Chapter 1

INTRODUCTION

BACKGROUND OF THE STUDY

Personal finance and financial management are essential skills for individuals to

achieve financial stability and security. With the increasing complexity of financial markets

and the growing importance of personal finance, it is crucial for individuals to possess a high

level of financial literacy. Globalization has kept pace in bringing forth rapid development

across countries and has caused financial literacy to become increasingly significant in

achieving greater economic success (Banthia & Dey, 2022). Financial literacy refers to the

ability to understand and effectively manage one's financial resources, making informed

decisions about saving, spending, and investing. On the other hand, financial behavior refers

to the way a person manages their money, makes financial decisions, and deals with financial

issues (Baranidharan, 2023).

In recent years, there has been a growing concern about the lack of financial literacy

among young adults. According to research, many individuals lack a solid understanding of

personal finance and exhibit poor financial behaviors, such as overspending and high levels

of debt. 63% of Canadians aged 18-34 reported feeling financially stressed, and 41% reported

having no savings or emergency funds (Financial Consumer Agency of Canada, 2019)

The consequences of poor financial literacy can be severe. Individuals who lack

financial literacy may be more likely to fall into debt, struggle to make ends meet, and

experience financial stress. Moreover, poor financial literacy can have long-term effects on

an individual's financial well-being, potentially leading to a lifetime of financial struggles.

Business, and Management (ABM), may be particularly vulnerable to poor financial literacy.

A study conducted by the National Endowment for Financial Education found that only 28%

of college students reported feeling confident in their ability to manage their finances

effectively. Another study by the Financial Planning Association found that 62% of college

students reported feeling overwhelmed by their financial responsibilities.

Despite the importance of financial literacy, there is a limited understanding of the

relationship between financial literacy and financial behavior among students in business-

related fields. Previous studies have focused primarily on the relationship between financial

literacy and financial behavior among adults or older adults, with little attention given to the

specific needs and experiences of young adults in business-related fields.

In the Philippines, problems with how to properly manage finances is also evident.

Financial literacy can also be determined by an individual’s debt management behavior. This

behavior refers on how an individual acts or reacts with the lack of money, causing them to

borrow more and be in debt. The level of financial literacy can influence this behavior.

According to research in Central Luzon State University, there is a tendency that an

individual’s financial behavior can be influenced also by their peers especially when it comes

to decision making (Pascual, and Santos-Recto, 2024)

The researchers’ purpose behind this study came from their observations and other

people’s thoughts about ABM students on how well they know how to manage finances, and

how it relates to their financial behavior. Finding the level of financial literacy and the

financial behavior of Grade 11 – ABM students of Dona Hortencia Salas Benedicto National

High School – Senior High School will surely help the researchers determine the relationship

between the two variables. In this study, the researchers aim to benefit the students, teachers,
and parents by helping them be aware about the connection of financial literacy and financial

behavior.

STATEMENT OF THE PROBLEM

This study aims to explore the financial literacy and financial behaviors

of students in the Accountancy, Business and Management (ABM) strand. Financial literacy

encompasses key aspects such as money management, saving, budgeting, and investing—

skills that are crucial for making informed financial decisions. Given the future roles of ABM

students as potential accountants and business professionals, it is essential for them to

develop strong financial literacy and sound financial behaviors. Despite the recognized

importance of financial literacy in ensuring prudent financial decision-making, there is a

noticeable gap in research focused on high school students pursuing business-related tracks

like ABM. A comprehensive understanding of ABM students' financial knowledge and

behaviors is needed to address this gap and to improve the financial education they receive.

To address this issue, the researchers sought to answer the following questions:

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

2. What are the financial behaviors of ABM students, including saving, spending, and

budgeting habits?

3. Is there a correlation between higher levels of financial literacy and better financial

behavior among ABM students?

4. Beyond financial literacy, what other factors influence the financial behaviors of

ABM students?

(Please show to me your Standardized tool)

financial literacy impacts students' financial management practices. It also aims to identify

ways in which financial education can be enhanced to improve financial decision-making and

outcomes for ABM students.

HYPOTHESIS

From the problem stated above, the following hypothesis was formulated:

Null Hypothesis: There is no connection between the financial behavior of Grade 11 – ABM

students to their level of financial literacy in terms of budgeting, spending, and managing

finances.

Alternative Hypothesis: There is a connection between the financial behavior of Grade 11–

ABM students to their level of financial literacy in terms of budgeting, spending, and

managing finances.

SCOPE AND DELIMITATIONS

The study contains an evaluation of the Grade 11 - ABM (Accountancy, Business and

Management) students’ level of financial literacy and how they manage their finances.

Furthermore, this research only seeks to investigate the relationship between financial literacy

and financial behavior. In the data gathering section, respondents are fixed to a maximum of

80 Grade 11 students in the ABM academic strand. The researchers will used a stratified

random sampling, for they will take a sample size per section using Slovin’s Formula.

The research instrument used for this study is limited only to the Survey

Questionnaire. The target respondents of this study are delimited to Grade 11 ABM Students

of Doña Hortencia Salas Benedicto National High School - Senior High School only. (Please
ask Grade 11 ABM Advisers the actual population of each section so that you will know the

sample size)

The study only focuses on the connection of financial literacy and financial behavior

of the students. However, the study excludes the effects of the students’ financial status on

their behavior.

SIGNIFICANCE OF THE STUDY

It is expected that this study’s results will reveal the ABM students’ financial literacy

levels as well as their financial behaviors. Since the concern on financial management

competency among the young people is enhancing, this research can assist the institutions of

learning to establish areas of concern about the teaching of financial literacy and enhance the

development of better teaching packages. The following individuals will benefit from the

study’s findings:

ABM Students. The findings will help know the current level of financial literacy

and financial behavior among these target groups. This will help them realize their adequacy

in managing personal finances and the areas that require improvement so that they can make

good decisions when they get prepared for business related careers.

Teachers. In this way, the findings will be useful for teachers in the ABM strand to

modify the lessons and their strategies of behavior in accordance with the seen deficiency in

the students in terms of financial literacy. The following should be understood when applying

the concept of formative assessment: Formative assessment helps teachers to specifically

understand their students’ financial literacy levels and therefore designers lesson plans and

interventions that specifically aim at students’ deficits.

programs that aim at delivering the knowledge in the area of financial literacy and make sure

that the content of those programs conforms to industry standards, as well as prepare students

for the future. This could result into coming up with other workshops, seminar or even

extracurricular activity that involves practical aspect of financial management.

Parents. This will also benefit parents as they will be in a better position to note their

children’s financial literacy and tendency. This will assist them in ensuring proper family

financial behaviors in place, complementing school educational process, and enabling their

children for financial self-sufficiency.

Financial Institutions. The readership of this study includes the banks, credit unions

and other financial institutions who stand to gain from the research by learning how they can

create new categories of youth financial education programs or products. Finding out the

level of financial literacy of the ABM students will enable these institutions to provide

services that an inhibit positive financial behaviors among the youth.

Future Researchers. This study will contribute positive knowledge to the existing

literature and body of knowledge on financial literacy and financial behavior of high school

students particularly those in the ABM strand. Subsequent studies can build from these

findings to examine other predictors of financial behavior that relates to other aspects, for

instance, socio-economic status, family financial socialization or technology exposure (for

instance Fintech).

RESEARCH FRAMEWORK

Theoretical Framework
 The study is based on concepts and theories that the researchers have carefully

reviewed to identify key variables. These theoretical foundations have helped the researchers

refine the research problem and develop the conceptual framework of this study.

Building on Festinger's theory, the present study will explore the relationship between

financial literacy and financial behavior among ABM (Accounting, Business, and

Management) students. The hypothesis is that students with higher financial literacy will

show more positive financial behaviors than those with lower financial literacy. This is

because individuals who understand financial concepts and practices are more likely to make

informed and wise financial decisions.

Additionally, the study also uses Ajzen's Theory of Planned Behavior, which suggests

that behavior is shaped by a person's attitudes, social pressures, and perceived control over

their actions. According to this theory, a person's attitude toward a behavior, the social

pressure they feel to engage in it, and how easy or hard they think it will be all affect their

intentions and, ultimately, their actions.

By combining these theories, the study aims to give a complete understanding of the

relationship between financial knowledge and financial behavior among ABM students. It

considers factors like social comparisons, attitudes, social norms, perceived control over

behavior, and influences from social learning.

Conceptual Framework
 This study focuses on determining the levels of Grade 11 ABM (Accountancy,

Business, and Management) students’ financial awareness which will be interpreted as high,

moderate, and low and financial literacy which will be interpreted as excellent, good, fair,

poor, and very bad. This also aims to identify if there is a significant relationship between the

two variables.

Financial
Awareness

 High
 Moderate
 Low
Grade 11 ABM Students
Financial Education
 Sex
Financial Literacy Programs
 Section
 Excellent
 Good
 Fair
 Poor
 Very Bad

Figure 1: The schematic Diagram of the Conceptual Framework of the Study.It shows the

Independent and Dependent Variable of the Study.

DEFINITION OF TERMS

The following terms are being defined conceptually and operationally.

ABM. Accountancy, Business and Management.

Operationally, it is the strand where the researchers will be getting their respondents

of the study.
DHSBNHS-SHS. Doña Hortencia Salas Benedicto National High School-Senior High

School.

Operationally, it is the locale of the study.

Financial Behavior. Conceptually, it refers to the way a person manages their money, makes

financial decisions, and deals with financial issues (Baranidharan, 2023).

Operationally, it is the dependent variable of the study.

Financial Literacy. Conceptually, it is possessing the financial knowledge, behaviors,

systems, team, and plan to confidently take effective actions that best fulfills an individual’s

personal, family, and global community goals (National Financial Educators Council, 2022).

Operationally, it is the independent variable of the study.

Schematic Diagram. Conceptually, a schematic diagram is a graphical representation of a

plan or a model that is presented in a simple, accessible way. Schematics use simple lines and

symbols to communicate information such as what, how, and where (Lucid Software Inc.,

2024).

Operationally, it is the diagram used for the conceptual framework of the study.

Survey Questionnaire. Conceptually, it can be a written documentation or questions that is

administered either in person (door-to-door), on paper (through the mail), by phone, or

online. (Eric van Holm, 2021)

Operationally, it is the research instrument used for the study.