widener (2019) further added that financial problems lead to health problems such
as anxiety which then lead to negative behaviours such as addiction to alcohol or
uncontrolled shopping, hence making the students lose their focus on their
academics. According to Asri et al. (2018) stated that poor financial management could
cause an individual unable to control the stress and thus it affects their daily life such as
health by making them depressed and becoming physically ill.

Further supported by the study of Asri et al. (2018) which stated that one of the
causes of stress among students is because of their financial problems in which the
students tend to feel dizzy and have anxiety that will eventually create tension with
them. In other words, financial problems lead to various problems that will eventually
affect the students academic performance. Another way financial problems could affect
the students' academic performance is stated by Widener (2019), in order to overcome
the financial problems, most students make a decision of having to work part-time and
even working for a long horse, which takes away their time focusing on their academics.
This can be supported by a study from Widener (2019). It found that students who are
financially depressed had lower grades and enrolled in fewer credit hours. Most
students are involved in part-time jobs given by universities or local companies.
According to Asri et al. (2018), the students who come from underprivileged socio-
economic status families are often constrained by problems such as needing to work to
help their families, incapable of buying learning materials that will ultimately impact their
academic performance.

Financial literacy is the ability to make sound judgements and make effective
decisions regarding the use and management of money. The actual definition of
financial literacy is in fact not clear and has never been universally agreed. Financial
literacy means the way individuals manage money can be seen in terms of terms of
insurance, investment, savings and in terms of budget preparation (Mahdzan &
Tabiani,2019). Financial literacy focuses on three dimensions or three aspects: financial
knowledge, financial attitude and financial behavior (OECD, 2020; Atkinson & Messy,
2020). Indeed many factors actually affect the level of financial literacy among
individuals. In today's challenging financial landscape, individual and household needs
are increasing, and certainly stimulate demand for different types of financial products.
Financial literacy is a combination of knowledge, attitudes, behaviors, awareness and
capabilities required to make financial decisions and for individuals achieving wealth
(OECD,2020).

LOCAL LITERATURE

(1) According to an old review of published psychology research in the Philippines,

stress and coping has been one of the most intensively researched topics among
Filipino psychology researchers (Bernardo, 2019). But there were hardly any studies
that focus on stress experiences of Filipino students in that review, a trend that has
improved somewhat in the last decade with the publication of some studies on Filipino
students’ stress-related experiences. This observation reflects a similar trend in other
parts of the world where research on stress experienced by higher education students
came relatively late compared to stress research on other populations (Michie, Glachan,
& Bray, 2020). As a reflection of this trend in other countries, research on stress in
higher education students has increased in the past two decades, and psychologists
now have a better understanding of the range of stressors for students (Robotham &
Julian, 2019) and factors related to students’ stress (Beiter et al.,2018).
Various psychological assessment tools have also been developed to measure
higher education students’ stress (e.g., Ross, Niebling, & Heckert, 2018; Sarafino &
Ewing, 2018) and general measures of stress have been adapted or validated for use in
specific populations of college students (Camacho, Cordero, & Perkins, 2020; Chan &
Bernardo, 2019). There has been a similar increase in the number of published
research on Filipino students’ stress-related experiences. Most of these studies inquire
into the factors associated with the experience of stress, Bernardo & Resurreccion 35
including the sources of stress (Calaguas, 2021; Pengpid, Peltzer, & Ferrer, 2021),
responses to stress (Dy, Espiritu-Santo, Ferido, & Sanchez, 2019; Labrague et al.,
2018), and various psychological and educational correlates of stress (Calaguas, 2021;
Pengpid et al., 2019; Reyes et al., 2018; Tamanal, Park, & Kim, 2018). There is a
noticeably higher frequency of published studies on stress-related experiences of
nursing students in the Philippines (e.g., Labrague, 2019; Labrague et al., 2020), which
may be explained by the continuing rise in enrollment in nursing programs in the
Philippines. A few studies have inquired into stress-related experience as symptoms of
more complex psychological problems of students (e.g., Gingrich, 2019; Sta. Maria et
al., 2018). Interestingly, even with the increase in the number of published studies
tackling stress experienced by Filipino students, there seems to be more studies on the
subject with Filipino-American students (e.g., Nadal, Pituc, Johnston, & Esparrago;
2021; Wei, Ku, & Liao, 2019), which suggests that more research could definitely be
done on stress-related experiences of Filipino students.
 One of the sources of stress for students that has been observed among higher
education systems in different parts of the world relates to financial pressures (Aherne,
2019; Joo, Durband, & Grable, 2019; Roberts, Golding, Towell, & Weinreb, 2018). Not
surprisingly, stress related to financial strain and uncertainty has a negative impact on
student well-being (Mahmoud, Staten, Hall, & Lennie, 2019; Smyth, Hockemeyer,
Heron, Wonderlich, & Pennebaker, 2020). Students’ financial stress is associated with
higher self-reported mental health needs (Hyun, Quinn, Madon, & Lustig, 2018),
difficulties in college adjustment (Meehan & Negy, 2020), and a range of adverse
behaviors, social relations, and academic outcomes (Adams, Meyers, & Beidas, 2018;
Northern, O’Brien, & Goetz, 2019). Experiencing financial stress is not unlikely among
Filipino students, and government statistics suggest that a significant proportion of the
school-age population experience financial difficulties. Starting at the basic education
level, almost 20% of Filipino children who dropped out of school mentioned insufficient
financial resources as the main reason for quitting school (Philippine Statistics Authority,
2021). Dropping out of school was most probable among 17-year olds, particularly
among those from the lowest income families (Reyes, 36 Financial Stress and Well-
being Tabuga, Asis, & Mondez, 2018). In the college-age population, the top reason
(mentioned by 37.58%) for not going to college or university was the high cost of higher
education; moreover, about 16.0% of those who opted not to pursue higher education
report that they did so in order to look for work to earn money for their families (Reyes et
al., 2020). In the current study, we hypothesized that financial stress would be
negatively related to subjective well-being, or specifically, life satisfaction of Filipino
students. There are currently no published studies that show this relationship with a
Filipino sample. One recent study did not actually measure financial stress, but showed
that sense of poverty was associated with the experience of psychological distress
among students (Reyes & Yujuico, 2019).

(2) Financial stress is both a significant problem for both international students and
citizen students. As financial stress relates to incapability to obtain funds to meet needs
and wants, it has been noted to impact learning motivation (Mbokani & Simaupang,
2018). In a study by Bernardo (2018) among Filipino students in higher education
concluded that financial stress affects students’ well-being. The study also asserted that
life satisfaction is a negative predictor of financial stress. However, eternal family
support moderates the relationship between life satisfaction and financial stress. The
study implies that whereas Filipinos are expressing financial stress how much more
international students. Joo, Durband, and Grable (2021) investigated the relationship
between financial stress and academic performance. Their study affirmed that financial
stress is a cause for students to reduce their coursework or stop schooling. Based on a
web-based survey of 503 students in higher education confirmed that there is a
significant relationship between financial stress and academic performance.

A further studies by Essel and Owusu (2018) and Yan (2018) examined the factors
that give stress to students which affects their academic success and how to manage it.
They identified four main area consisting of relationship factors, environmental factors,
personal factors, and academic factors. How to work with people was what they
considered as related factors. The environment stress was related to students’ worries
about the future. Academic stress factor was the class workload. The personal factor is
mainly financial stress. Financial stress was noted to predominantly affect the students’
academic success. They recommended stress management classes and financial
literacy courses for all the students so that they can manage their finances.

(3) Financial Management A number of researches have been conducted related to

financial management. Mandell (2021) defines financial literacy as “the ability to use
knowledge and skills to manage one’s financial resources effectively for lifetime financial
security.” Huston (2018) explains that financial literacy is made up of two elements:
understanding and use. Understanding financial implies that a person is knowledgeable
about personal finance and applies such knowledge in dealing with one’s finances. A
majority of the literature reviewed focuses on demographic factors or socially
constructed models of consumption to explain spending behavior. However, there is
very limited knowledge on the applicability of existing economic theories that explain
consumers’ spending habits, particularly within the setting of college students. Children
often do receive pocket money and/or an allowance (Furnham & Kirkcaldy, 2019;
Webley & Plaisier, 2018) from their parents, and extended family members.

Baseon Katona's (2018) theory of discretionary savings, children's pocket money

can therefore be viewed as discretionary spending money. Results of the students
budgeting, and spending conducted by Stollak (n.d) revealed that women were much
better planners and budgeters than males. Similarly, students became better budgeters
and planners as they matured. Saving is imperative to improve individual and societal
welfare. At the personal level, savings help households achieve smooth consumption
patterns Bona (2018) concluded that most of the respondents spent more money on
their projects and assignments, tuition fees and school supplies, and room and board.
This is due to increasing price of materials used in doing their projects and
assignments. Moreover, the growing rate for tuition fees, and room and board resulted
to more spending. Meanwhile, students spend less in clothing and accessories,
transportation, laptops and other gadgets. Students should plan their expenses so that
their spending behavior can be better. They must put into consideration saving money
and buying items that they really need rather than spending so much on their wants.
Students must be conscious on the consequences of their financial decision because it
affects their future. One-way students may lessen their spending is to analyze their
spending practice.

SYNTHESIS

Financial Literacy is the ability to use knowledge and skills to manage one’s financial
resources effectively. A majority of the literature reviewed focuses on demographic
factors or socially constructed models of consumption. Children often do receive pocket
money and/or an allowance from their parents and extended family members. Students
spend more money on their projects and assignments, tuition fees and school supplies,
and room and board. They spend less in clothing and accessories, transportation,
laptops and other gadgets. Students must be conscious on the consequences of their
financial decision because it affects their future. One-way students may lessen their
spending is to analyze their spending practice. According to Katona’s (2018) theory of
discretionary savings, children’s pocket money can therefore be viewed as discretionary
spending money. (P.Jeevitha & R.Kanya Priya, 2019) state that the study was carried
out in India and that although students’ spending habits differ, they save less than they
spend overall. Most students have savings and are aware of the value of saving money.
Students frequently favor using savings accounts as their primary means of saving.
Students set aside money for unexpected expenses. According to a study on students’
purchasing habits, they spend more money on transportation and education. According
to (Abawag, C.F.N et al, 2019) they concluded that most of the monthly allowance of
their respondents are spent in food. Particularly, there is a tight spending when it comes
to personal needs and academic purposes. Male students are more financially
responsible than female students, according to a study conducted by the University of
Saint Louis Tuguegarao City, Cagayan in the Philippines. Sex, year level and ethnicity
are determinants of the difference regarding on the spending behavior. Women were
much better planners and budgeters than males. Similarly, students became better
budgeters and planners as they matured. As a result, the college should start examining
how they can better inculcate the younger male population. This study was conducted in
USA.Students do not have a commitment on monthly debt instalments like other
households, however, their status as students requires them to pay their education fees,
rents and other essentials.