THE RELATIONSHIP BETWEEN FINANCIAL BEHAVIOR AND FINANCIAL

STRESS AMONG FIRST YEAR ACCOUNTING STUDENTS IN UM TAGUM

COLLEGE

A Research Paper
Presented to the Faculty of Arts and Sciences Education
UM Tagum College
Tagum City

In Partial Fulfillment Requirement for the Subject

Purposive Communication

Presented by:

Madura, Sherlie Love

Manatad, Pherta Sizar
Medellin, Cecilio Jr.
Mejorada, Jocen Angela
Mongado, Charlize

October 2019
 Chapter 1

THE PROBLEM AND ITS SETTING

Rationale

Financial stress defines as the difficulty that an individual or household may

have in meeting their basic financial commitments due to shortage of money. Other

researchers defined this as the inability to meet one's economic responsibilities and is

influenced by attitudes, beliefs and other psychological factors. They also point out

that it have been linked to negative consequences across many aspects of life and

this include the health, well-being, relationship and especially the academic aspect.

There are young adults, including college students who have highest levels of stress

about money. So there are multiple financial stressors for many college students and

that includes their typical living expenses, academic expenses and school tuition,

work-school-life balance, financial pressure from family and unsure employment after

graduation (Bray, 2012; Beiter et al., 2015; Nelson, Lust, Story & Ehlinger, 2008;

Northern, O'Brien, & Goetz, 2010; Train, Mintert, Llamas & Lam, 2018; Wisconsin

HOPE Lab, 2016).

Financial behavior, on the other hand, can be related to personal financial

management. A good financial behavior development in students call for a special

attention because the financial behavior aspect can play a vital role in influencing the

welfare of university students. For instance, students who live far away from their

parents, for the first time will be faced with the choice of monthly financial management

by themselves. Thus, it is very essential that college students should possess financial

knowledge to be able to understand the benefits and risks of every decision to be

made. Also, there are lot of people especially college students whose dealing mental

health because of the impact of bad financial behavior that could lead to financial

stress and that should not be dismissed, and general anxiety may be among the most

proximal health correlation of financial stress. But contrary to that, there are studies

found that students who have problem with financial stress was not active in campus

activities but they were more into participating in academically beneficial activities.

(Ali, 2013; Heckman et al., 2014; Layli, 2013; Lucas, 2018).

In the Philippines, college students are said to experience a unique cluster of

stressors which may have a significant impact on their ability to cope with college life.

It may be internal or external to the individual. There are interpersonal, intrapersonal,

academic and environmental stressors. Exposure too many stressors can be related

to psychological symptoms such as depression and anxiety. If it is severe and

prolonged, it could affect the student’s academic performance and campus life.

Furthermore, in a statement, the Bangko Sentral ng Pilipinas (BSP) said Filipino adults

could correctly answer only three out of seven financial literacy-related questions

covering basic numeracy, computing compounding interest, fundamentals of inflation

and investment diversification. Thus, showing that Filipinos lack specific knowledge to

make informed financial decisions and could lead to financial stress to each individual.

(BSP, 2018; Charbonneau et al., 2010; Dussellier et al., 2005; Garrett 2001; Lucas,

2018; Richlin-Klonsky & Hoe in Busari 2012; Ross, Neibling & Heckert 1999).

However, the researchers have come across limited study that was

conducted on the relationship of financial behavior and financial stress of college

students, specifically, students from UM Tagum College. It only shows that the present

study shall make specific contribution and generate new knowledge on the effects of

literacy on financial behavior of university students. It is in this context that the

researcher is interested to determine whether financial behavior paves way to financial

stress of first year accounting students as this can raise awareness to the intended

beneficiaries of this study and possibly develop action plan to improve financial

behavior of university students, thus, the need to conduct this study.

Research Objective

This study aimed to determine the impact of financial behavior on financial

stress of accountancy students from UM Tagum College. Specifically this study will be

conducted to seek answers to the following objectives:

1. To assess the level of financial behavior among college students of UM Tagum

College in terms of:

1.1. Maintaining reasonable and low debt;

1.2. Personal spending plan;

1.3. Savings plan; and

1.3. Lack of money-related conflict

2. To find out the level of financial stress among college students of UM Tagum

College in terms of:

2.1. Student loans;

2.2. Credit cards;

2.3. Financial attitudes;

2.4. Financial knowledge and education; and

2.5. Financial future

3. To determine the significant relationship between financial behavior and financial

stress among accounting students in UM Tagum College.

Hypothesis

The hypothesis of the study is to be tested at 0.05 level of significance stating

that there is no significant relationship between financial behavior and financial stress

among accounting students of UM Tagum College.

Review of Related Literature

Theories, concepts, facts, information, views and readings related to financial

behavior and financial stress among accounting students are presented in this section.

This gives additional background information to support the current study.

Financial Behavior

Financial behavior can relate to the concept of financial management at

individual level. This personal financial management comprises activities for financial

planning, management and control. Planning involves the proper allocation of received

allowance for a month. Management is the activity for managing finance efficiently,

while controlling is the activity for evaluating whether the financial management has

been in accordance with what was planned (Kasmir, 2010).

A research defines financial behavior as a student’s demeanor by adapting to

financial system. They consider this adaptation made at the aspect of financial

acquisition or the ways money was used. Hibbert and Beutler, in their study, states

that negative financial behavior resulted to students facing financial difficulties in their

college lives. Moreover, having positive financial behavior can be an effective strategy

in improving quality of lives of individuals because more knowledge on money leads

to positive attitudes towards quality of life which ultimately leads to better decision

making resulting with effective utilization of resources to improve their standard of

living. (Amarasinghe et al., 2017; Danes & Haberman, 2017)

 Similarly, Robb and Woodyard point out that the individuals’ financial well-being

is dependent on their actions, besides the external influences of politic and economic

forces. That is why the critical importance of understanding the relationship between

financial behavior and financial stress is increasingly recognized. Moreover, financial

behavior can play a pivotal role in influencing the welfare of individuals in a household,

society, nation and the world at large. Such evident behavior is mainly influenced by

one’s identity, wants, knowledge, performance, achievement, personal characteristics,

significance and psychological factors (Bergner, 2011; García, 2013; Robb &

Woodyard, 2011).

Financial Stress

Financial stress is frequently experience by college students. According to a

recent national survey, 35 percent of students said that their finances were “traumatic”

or “very difficult” to handle and stress is recognized as a major cause of academic

difficulty. There are survey that focus on financial stress that found that four of the five

most common stressors among students related to their personal finances.

Experiencing “extreme” or “high stress” related to the cost of education and living

expenses are frequently experience by first-year students than other students.

(American College Health Association, 2013; Trombitas, 2012).

The impact of financial stress to students may lead to psychological distress. In

Midwestern, college students indicate that financial and life stressors, higher

subjective financial knowledge, fewer financial resources, negative perceptions, and

lower mastery are associated with higher financial stress. High perceived of stress and

having the lack of coping skills could become an obstacle on achieving to be a

competent in a profession. Furthermore, Singh stated that some of the many coping

strategies made by the students are avoidance, transference, problem solving and
optimism. It is recommended to have a stress reduction among students by knowing

the most stressful areas and give a proper method to improve the productivity of the

students. (Britt, S. L., et al., 2016; Singh, 2011).

In connection, Everyday Health surveyed more than 6,700 men and women

about what causes them stress and how they cope. Out of those respondents, 52

percent said that financial issues regularly stressed them out. Also, women were more

likely to report financial stress. Stress is by no means a new concept in college student

research. Stress has been recognized as a major cause of academic difficulty. Given

that financial stress is fairly common among college students, Northern et al.,

developed a scale measure of college student financial stress, known as the Financial

Stress Scale-College Version (FSS-CV). It is a comprehensive measure of financial

stress that consists of numerous factors, including being behind on payments, having

significant debt, and other factors related to personal finance which could be utilize

when measuring the level of stress a student experiences (Holland, 2019; Northern et

al., 2010).

Correlation between Measures

A research explored the relationship between financial stress and financial

practices. They measured financial stress using the number of reported financial

stressors, which included: not able to purchase clothing, not able to discuss financial

matters, not able to pay utilities, not able to save for emergencies, have financial

concerns that affect relationships, no money for medical bills, and not able to keep a

car running. They found financial stress was negatively related with good financial

practices and positively related with bad financial practices. Students who were

experiencing more financial stress were less likely to save regularly and feel they are

doing a good job managing their finances, and more likely to pay interest, make
minimum payments, write checks with insufficient funds in the bank, and regret making

purchases (Hayhoe et al., 2000; Mudzingiri et al., 2018).

Similarly, a study provides useful insight into financial stress among college

students. The results were students who reported negative financial behaviors were

significantly more likely to feel financially stressed than students who did not report

negative financial behaviors. Also, it is revealed in their study that students with greater

financial self-efficacy were less likely to report financial stress. Lastly, students who

were more optimistic about their financial futures were less likely to report financial

stress (Rubinstein, 2017; Knapp, 2010).

Estimo Parcia’s study has also revealed a domino relationship between an

individual’s financial literacy, financial behavior, financial stress, and financial

wellness. Based on this evidence, it can be said that if one’s financial literacy is

improved, this literacy can direct his behavior on managing his financial resources,

thereby reducing his level of financial stress, and subsequently improving his financial

wellness. This relationship is supported by previous studies that had established

financial literacy as an influential factor in improving a person’s financial behavior, and

financial stress as an adverse effect of an individual’s lack of financial knowledge

(Estimo & Parcia, 2017)

Theoretical Framework

This study is gleaned on Maslow’s (1943) Hierarchy of Needs Theory which

proposed that motivation is the result of a person's attempt at fulfilling his five basic

needs. These needs, according to him, can create internal pressures that can

influence a person’s behavior. His Hierarchy of Needs includes physiological needs,

safety needs, social needs, self-esteem, and self-actualization. Maslow believed that

these needs exist in a hierarchical order. This progression principle suggests that
lower-level needs must be met before higher-level needs. The deficit principle claims

that once a need is satisfied, it is no longer a motivator because an individual will take

action only to satisfy unmet needs. In this study, the need to be satisfied with their

physiological and safety needs are essential for the students. Being able to provide

for their personal needs, which could depend highly not only on the allowances they

receive but also on how they manage this, could affect their attainment of the rest of

their needs in the hierarchy. However, as an emerging adult the other needs should

be addressed to provide the students a sense of security and well-being. Hence,

students can self-educate on how to manage their financial resources live a more

contented life.

Additionally, Joo’s (1998) Conceptual Model of Personal Financial Wellness

and Worker Job Productivity mentioned that financial behavior refers to positive and

desirable behaviors that are recommended as a best practice of financial activities. An

example of this as mentioned by Joo is maintaining reasonable and low debt,

intentionally following a personal spending plan, having an active savings plan, and

the lack of money-related conflict with family or partner. Financial stress, on the other

hand can be adversely caused by an individual’s lack of financial knowledge,

undesirable financial behavior, and certain demographic variables.

Ashton et al. (2014), examined the financial attitudes, practices and knowledge

of students from higher education institutions across the United States. They

highlighted five key topics in determining the level of financial stress among students,

these are: student loans, credit cards, financial attitudes, financial knowledge and

education and financial future.

Conceptual Framework

Presented in Figure 1 is the conceptual framework of the study. The

independent variable is the financial behavior with the following indicators: maintaining

reasonable and low debt which refers to limited obligation a student have in the course

of his college journey; personal spending plan which comprises a student’s detailed

plan on how he would consume his allowance; savings plan which refers to strategies

he could utilize to save money for future usage; and lack of money related conflict

which means that a student should not owe money from his peers or even family

(Phillips, 2015).

The dependent variable is the financial stress of accounting students with the

following indicator: student loan, which is a primary source of funding to pay their

tuition in the university; credit cards, students can use as a source of funding for day-

to-day expenses; financial attitudes, which includes a student’s money management

skills; financial knowledge and education which refers to financial advice given by

professionals; and financial future, or the expected allowance a student will have

(Montalto, 2014).

Significance of the Study

The findings of this study may serve as basis to know how far financial behavior

affect the financial stress of college students and ensures how helpful it is in improving

students’ financial decisions and personal money management. The outcome of this

research may provide insights to all UM Tagum Administration and Faculty for it would

provide a great support to the institution with its mission to provide quality education

to its students and will provide significant information that is useful in order to assist

and give their students the knowledge they needed to continue their goals and to

become proficient in their field of chosen course.

 Furthermore, the result of this study can help parents understand that teaching

their children, as early as possible, the importance of money management, as well as,

saving and proper debt responses. The study shall also provide significant information

to other researchers to further studies that would be conducted. And above all, through

this study, university students will be able to grasp appropriate insights concerning

their needed knowledge for them to avoid experiencing financial stress in the future.

Definition of Terms

In order for the reader to have a better understanding on the terminologies used

in the study, the following terms are defined operationally:

Financial Behavior. This term refers to the concept of financial management

at individual level (Kasmir, 2010). In this study, it refers to maintaining reasonable and

low debt, personal spending plan, savings plan, and lack of money related conflict

among accounting students.

Financial Stress. This can be defined as a condition that is the result of

financial and/or economic events that create anxiety, worry, or a sense of scarcity, and

is accompanied by physiological stress response (Financial Health Institute, 2015) In

this study, this term refers to student loan, credit cards, financial attitudes, financial

knowledge and education, and financial future.

Independent Variable Dependent Variable

Financial Behavior Financial Stress

 maintaining  student loan;

reasonable and low  credit cards;
debt;  financial attitudes;
 personal spending  financial knowledge
plan; and education; and
 savings plan; and  financial future
 lack of money
related conflict

Figure 1. Conceptual Framework of the Study

 Chapter 2

METHOD

In order to analyze the financial behavior and financial stress of first year

accounting students, this study made use of a research methodology. The chapter

discusses procedures and activities that was under taken, focusing namely on the

study’s research design, locale, respondents (sampling techniques), instrument, data

gathering procedure, research statistical tool and data analysis.

Research Design

This study is a Quantitative type of research which generates numerical data or

information that can be converted into numbers. The quantitative was used because

it is easier to analyse numeric data from the questionnaires’ as the primary data and

secondary sources. Specifically, descriptive-comparative was used to describe the

difference between the internal factors when analysed by the nature of the business.

Descriptive-comparative studies endeavour to establish significant differences

between two or more groups of subjects on the basis of a criterion measures. No

attempts to control the effects of extraneous factors are made.

Additionally, this study used correlational method of research to investigate the

nature of the relationship and can assess those variables. However, correlation does

not imply causation; that is simply because two events are in some way correlated

does not mean the one necessarily causes the other.

Research Locale

This study will be conducted at UM Tagum College which is located in Mabini

Street, Tagum City, Davao del Norte.

Research Respondents

The respondents of the study were the 150 first year accounting students of UM

Tagum College. The researchers used the complete enumeration as a sampling

strategy. According to Australian Bureau of Statistics (2013), it is the study of every

unit, everyone or everything, in a population. Also it means a complete count.

In addition according to Creswell (2013), above 50 respondents is enough to

gather an enough data as well.

Research Instrument

The research instrument to be used in this study is adopted and modified from

Financial Knowledge and Behavior Survey devised by Commission for Financial

Literacy and Retirement Income, New Zealand (2013) for the independent variable.

And, an adopted and modified survey questionnaire from Ohio Student Financial

Wellness Survey (OSFWS) devised by Montalto et al. (2014) for the dependent

variable. The first set of questionnaire deals with the financial behavior of freshmen

accountancy students with four indicators; maintaining reasonable and low debt,

personal spending plan, savings plan, and lack of money related conflict. The contents

of the instrument will be presented to the group of experts for validation.

In evaluating the financial behavior of freshmen accountancy students, the five

orderable gradations with their respective range of means and description will be

considered:

Range of Means Descriptive Equivalent Interpretation

4.30 – 5.00 Very High This means

that the financial
behavior of accounting
students was very high.

3.50 – 4.20 High This means

 that the financial
behavior of accounting
students was high.

2.70 – 3.40 Moderate This means

that the financial
behavior of accounting
students was
moderate..

1.90 – 2.60 Low This means

that the financial
behavior of accounting
students was low.

1.00 – 1.80 Very Low This means

that the financial
behavior of accounting
students was very low.

The second set of the instrument embarks with the financial stress of

accounting students. It is compose of five indicators namely: student loan, credit cards,

financial attitudes, financial knowledge and education, and financial future.

For the accounting proficiency, the following five orderable gradations with their

respective range of means and descriptions will be considered:

Range of Means Descriptive Equivalent Interpretation

4.30 – 5.00 Very High This means

that the financial stress
of accounting
students was very high.

3.50 – 4.20 High This means

that the financial stress
of accounting
students was high.

2.70 – 3.40 Moderate This means

that the financial stress
of accounting
students was
moderate.

1.90 – 2.60 Low This means

 that the financial stress
of accounting
students was low.

1.00 – 1.80 Very Low This means

that the financial stress
of accounting
students was very low.

Data Collection

The study employed both primary and secondary sources of data collection. In

order to realize the target, the study used well-designed questionnaire as best

instrument. Secondary data from files, office manuals, circulars and policy papers will

be used to provide additional information where appropriate. Besides, variety of books,

published and/or unpublished government documents, websites, reports and

newsletters will be reviewed to make the study fruitful. The researchers will conduct

the following steps and procedures in gathering data for the study, after the approval

of the panel of members.

The researchers will ask permission to the Administration office of UM Tagum

College to conduct study to the first year students under Bachelor of Science in

Accountancy courses. When the letter is approved researchers will dispense the

survey questionnaires and explained the purpose to the following respondents of the

study. Moreover, the researchers will recollect the survey questionnaires after the

respondents answered all of the items. And lastly, the researchers will tallied all the

data gathered from the respondents and will be analyzed and interpreted.

Statistical Tools

The statistical tools that will be used for data analysis and interpretations

are the following:

 Mean. This statistical tool will be used to determine the level of financial

behavior and financial stress among first year accountancy students.

Pearson (r). This statistical tool will be employed to determine the significance

on the relationship between financial behavior and financial stress among first year

accountancy students.