CORRELATIONAL STUDY BETWEEN FINANCIAL KNOWLEDGE, SELF-CONTROL: AND

THE SAVING BEHAVIOR

School Year 2019-2020

A Thesis
 Presented to
College of Business Administration and Entrepreneurship
Southern de Oro Philippines College

In partial Fulfillment of the requirement for degree

Bachelor of Science Business Administration
Major in Financial Management

By:
Jean Mariz C. Muñez
Jeann Grace M. Estrada
Ailyn Katipunan
Haze Anino
Ma Therese Gomez
Mariefe Mansanares

August 2020

Chapter 1

THE PROBLEM

Introduction

Financial literacy is the understanding focusing on finance such as

managing personal finance, investing and most especially saving among
individuals and was believed to be the foundation of a strong nation and
economy. It is often associated with the concepts of compound interest, financial
planning, saving methods, consumer privileges and monetary value changing
over time (Sahin, 2016). Moreover, it is the ability to effectively and efficiently
manage owns financial decisions concerning both long-term (Zulficar, 2018).
Financial literacy denotes a person’s understanding on the areas of personal
finances and investments most especially in making financial decisions
concerning both long-term and short-term goals (Mbazigwe, 2013).

Financial literacy is strongly related to education (Mandell, 2009). Thus,

financial education played a huge role towards instilling the basic financial
literacy such as responsible use of credits, loans and investments (Nasr, 2015).
Through financial education, students will be able to improve their generic saving
goals (Malcom, 2013). Hence, when financial education is affecting teenager’s
behaviors more than the level of their own knowledge, then the goal of the
financial education program has been accomplished (Kieschnick, 2006). Thus,
financial education has been associated together with the business-related
courses and are seldom taught to other field of course resulting to the different
level of understanding on financial literacy and saving style.

According to the survey of Bangko Sentral ng Pilipinas conducted in

2014, the Philippines was marked as one having the lowest saving rates in
Southeast Asia with only one out of four Filipino households has saving, which
appeared to be the major challenge among Filipinos. The survey showed that
half of the respondents do not know the amount of money that was spent last
week and the amount of money on hand (World Bank, 2015). For about 55% of
the respondents have scarcity in money allotted for food or basic necessities and
about 26% revealed that it became a regular occurrence. An estimated 23 million
adults experienced this kind of scenario (Mylenko, 2015).

In the Philippines, a survey on financial inclusivity among Filipinos shows

that most family income was only suited for the basic necessities each month
(Montecillo, 2015). Unfortunately, this saving habit of most Filipinos was coined
as the ‘fatalistic attitude’ preventing them to a good saving habit. Most common
attitudes among Filipinos towards saving includes limited financial
understanding, undiscussed money matters within the family, easy access on
loans resulting to the accumulation of debts, the ‘come what may’ mentality and
mostly are victims of lifestyle inflations (Silang, 2016).

In relation to this, a survey globally initiated by the Standard and Poor’s

Ratings Services. World Bank and the Global Financial Literacy indicated that an
alarming one out of three adults only know the basic financial concepts (Manila
Times, 2015). In the Philippines, from the study conducted by Philam Life found
out that 96% of Filipinos were concerned in their own financial status however
only 16% said that they are ready for their medical cost in case diagnosed.

Contrary to what most millennial think, they aren’t as financially savvy as

they perceive themselves to be. According to a data presented by The Global
Filipino investor: The Philippines is one of the 30 least financially literate
countries in the world with only 0.7% of the population investing in stocks, bonds,
mutual funds, and government securities. Despite the Philippines having about
one third of its population in the millennial age group, the ratio of those who are
financially literate to the entire population aren’t even close to a fraction of the
millennial population in the country. Although the millennial make up large
segment of the country’s workforce, they aren’t financially literate (Adrian, 2017).

The Philippines is one of the fastest growing economies in the region

today, giving the people the chance to have more financial power than
before.however, all these will only go to waste if we do not understand how
money works and what are the consequences of having bad money habits. Now,
everyone seems to talk about financial literacy but not a lot about ‘financial
education’.

Financial education and advocacy programs o public and private

sector here in our country have been identified as key areas in building an
improved financial system in the Philippines. We have a lot of government
agencies doing their own thing like the Bangko Sentral ng Pilipinas (BSP),
Department of Finance (DOF), the Securities and Exchange Commission (SEC),
the National Credit Council, the Insurance Commission, the National Anti-
Poverty Commission and also DepEd are all trying to work together to raise
financial literacy in the country.