CHAPTER ONE

THE PROBLEM AND ITS SETTING

Introduction

“What is important for kids to learn is that no matter how much money they have,

earn, win, or inherit, they need to know how to spend it, how to save it, and how to give

it to others in need. This is what handling money is about, and this is why we give kids

an allowance” (Barbara Coloroso). A strong statement that can be proven in most of

the children that have allowance. Children need to know the value and importance of

the money that their parents give them; they need to know the purpose why they are

receiving such amount of money as allowance.

Background

Miller and Yung (1990) found no evidence that adolescents understand

allowances to be an education opportunity promoting self-reliance in financial decision

making and money management. In a study designed to identify the extent to which

mothers passed on financial information and experiences to their children, it was found

that mothers were attempting to give more information to their own oldest child than

they themselves received (Rettig, 1985)

Most economists worry a great deal about this phenomenon. In the short run, a

lack of savings makes families vulnerable to financial failure, which can result from

unfortunate, but commonplace events such as the loss of a job, an illness in the family,
or the failure of a necessary but expensive asset such as a car, a roof or a furnace. In

the longer run, families who don’t save for their old age may not be able to retire. In

addition, constant inflation is one of the biggest problem here in our country, it makes

our lives harder and it adds on to the problem of the people in our country, its scope

reaches the poor and up until the richest ones. Plus, there is a new law which revises

the taxation of our country which will make goods and everything to cost higher than its

previous prices due to the revision of tax of almost all the goods. However, the majority

of the Filipino citizens can bring home their monthly incomes now without taxes, which

will lead us to dealing with adjusting our budgets and learn new techniques in saving

money. These things would greatly affect the students’ preference and decision making

in handling their money; however, there are two types of allowance that may affect

these students’ preference towards managing their money. This research aims to know

which of the two is the better type of allowance that they will be giving and this will help

the parents to decide which better type of allowance they will give their child or children.

Rationale

There is a need to study this kind of problem in order to point out which of the

two types of allowance is better, which will lead to the understanding which is more

effective way on training the students in handling their money.

Statement of the Problem

This study was conducted to determine the better way of giving allowance to the

students of Our Lady of Lourdes Catholic School S.Y 2017 – 2018. The study will

specifically answer the following questions:

1. What is the daily average amount of allowance of the student?

2. Is there a connection between frugality and allowance?

3. What is the level of frugality of students who received unconditional allowance?

4. What is the level of frugality of students who received conditional allowance?

5. What is the better way of giving allowance?

Research Hypothesis

Based on the related literatures that the researchers have gathered, the

researchers hypothesized that the following will be the answer to the specific questions

that the research is aiming to answer.

1. There is a significant connection between frugality and allowance.

2. The level of frugality of the students receiving unconditional allowance is ranging

from lavish to neutral. However, some of the respondents were frugal.

3. The level of frugality of the students receiving conditional allowance is ranging

from neutral to frugal.

4. The better way of giving allowance is the conditional allowance, because this

leads to more realizations of the importance of the money that they have.
Importance of the Study

This study will benefit almost all of us, from the students, the parents or incoming

parents and those independent with dependents.

1. The study will help the students because this study will identify which of the two

type of allowance is better. This will help the students to be aware of their own

expenses, thus it will wake up the students to the reality that saving is important.

2. This will help parents and incoming parents to decide which type of allowance is

better, and which allowance will help them teach their child or children

the importance of the study.

3. This will also help independent with dependents to budget their money and know

which way of giving allowance is better so that the money they give will not be

just wasted.

Definition of terms

Frugality

-the quality of being economical with money or food, it is also being thrifty.

Lavishness

- the quality of being generous, openhanded or being excessive.

Allowance

-allowance is money that parents, guardians or elderly give to their

dependents for their daily expenditures.

Conditional allowance

-it is a type of allowance that the parents, guardians or elderly give their

dependents that has a condition or rules that should be done or performed by the

dependent before receiving the money.

Unconditional allowance

-it is a type of allowance that the parents, guardians or elderly give their

dependents that has no conditions; it is given on a regular basis.

Scope and Delimitation of the Study

The survey was conducted to determine the levels of lavishness of the students

with conditional and unconditional allowances of Our Lady of Lourdes Catholic

School. The respondents of the survey were from different levels in the Junior High

School level. They were firstly grouped according to the type of allowance that they

are receiving; all of the conditional allowances were given a survey questionnaire,

while the respondents from the unconditional allowances were randomly picked to

get the same amount of the respondents of the other group. Each of the group is

consisted of 34 respondents. This study focuses only to the relationship between the

lavishness of the students and the type of allowance that they are receiving and

identify which of the two types of allowance is better to practice.