FINANCIAL LITERACY: IMPACT ON SENIOR HIGH SCHOOL STUDENTS’

FINANCIAL MANAGEMENT

In Partial Fulfillment of the Requirements in Practical Research 2

Presented to the Faculty and Staff of

San Isidro National High School – Senior High School

Presented by:

John Kinder R. Basilio

Ethyl Princess B. Rodrigo

Princes S. Abriam

Paul Justine A. Uminga

Christian John Miguel

Student Researchers

MILDRED P. LAGMAY

Subject Teacher

SY 2020 - 2021
 CHAPTER I: The Problem and a Review of Literature

Background of the Study

Financial Literacy refers to a variety of important financial skills and concepts. It is the

ability to understand and effectively use various financial skills, including personal financial

management, budgeting and investing. People who are financially literate are generally less

vulnerable to financial fraud (Fernando, 2020). The lack of financial literacy can lead to a

number of breakdowns. Financially illiterate individuals may be more likely to spend their

money in useless things and will accumulate unsustainable debt burdens.

It has become one of the most concerned issues in the developing countries in recent

years especially after the economic crisis of 2008 since the effects of personal finance are

significance to the societies. Prior to the economic crisis, studies on financial literacy were scarce

in academic journals, but governments of many developing countries only gave the needed

attention to the issue of financial literacy after the crisis (Schagen and Lines, 1996). Past studies

have revealed that Americans tend to have a higher rate of consumption compared to their

savings rate that leads to the US government to inculcate financial literacy among Americans

(Sullivaa et al, 2008).

Moreover, financial literacy has a critical impact on students’ ability to make smart

choices about which institute of higher education to attend, what to study, how to pay for

college, and how to manage student loan debt after graduation. Students who are financially

literate are better equipped than those who are not be able to make wise choices regarding

financial decision. The choices students make while in school often have a direct impact on their

financial status in the future (Coogan, 2016).

 The need for financial literacy becomes inevitable since today’s world markets are full of

complicated products. Considering the spending habit of people and the luxuries thing that they

want, it is therefore very important to teach financial literacy among people. Students in recent

times tend to easy access to funds, and as a result for being financially illiterate they become an

impulsive buyers (Danes, Huddleston and Boyce, 1999). The inadequate personal finance among

students then has undesirable effects on students’ decision making.

Therefore, the researchers of this study aimed to implies that there is need for students to

be equipped with financial literacy in order to achieve some degree of financial autonomy and to

determine the impact of it to the senior high school students of San Isidro National High School,

San Isidro, Isabela.

Review of Literature

Financial Literacy: An Exploratory Review of the Literature and Future Research

Abdullah, M. A., & Chong, R. (2014). Financial literacy: An exploratory review of the literature

and future research. Journal of Emerging Economies and Islamic Research, 2(3), 32-41. There

are voluminous literatures written on financial literacy or financial knowledge. Since there is a

renewed interest in Islamic finance, this article provides an account of reviews on current

financial literacy studies in particular studies with respect to Islamic financial products. It was

several years ago when the Governor of Central Bank of Malaysia pointed out that in order to

make Islamic financial products acceptable to a wider spectrum of investors and businesspeople

alike, financial literacy on Islamic financial products need to be enhanced. This is in order to

facilitate transactions, with a clear understanding and appreciation of the unique characteristics

and features of Islamic finance and its real economic value. Nevertheless, Kayed (2008) in his
paper posed a pertinent question enquiring if there are any attempts by the research community

to assess levels of Islamic financial literacy in various Muslim communities. In addition, another

question was put forth by Ahmad (2010) on the importance of Islamic financial literacy. These

two questions have actually motivated the current study to review available literatures on

financial literacy main focus on the Islamic financial literacy. The objectives of this study are to

determine if there are sufficient studies available on financial literacy with respect to Islamic

financial products and services, as well as to examine if there are sufficient studies on the

differences in the factors that affect financial literacy of people. The implications and

recommendations are then put forward for future research.

Financial Literacy, Financial Education, and Economic Outcomes

Hastings, J. S., Madrian, B. C., & Skimmyhorn, W. L. (2013). Financial literacy, financial

education, and economic outcomes. Annu. Rev. Econ., 5(1), 347-373. In this article, we review

the literature on financial literacy, financial education, and consumer financial outcomes. We

consider how financial literacy is measured in the current literature and examine how well the

existing literature addresses whether financial education improves financial literacy or personal

financial outcomes. We discuss the extent to which a competitive market provides incentives for

firms to educate consumers or to offer products that facilitate informed choice. We review the

literature on alternative policies to improve financial outcomes and compare the evidence with

that on the efficacy and cost of financial education. Finally, we discuss directions for future

research.
 A Literature Review On Financial Literacy

Selim, A., & Sibel D. A. (2014). A literature review on financial literacy. Based on prior

research, this paper provides insights regarding financial literacy. Amidst this research, some

similarities and contrariness have been manifested by juxtaposing this literature in terms of (1)

definitional issues on financial literacy, (2) its probable endogeneity, (3) its determinants and

consequences established by the extant research, (4)other probable estimators of financial

decision making which would individually make differences aside from financial literacy,

(5)manner of measuring it (i.e., subjective objective measures versus proxies, (6) targeted

population for finding evidence. This study indicates that (i) there is a need of a common and

well-structured definition of financial literacy due to the interchangeably usage of various

concepts, all of which mean the financial knowledge level of individual, (ii) objective measures

seem to work best in measuring financial literacy among individuals, (iii) researchers should

reconsider about proxies for financial literacy in the event that individual effect of proxy may be

difficult to be separated, (iv) it is better to consider that financial literacy may be potentially

endogenous variable rather than the exogenous one, (v) studies should present an explicit

explanation how the relationship between financial literacy and research problem (e.g.,

investment preferences) occurred, (vi) relative impact of financial literacy should be

preemptively examined by incorporating other potential factors influencing financial decision

making into research models.

 Financial literacy, financial advice, and financial behavior

Oscar A. S., & Andreas W. (2017). Financial literacy, financial advice, and financial behavior.

In this survey, we review the voluminous body of literature on the measurement and the

determinants of financial literacy. Wherever possible, we supplement existing findings with

recent descriptive evidence of German households’ financial literacy levels based on the

novel Panel on Household Finances dataset, a large-scale survey administered by the Deutsche

Bundesbank and representative of the financial situation of households in Germany. Prior

research not only documents generally low levels of financial literacy but also finds large

heterogeneity in financial literacy across the population, suggesting that economically vulnerable

groups are placed at further disadvantage by their lack of financial knowledge. In addition, we

assess the literature evaluating financial education as a means to improve financial literacy and

financial behavior. Our survey suggests that the evidence with respect to the effectiveness of the

programs is rather disappointing. We also review the role of individuals’ financial literacy for the

use of professional financial advice and assess whether expert intervention can serve as a

substitute to financial literacy. We conclude by discussing several directions for future research.

Keeping It Simple: Financial Literacy and Rules of Thumb

Drexler, A., Fischer, G., & Schoar, A. (2014). Keeping it simple: Financial literacy and rules of

thumb. American Economic Journal: Applied Economics, 6(2), 1-31. Micro-entrepreneurs often

lack the financial literacy required to make important financial decisions. We conducted a

randomized evaluation with a bank in the Dominican Republic to compare the impact of two

distinct programs: standard accounting training versus a simplified, rule-of-thumb training that

taught basic financial heuristics. The rule-of-thumb training significantly improved firms'
financial practices, objective reporting quality, and revenues. For micro-entrepreneurs with lower

skills or poor initial financial practices, the impact of the rule-of-thumb training was significantly

larger than that of the standard accounting training, suggesting that simplifying training

programs might improve their effectiveness for less sophisticated individuals.

Financial Literacy around the World: An Overview

Lusardi, A., & Mitchell, O. S. (2011). Financial literacy around the world: an overview. National

Bureau of Economic Research Working Paper Series, (w17107). In an increasingly risky and

globalized marketplace, people must be able to make well-informed financial decisions. Yet new

international research demonstrates that financial illiteracy is widespread when financial markets

are well developed as in Germany, the Netherlands, Sweden, Japan, Italy, New Zealand, and the

United States, or when they are changing rapidly as in Russia. Further, across these countries, we

show that the older population believes itself well informed, even though it is actually less well

informed than average. Other common patterns are also evident: women are less financially

literate than men and are aware of this shortfall. More educated people are more informed, yet

education is far from a perfect proxy for literacy. There are also ethnic/racial and regional

differences: city-dwellers in Russia are better informed than their rural counterparts, while in the

U.S., African Americans and Hispanics are relatively less financially literate than others.

Moreover, the more financially knowledgeable are also those most likely to plan for retirement.

In fact, answering one additional financial question correctly is associated with a 3-4 percentage

point higher chance of planning for retirement in countries as diverse as Germany, the U.S.,

Japan, and Sweden; in the Netherlands, it boosts planning by 10 percentage points. Finally, using

instrumental variables, we show that these estimates probably underestimate the effects of
financial literacy on retirement planning. In sum, around the world, financial literacy is critical to

retirement security.

Financial Literacy around the World: An Overview of the Evidence with Practical
Suggestions for the Way Forward

Xu, L., & Zia, B. (2012). Financial literacy around the world: an overview of the evidence with

practical suggestions for the way forward. Financial literacy programs are fast becoming a key

ingredient in financial policy reform worldwide. Yet, what is financial literacy exactly and what

do we know of its effectiveness? This paper collects insights from the literature thus far and

summarizes global evidence on financial literacy, its correlates, and existing and upcoming

causal investigations. The authors conclude with a synthesis of policy advice and practical

suggestions for the way forward in this fast-growing area of research.

Research Framework

INPUT PROCESS OUTPUT

 The impact of  Conducting a  The reasons why
financial literacy survey they need to
c
on student’s  Data Gathering become literate
financial  Data analysis financially is
management.  Making because financial
 Research conclusions and literacy is
Instrument recommendation important
s. especially this
time of pandemic
where we need to
save money.

Statement of the Problem

 This study aims to determine the impact of financial literacy on the senior high school

students in their financial management.

Specifically, the study will seek answer to the following questions:

1. What is the profile of the respondent in terms of their:

1.1 Name; and

1.2 Grade/section

2. Is there a significant relationship between financial literacy and financial management skills of

senior high school students?

3. How does students financial knowledge affect their decisions?

4. What are the impact of financial literacy on senior high school students in terms of:

4.1 Budgeting

4.2 Borrowing

4.3 Saving

This study "FINANCIAL LITERACY: IMPACT ON THE SENIOR HIGH SCHOOL

STUDENTS’ FINANCIAL MANAGEMENT" aims to determine the following objectives:

1. There is a significant relationship between financial literacy and financial management skills

of senior high school students.

2. Students financial knowledge affect their decisions.

3. There are impact of financial literacy on senior high school students in terms of their

budgeting, borrowing and saving money

Significance of the Study

This research entitled “ Financial Literacy: Impact of senior high school students’ financial

management” has the following benefits and beneficiaries:

To the incoming senior high students, this can be their background in getting information

about financial literacy and to help them on how to manage their money.

To the future researchers, it can give them information and it can be their basis in

conducting their research study related to the financial literacy.

To the researchers, it will serve as the partial fulfillment of the requirements in their

grade 12 practical research 2 subject.

 CHAPTER II: Methodology

Research Design

The survey research design was used in this study. This survey research was conducted at

San Isidro national high school, San Isidro, Isabela via online using google forms due to the new

method of learning.

Participants

There was thirty (30) determined respondent from grade 11 and 12 Accountancy,

Business and Management. These thirty (30) was randomly chosen for the study.

Research Instruments

The data was collected using the survey questionnaire send online to the thirty (30)

respondents from grade 11 and 12 Accountancy, Business and Management, and was retrieved

via online also.

Data Gathering Procedure

Preparation of Questionnaires

Grade Level = 11, 12

Selection of No
Respondents

If Respondents =
Grade Level then

Yes

Distribution of Survey Forms

 Collection of Survey Forms

Gathering of Data

Data Analysis

Figure 1. Flowchart of General Procedures

Treatment of Data

The data gathered was analyze using the Descriptive Statistical Technique
 CHAPTER III: Results and Discussion

Results and Discussions

Results are divided into categories that addresses five issues. The first category is why

did you prefer saving money instead of asking money from your parents? The second category is

what are the impacts of financial literacy on how students budget and save their money?. The

third category is what the does being good in budgeting and saving money affect your decisions

in life?. The fourth category is in what way the financial literacy helps you in borrowing or

lending money. And the fifth category is what are the reasons why we need to become literate
financially?

Table 1. WHY DID YOU PREFER SAVING MONEY INSTEASD OF ASKING MONEY
FROM YOUR PARENTS?

The average personal financial literacy scores among all respondents, in the first category

is 40% of all respondents is strongly agree that they need to ask their parents ‘permission first

before spending the money on they have23.33% of all respondents agreed, 30% of the

respondents either agree or disagree and 1% of all respondents are both disagree and strongly

disagree.
 There are 50% of respondents that answered strongly agree that for personal preferences,

they want to buy something that comes from their own pocket not come from their parents,

36.67% of all respondents agree, 13.33% is either agree or disagree and 3.33% of them is

disagree.

There are 53.33 % of respondents that answered strongly agree that they’re saving money

to help their families in budgeting money, 33.33% of respondents agree and 14.33% of

respondents is either agree or disagree.

There are 53.33% of the respondents who strongly agree that they’re saving money just

to lessen the worries of their family about their allowances and to show them that they can save

their own money, 36.67 % of the respondents agree and 10% of the respondents is either agree or

disagree. While 3.33% of all respondents is disagree and 6.67% of the respondents strongly

disagree on this choice.

There are 30% of the respondents who strongly agree that they can decide independently

what to spend the money on, 33.33% of respondents is agree and either agree or disagree.
Table 2. WHAT ARE THE IMPACTS OF FINANCIAL LITERACY ON HOW

STUDENTS’ BUDGET AND SAVE THEIR MONEY?

The average personal financial literacy scores, among all respondents, in the second

category is 46.67% of all respondents strongly agree that being literate helps them to save

more money, 43.33% of all respondents agreed and 10% of the respondents is either agree or

disagree.
 There are 53.33% of the respondents who strongly agree that they can understand the

difference between spending less money and saving money, while 36.67% of all respondents

agree, 10% is either agree or disagree and 3.33% of them is disagree.

There are 53.33 % of respondents who strongly agree that as a student, it teaches them to

spend money in an appropriate way, while 30% of respondents agree, 13.33% of respondents is

either agree or disagree and 3.33% of respondents disagree about it.

There are 60% of the respondents who strongly agree that being literate on budgeting and

saving money helps them in becoming a wise consumer, while 26.67 % of the respondents agree,

10% of the respondents is either agree or disagree and 6.67% of all respondents is disagree.

There are 73.33% of the respondents who strongly agree that as a student, financial

literacy helps them to realize that it is important to save money for their future, while 26.67% of

respondents is agree and 3.33% either agree or disagree.

TABLE 3. HOW DOES BEING GOOD IN BUDGETING AND SAVING MONEY

AFFECT YOUR DECISIONS IN LIFE?
 The average financial literacy scores of respondents in third category is 50% of all the

respondents is strongly agree that budgeting money affects their buying behavior, especially

when buying products, they would choose the products that suited in their budget, while 36.67%

of respondents agree and 13.33% of the respondents is either agree or disagree.

There are 36.67% of respondents that are strongly agree that saving money teaches them

to choose the products that has a lower price than the expensive one, while 53.33% are agree and

10% of respondents are either agree or disagree.

There are 46.67% of respondents that are strongly agree that budgeting forces them to

buy the things they need instead of the things they want, while 53.33% of respondents are agree

and 10% of the respondents are either agree or disagree.

There are 30% of respondents that are strongly agree that budgeting serves as their basis

when buying products and availing services, while 56.67% of respondents are agree and 13.33%

of them are either agree or disagree.

There are 30% of respondents who strongly agree that saving money sometimes leads

them in doing bad habit like choosing products with a lower price and low quality instead of a

product which is expensive but has a good quality, while 36.67% of respondents are agree, 20%

of respondents either agree or disagree and 13.33 % of respondents are disagree

TABLE 4. IN WHAT WAY THE FINANCIAL LITERACY HELPS YOU IN

BORROWING OR LENDING MONEY?

The average personal financial literacy scores, among all respondents, in the fourth

category is 23.33% of all respondents are strongly agree that being literate teach them to

borrow money properly, while 43.33% of all respondents agreed, 26.67 of the respondents

either agree or disagree, and 3.33% of the respondents disagree and strongly disagree.

There are 20% of the respondents who strongly agree that being literate helps them to

lend money in a wise way, while 56.67% of all respondents agree, 20% is either agree or

disagree and 3.33% of them is strongly disagree.

There are 36.67 % of respondents who strongly agree that putting a fair interest rates

when lending money helps them, while 26.67% of respondents agree and 36.67% of respondents

is either agree or disagree.

 There are 33.33% of the respondents who strongly agree that financial literacy helps them

to borrow only the exact amount needed, while 40% of the respondents agree and 26.67% of the

respondents is either agree or disagree.

There are 30% of the respondents who strongly agree that financial literacy teaches them

to state a minimum and maximum amount of money when lending money to the borrowers in

order to prevent excess and shortage, while 53.33% of respondents is agree and 16.67% either

agree or disagree.

TABLE 5. WHAT ARE THE REASONS WHY WE NEED TO BECOME LITERATE

FINANCIALLY?

The average financial literacy scores of respondents in fifth category is 56.67% of all the

respondents is strongly agree that the reasons why they need to become literate financially is to

control the way they spend money, while 36.67% of respondents are agree and 6.67% of the

respondents is either agree or disagree.

 There are 66.67% of respondents that are strongly agree that the reasons why they need to

become literate financially is because financial literacy is important, while 26.67% of

respondents are agree and 6.67% of respondents are either agree or disagree.

There are 60% of respondents that are strongly agree that the reasons why they need to

become literate financially is because it will help them to have a wise decision in terms of

budgeting, saving, lending and borrowing money, while 36.67% of respondents are agree and

3% of the respondents are either agree or disagree.

There are 66.67% of respondents that are strongly agree that the reasons why they need to

become literate financially is to save for their future, it is necessary to be ready because they

don’t know what will happen next to their money, while 26.27% of respondents are agree and

6.67% of them are either agree or disagree.

There are 60% of respondents that are strongly agree that the reasons why they need to

become literate financially is because financial literacy opens up a lot of opportunities in their

life like being ready in times of emergencies, teach them choose wisely and more -expensive but

has a good quality, while 26.67% of respondents are agree, 13.33% of respondents either agree

or disagree.
 CHAPTER IV: Summary of Findings, Conclusion and Recommendations

Summary 

This chapter concludes the study by dealing with summary of findings, conclusion and

recommendations on the impacts of financial literacy on students’ financial management.

A. WHY DID YOU PREFER SAVING MONEY INSTEASD OF ASKING MONEY

FROM YOUR PARENTS?

The research finding revealed that the reasons why the respondents  prefer saving money

instead of asking money from their parents are because the respondents want  to help their family

in budgeting the money and to lessen the worries of their family about their allowances , to show

them that they can save their own money, for personal preferences, they want to buy something

that comes from their own pocket not come from their parents, they need to ask their parents’

permission first before spending the money on they own and they can decide independently what

to spend their money on.

B. WHAT ARE THE IMPACTS OF FINANCIAL LITERACY ON HOW STUDENTS’

BUDGET AND SAVE THEIR MONEY?

The research finding revealed that the impacts of financial literacy on how students’

budget and save their money are as follows; As a student, financial literacy helps them to realize

that it is important to save money for their future, being literate on budgeting and saving money

helps them in becoming a wise consumer, they  can understand the difference between spending

less money and saving money, as  a student, it teaches them to spend their  money in an

appropriate way and being literate helps them to save more money
C. HOW DOES BEING GOOD IN BUDGETING AND SAVING MONEY AFFECT

YOUR DECISIONS IN LIFE?

The research finding revealed how does being good in budgeting and saving money

affect their  decisions in life, budgeting  serves as their basis when buying products and availing

services, saving  money teaches them  to choose the products that has a lower price than the

expensive one, budgeting money affects their buying behavior, especially when buying products,

their  would choose the products that suited in my budget, budgeting forces me to buy the things

they need instead of the things they want and saving money sometimes leads them  in doing bad

habit like choosing products with a lower price and low quality instead of a product which is

expensive but has a good quality.

D. IN WHAT WAY THE FINANCIAL LITERACY HELPS YOU IN BORROWING OR

LENDING MONEY?

The research finding revealed that  ways that the financial literacy helps them  in

borrowing or lending money are as follows,  it teaches them to state a minimum and maximum

amount of money when lending money to the borrowers in order to prevent excess and shortage,

being literate helps them  to lend money in a wise way, being literate helps them  to borrow

money properly, financial literacy helps them  to borrow only the exact amount needed and

putting a fair interest rates when lending money.

E. WHAT ARE THE REASONS WHY WE NEED TO BECOME LITERATE

FINANCIALLY?

The research finding revealed that the reasons why they  need to become literate

financially are as follows,  financial literacy is important especially this time of pandemic where
they need to save money, to save for their future it is necessary to be ready because they  don’t

know what will happen next to their money, financial literacy opens up a lot of opportunities in

their  life like being ready in times of emergencies, teach them choose wisely and more, it will

help them to have a wise decision in terms of budgeting, saving, lending and borrowing money

and to control the way they spend money.

Conclusion

Therefore, the researchers conclude that that the reasons why the respondents prefer

saving money instead of asking money from their parents is because the respondents want to

help their family in budgeting the money and to lessen the worries of their family about their

allowances. They found out that the impacts of financial literacy on how students’ budget and

save their money is the as a student, financial literacy helps them to realize that it is important to

save money for their future, being literate on budgeting and saving money helps them in

becoming a wise consumer. The researchers found out also how does being good in budgeting

and saving money affect their decisions in life, budgeting serves as their basis when buying

products and availing services, saving money teaches them to choose the products that has a

lower price than the expensive on. They conclude also that the   way that the financial literacy

helps them in borrowing or lending money is it teaches them to state a minimum and maximum

amount of money when lending money to the borrowers in order to prevent excess and shortage.

The researchers then found out that the reasons why they need to become literate financially is,

financial literacy is important especially this time of pandemic where they need to save money.
Recommendations

 Students should know how to balance their budget and allowances.

 Teachers should educate their students how to manage the spending of their money.

 And also parents must regularly check their children’s allowances in order to prevent or

avoid their children’s to experience insufficient budgets/allowances

 Students must buy first the things they need instead to things they want.

 Students must save money in order to have extra budgets or funds when an emergency

happens.

 Students should answer parents before spending their money.

 Students need to be a wise consumer to prevent future uncertainties related to financing.

 Students should know on how to record their daily, monthly or even annual expenses .

 Students should know how to be a wise borrower, they should choose the smallest

interest rates than the higher.

 Students should partial knowledge about money management.

For Further Research

 On the attainment and addition of   objectives of this study

 On this topic in other schools to be compared with this study

 On the perception and knowledge about the respondents in managing their money.

 A research study on the specific effects of financial literacy on the financial management

if a individual or groups must be conducted.

 REFERENCES

Abdullah, M. A., & Chong, R. (2014). Financial literacy: An exploratory review of the literature

and future research. Journal of Emerging Economies and Islamic Research, 2(3), 32-41

Hastings, J. S., Madrian, B. C., & Skimmyhorn, W. L. (2013). Financial literacy, financial

education, and economic outcomes. Annu. Rev. Econ., 5(1), 347-373

Selim, A., & Sibel D. A. (2014). A literature review on financial literacy. Based on prior

research, this paper provides insights regarding financial literacy

Oscar A. S., & Andreas W. (2017). Financial literacy, financial advice, and financial behavior.

Drexler, A., Fischer, G., & Schoar, A. (2014). Keeping it simple: Financial literacy and rules of

thumb. American Economic Journal: Applied Economics, 6(2), 1-31

Lusardi, A., & Mitchell, O. S. (2011). Financial literacy around the world: an overview. National

Bureau of Economic Research Working Paper Series, (w17107)

Xu, L., & Zia, B. (2012). Financial literacy around the world: an overview of the evidence with

practical suggestions for the way forward.