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Chapter 1
Introduction
The capacity to settle on educated and successful choices about utilizing and overseeing
wealth and money is defined as financial literacy (Gale and Levine, 2010). Today, the ever-
changing world is moving in a fast pace, the impressions of being financially literate is a skill
However, the lack of financial literacy affects the capacity of people to satisfy long‐
term goals. Ineficcient money management because of the lack of financial literacy can prompt
personal behavioural patterns that make consumers defenseless against serious financial crises
(Braunstein & Welch, 2002). Financial fallacies influence the well‐being of people and
occurring negative externalities that influence all economy (Huston, 2010). Family members
lacking financial literacy come up with negative choices that influence themselves as well as
their families and the general public by any means (Storm and Levine, 2010).
Students failed to budget efficiently because they spent more than they earned. Their
expenses calculated are more than their income (Wilson, 2008). The act of spending makes
someone feel satisfied. In this manner, it demonstrates that anyone will spend more in order to
make them happier. Hence, students prefer to fork over cash for entertainment instead of
purchasing things ( Lois transporter, CFP ; David Maurice, CFP, 1998 ). Students behaviour
and conception of saving, like all financial behaviour is built inside the social group, achieved
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by particular individuals, helped by institutional and other social offices. Where in one needs
their own right. It’s opposed that students save more cash as they grow older, however it isn't
On the other hand, the advancement of financial literacy in young people has turned
out to be one of the most fundamental issues for policy makers. The first reason is that the
financial decisions faced by young people today are not quite the same as before. Financial
systems, products and services are getting more advanced. The other reason is that young
people will confront more risks in the future because of increased life expectancy, employment
issues, reduced prosperity and uncertain financial outlook (Atkinson and Messy, 2012).
lifelong learning for students, in order for them to be prepared on their future in entering the
Micomonaco (2003) finds college students tend not to have a budget or calculate credit
that a mere 17 states require high school students to take a course on financial literacy. A direct
impact was proven by these courses on a student’s ability to make wise financial decisions.
Plus, students who have some personal finance classes under their belts are much more likely
to successfully save money, budget wisely and invest smarter (Hoyt, 2015). A person with
adequate financial knowledge tend to save for the future, retirement and unexpected
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circumstances (Jappelli, 2010). Individuals who have financial literacy at least at a basic level
However, based on a recent study, looking at what first-year college students know
about finances shows most can only answer about a third of general financial questions
correctly (Metinko, 2015). Most students have low levels of financial literacy and have
Arnold (2015), it is truly disappointing but unexpected for students to lack knowledge of
financial literacy. Incoming freshmen are not very experienced and have more than likely
Education for these decisions relies on the individual. Although, money can and often does
lead to fulfillment and happiness; however, it can lead to unwanted events if mismanaged.
Therefore, the researchers conduct the study not just because it is aligned with their
strand, but because it is a unique and interesting study that is relevant to students having a hard
time dealing with their financial decisions. With this reason, the researchers are hoping that by
identifying the influence of financial literacy to students’ financial decisions, particularly the
students of Liceo de Cagayan University - Paseo del Rio Campus, some measures may be
helpful to the students and also to the teachers creating ways to train student in making wise
financial decisions.
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Theoretical and Conceptual Framework
The paper will rely on a few theoretical groundings and framework. Firstly, according
to the Rational Choice Theory, an individual should have a proper understanding of his or her
own selection of goals and the consequences of that selection. Rational people always choose
only those options that can offer good results. By means, people will choose to know more on
state of mind, and conduct to settle on legitimate budgetary choices and achieve his or her
monetary prosperity. Somebody can be characterized as financially educated on the off chance
that he or she is equipped and ready to settle on appropriate financial choices dependent on
his/her back learning. The more an individual is fiscally educated, the more he or she turns out
to be financially complex and equipped. Be that as it may, a great number of people are lacking
The ordinary microeconomic way to deal with saving and spending choices places that
a completely levelheaded and all around educated individual will expend not as much as his
pay in the midst of high profit, hence saving to help utilization when salary falls. Though,
students might not have their own income, except for working students. Beginning with
Modigliani and Brumberg (1954) and Friedman (1957), the buyer is placed to orchestrate his
ideal saving and spending examples to cover negligible utility up his lifetime.
There is a significant theoretical and exact assortment of work on the financial aspects
of education, five far less consideration has been dedicated to the topic of how individuals
attain and transmit financial literacy. Over the most recent couple of years, be that as it may, a
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couple of papers have started to look at the choice to gain financial education and to consider
the links between financial knowledge, saving, and spending (Delavande, Rohwedder, and
Willis 2008; Jappelli and Padula 2013; Hsu 2011; and Lusardi, Michaud, and Mitchell 2013).
behavioural changes for the least educated. This is on the grounds that it may not be
advantageous for the least educated to acquire learning investment costs, given that their
utilization needs are better safeguarded by transfer programs.12 The finding is reliable with
(Jappelli and Padula's, 2011) proposal that less monetarily educated people will be found in
The study by Delavande, Rohwedder, and Willis (2008) presents a straightforward two-
period model of customer sparing and portfolio allocation over safe bonds and risky stocks,
taking into account the securing of human capital as financial knowledge (à la Ben-Porath,
1967, and Becker, 1975). This work places that people will ideally choose to put resources into
financial knowledge to access higher-return resources: this preparation helps them recognize
better-performing assets and additionally procure financial consultants who can decrease
investment expenses.
Notwithstanding the fact that a few people will normally invest a little or nothing in
financial learning, it is in any case intriguing to take note of that regardless that it can be
socially ideal to raise financial information for everybody in early life, for example, by
implementing financial literacy in high school. This is on the grounds that even if whether the
financially illiterate never invest again and let their knowledge endowment devalue, they can
still will win higher profits for their saving, which produces a considerable welfare support.
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For instance, giving pre-work market financial knowledge to the least educated group enhances
their prosperity by a sum proportional to 82 percent of their initial wealth (Lusardi, Michaud,
decision. Here are some factors that affect students’ application on financial literacy; age,
gender, strand, and basic financial knowledge. It is confirmed that financial literacy is, truth
be told, most minimal among the young and the old. There is a widespread lack of financial
and economic knowledge among high school students (Markow and Bagnaschi 2005; Mandell
1997, 2008). College and young adults additionally show low learning, affirming that many
begin their working profession with low levels of financial literacy (Chen and Volpe 1998;
Lusardi, Mitchell, and Curto 2010). According to a study in St. Norbert College, women were
much better budgeters and planners than males. When it comes to students' financial decisions,
appear to be more aware than men (Carlo Alberto. Org, 2015). Former Chairman of the U.S.
Federal Reserve (Fed) Alan Greenspan, believed that the one of the most common problem in
today's generation and the economy is the lack of basic financial literacy.
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Statement of the Problem
The study attempts to identify the influence of Financial Literacy among Grade – 12
Senior High School Students of Liceo de Cagayan University, Paseo del Rio Campus.
Age
Gender
Strand
2.) How financially literate are the Grade 12 - Senior High School Students in terms
of:
Budgeting
Saving
Spending
Age
Gender
Strand
The problems 1 and 2 are hypothesis free. On the basis of problem 3 and 4 it has a null
The researchers believe that the findings of the study will be beneficial to the following:
Students. Gaining such literacy at an early age will help students envision their
financial goals in life. This research study will make them great decision-makers with wise
financial perspective. Also, it will teach them to project values of money in the future in order
Teachers. They will be able to use the findings of this study on helping the students to
become financially literate individuals. This research study will assist them on teaching the
University. This study would benefit the University as she will implement about
teaching financial literacy and will be able to produce financial literate students.
Government. The findings will help them realize the importance of teaching financial
literacy to the different schools and to be able to regulate new methods on teaching financial
literacy.
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Future Researchers. The study will go about as basis or reference for future
researchers. Furthurmore, future researchers can expand and examine the study and associate
The scope and delimitations of this research are focused on the influence of financial
literacy on students’ financial decisions in terms of budgeting, saving and spending. The
research study is only limited to the Grade 12 Senior High School students of Liceo de Cagayan
University, Paseo del Rio Campus for the Academic Year November 2018-March 2019.
Definition of Terms
Budgeting. It is the way towards making an arrangement to spend your cash. Budgeting
enables a person to decide ahead of time whether he will have enough cash to buy the things
he has to buy and might want to buy. It is offsetting expenses with your income.
individual.
Financial Literacy. An ability on make effective economic decisions regarding the use
Financially Literate. An individual who has the information, aptitudes, and certainty
to settle on capable financial choices that suits his money related circumstances. He has the
Financial System. A system that permits the trading of assets between investors,
lenders and borrowers. Financial system works at national and worldwide dimensions.
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Saving. An act of economizing where an individual keeps and saves a money or income
Strand. The different academic courses in senior high school divided into four
A. Demographic Profile
Age
Budgeting Budgeting
Saving Saving
Spending Spending
Figure 1. The schematic diagram showing the relationship of the independent and
Group Members:
Francisco, Ella Mae
Birog, Kristine Louise
Miñoza, Litton
Arsenal, Lester
Viñas, Sophia Elah
Epan, Trixie Ann
Morre, Bianca
Santican, Jezri
Dalidig, Wali
Abbu, Danielle Anne