CHAPTER I

PROBLEM AND ITS SETTING

Introduction

General Santos City is becoming a progressive city in the Philippines. A

lot of investors that ventures for businesses are coming inside the premises of

the place. Factories, subdivisions, banks, malls, and other more establishments

are uprising and opens job opportunities for both minimum wage earners and

non-minimum wage earners. These happenings helped General Santos City to

uplift their economic status.

Due to the different events that happened to our society, it has affected

our economy. Inflation occurred and there came the persistent increase of prices

of goods and services that are available to the market. This economic

phenomenon affected both the minimum wage earners and the non-minimum

wage earners. Inflation caught the attention of the researchers to conduct a study

with regards to determining the financial literacy of minimum wage earners and

non-minimum wage earners. With the current manifestation of such economic

phenomenon, spending habits and money management has been affected and

changed. It is important to consider the financial literacy of both minimum wage

earners and non-minimum wage earners for they are part of the key role players

for an economy to succeed. This study introduced awareness to both types of

workers as their spending habits and money management is concerned.

Statement of the Problem

This study aimed to determine the level of financial literacy between

minimum wage earners and non-minimum wage earners in General Santos City.

Specially, the study sought to:

1. Determine the level of financial literacy of the minimum wage earners

in terms of:

a. Budgeting

b. Saving

c. Investing

2. Identify the level of financial literacy of non-minimum wage earners in

terms of:

a. Budgeting

b. Saving

c. Investing

3. Recognize the significant difference between the level of financial

literacy of minimum wage earners and non-minimum wage earners.

Hypothesis

This study was tested using 0.05 level of significance.

There is no significant difference between the level financial literacy of

minimum wage earners and non-minimum wage earners.

Significance of the Study

This study will provide information on the Minimum Wage Earners and

Non-Minimum Wage Earners knowledge about economic matters in General

Santos City in realizing the financial capability of an individual.

Furthermore, this study will benefit the following:

As for the government, this study aims to inform the government and

different stakeholders in training the financial literacy level among minimum and

non-minimum wage earners around General Santos City. Discoveries of this

study would empower the government and to plan and execute approaches that

would improve the financial literacy of the workers. The discoveries would then

guide the government to tailor instructive projects that will meet the needs of the

workers concerning their financial matters.

Furthermore, this study helps the community to understand and provide

information in accordance to the importance of financial literacy in the community

to enlighten about the necessity of making financial responsible decisions.

On the other hand, this study aims to help the earners or workers in

opening the minds of the minimum wage earners and non-minimum wage

earners about financial literacy concepts for they are one of the key role players

in the economy and realizing an individual’s spending habit is essential to money

management.

Lastly, this study aims to help the future researchers as reference in

understanding the importance of financial capability of an individual and to serve

as information in setting guides in managing financial affairs and spending

strategies.

Scope and Delimitation

This study covered determining the financial literacy of an individual

whether they are minimum or non-minimum wage earners. The determination of

financial literacy is only limited on the factors that affect an individuals’ financial

literacy. Financial literacy has six core principles but the researchers limited on

using three principles only namely budgeting, savings, and investing.

The respondents utilized a modified questionnaire adapted from the study

of Dayot, Elarcosa, Perez, and Uy wherein it is composed of statements of a

real-life experiences focusing in the ability of an individual managing their salary

through budgeting, investing, and saving. Hence, these statements are to be

answered through rating themselves based on the frequency assigned whether

the respondents are never, rarely, sometimes, usually and always does the

situations mentioned in the questionnaire.

The respondents were gathered using the purposive random probability

sampling and was determined through the sample size formula resulted to 384

overall respondents. This was divided into two; one hundred ninety- two (192)

samples under minimum wage earners and one hundred ninety- two (192)

samples under non-minimum wage earners. The minimum wage earners will only

limit to those individuals receiving a basic monthly salary of lower than P13, 000

such as those who Works in agricultural, non-agricultural, retail, and services

establishments house-helpers, baby-sitter/nanny(yaya), cook, gardener, driver,

laundry person, construction labors, and etc., while non-minimum wage earners

are those individuals receiving higher than P13, 000 comparably those who are

in a management or has a professional position

The gathering of data was only limited within any of the Barangays in the

City of General Santos. This happened between the month(s) of March to May.

The researchers chose this location as it is within the respondents' range of

residency and it is more convenient to gather.

Definition of Terms

To have a clear understanding, the following terms are conceptually and

operationally defined.

Financial literacy. It is the ability to use knowledge and skills to manage

one’s financial resources effectively for lifetime financial security (Mandell, 2009).

Operationally, financial literacy is the knowledge of an individual to his or her

financial matters and transactions.

Budgeting. It is a process of planning on how to spend your money (My

Money Coach, n.d.). Operationally, it is the allotment of money to probable and

necessary expenses.

Saving. It is the outcome when consumption is deducted to the income in

a year (Lee & Hanna, 2015). Operationally, it is the act of the act of setting aside

money for future or emergency use.

Investing. Conceptually, it is committing a specific amount of money,

expecting some future benefits or rewards out from it (Value Penguin, n.d.).

Operationally, it is the act of committing money with the goal of earning a

financial return

Minimum wage earners. Conceptually, a wage earner is an individual

who works for wages in return for the labor they have served. In Industrial

Relations and HR Terms, a wage earner is someone who earns money to help

and support a household (Wage Earner, n.d.). Operationally, they are the

workers who are compensated with the minimum wage.

Wage. Conceptually, it is the amount an employee works out the pay rate

(Business News, n.d.). Operationally, it is a compensation to a worker based on

the hours, days, or period he or she has worked.

Non-minimum wage earners. Conceptually, a salary earner is someone

who is paid a fixed amount per pay period. The summing amount of the received

payments of this employee are what is called the salary (Bragg, 2018).

Operationally, they are the workers who receive salary on every end of the

month.

Salary. Conceptually, it is the most basic source of income of an

individual. It is also the mainstream of their financial expenditures to sustain their

daily financial needs towards their necessity (Doyle, 2019). Operationally, it is a

compensation given to a worker in a fixed period.