MANAGEMENT OF PERSONAL FINANCES OF SENIOR HIGH SCHOOL

STUDENTS AT STA. TERESA COLLEGE: A BASIS FOR FINANCE

MANAGEMENT PLAN

A Thesis Presented to the

Senior High School Department

of Sta. Teresa College

In Partial Fulfillment

of the requirements

in Research

by:

Abuzman, Sarji James Micko A.

Masangcay, Marcial Jay-Ar C.

Dinglasan, Nicole A.

Magpantay, Allyza Princess P.

Panopio, Michelle Aubrey B.

 CHAPTER I

THE PROBLEM AND ITS BACKGROUND

Introduction

Allowance plays an important role in the life of people. It is the amount of

money that is being used to address specific needs. In order to meet its goals,

management of allowance, which is an individual’s personal finance, requires a

clear understanding and wise decisions.

Personal financial management is a daunting and continuous task that can

cause even the most economically savvy individual to become confused or short-

sighted. It simply means gaining an understanding of your financial situation in

order to make the most of your assets in day-to-day life and in planning for your

future (Batten, 2015).

Proper personal finance management is especially important for students

like us. It is what we use to buy from the canteen, the bookstore, or even to pay

for the class’ funds that we have at school. If we know the right way to handle our

personal finance, we’ll be able acquire the products or services that we need as

students which means that our personal budget is a success.

However, personal finance sometimes fails due to some reasons. One of

these is that the budget is unrealistic. In making a budget plan, one needs to be

completely honest about the numbers he includes on his budget. Make sure that

the amount being put in the plan can really afford the product that it’s designated
for. Another reason is leaving items off when making the plan. One should make

sure that he is accounting for every expense that might come up. Other reasons

are overspending which is very common to people, not monitoring one’s own

budget, forgetting emergencies, and not giving enough time to learn the proper

way of budgeting (Fobes, 2016).

It is also identified that many people still lack knowledge on the proper

way of handling their own finances. This is especially true to high school students

because some schools don't require them to take a personal-finance class to

graduate. Due to this, parents have also expressed concerns over the matter

(Bortz, 2012).

Therefore, our group ponders on how we can help people avoid failing

their personal finance. We aim to give them a better and deeper understanding of

personal financial management that may help them in budgeting their money.

Therefore, the output of this study is a basis for finance management plan.

Theoretical and Research Framework

This framework discusses the theories associated in the said study. The

researchers secured their concepts and ideas on the following theories stated

below:

Theoretical Paradigm of the Study

 The Standard Model Theory of Personal Finance. One can’t build

wealth until he has erased all his negative wealth. If one owe more than one

owns, he is going to have to wait. Also, debt becomes exponentially less

manageable as it grows. Therefore, don’t let it grow. Better yet, don’t incur it in

the first place. Indulging oneself while in debt is immature and counterproductive.

If one just wants to “live a little”, or “preserve his sanity”, or “do something nice

for himself”, or however he chooses to justify spending any extra dollars, he’ll

stay poor that much longer. Rules change and become far easier to live by once

one’s in the black. It starts off hard and gets easier. When one got money that

doesn’t need to go to everyday expenses (and debt reduction), there lies

opportunity (“The Standard Model Theory,” 2013).

The relation of this theory in our study is when we gather information from

the students about how they manage their weekly allowance.

Personal Financial Planning Theory. Financial planning theory is the

same for business budget planning as it is for personal planning. The theoretical

planning involves five simple steps that allow oneself to identify his budget’s

potential and set financial goals for your personal budget. The theoretical

approach also allows a person to create an active plan that can help him reach

his financial goals. Financial planning is ideal for those who want to eliminate

personal debt or start saving money. The first step is planning preparation.

Before one can start planning his personal finances, he needs to have a full

operational budget in which he’ll address his overall assets and liabilities. The

budget should also be operational, which means that it should address your
monthly income and spending. The money you have left over from your budget is

what you will use to create your financial plan. If you do have a budget, make any

changes you desire to it before you start planning your finances. The next step is

setting financial goals. One should put the budget aside and set his financial

goals. Comparing goals to budget comes next. Compare the financial goals to

the monthly budget from the first section. Comparing one’s budget to his goals

enables oneself to make adjustments to financial goals if needed. The fourth step

is to develop a plan. It should be a plan that is suited for both operational budget

and financial goals. One may discover that changes need to be made to his

original goals based on his budget potential. And last step explained in this

theory is the evaluation. The plan must be evaluated on a biannual or annual

basis (Mary Jane, 2017).

The relation of this theory in our study is the budget planning mentioned

that may be used or may already be being used by the students concerned in

this research.

A Theory of Personal Budgeting. Prominent research argues that

consumers often use personal budgets to manage self-control problems. This

theory analyzes the link between budgeting and self-control problems in

consumption-saving decisions. It shows that the use of good-specific budgets

depends on the combination of a demand for commitment and the demand for

flexibility resulting from uncertainty about intratemporal trade-offs between

goods. It explains the subtle mechanism which renders budgets useful

commitments, their interaction with minimum-savings rules (another widely-

studied form of commitment), and how budgeting depends on the intensity of

self-control problems. This theory matches a number of empirical findings and

can guide marketing personal budgeting devices (Galperti, 2017).

The theory can be related in our study by knowing the link between

budgeting and self-control problems in consumption-saving decisions of the

concerned students.

Conceptual Framework

A conceptual framework provides clear thinking based on the flow of

research. It also illustrates the steps that the researchers will take to answer the

questions that are expected to be solved. Through this framework, the concrete

relationship between each and every variable can be seen. It is focused on the

input works, procedures and the output that has been produced.
 Input Process Output

 Concept of
Personal Financial  Interview
Management

 Survey
 The essential
A basis for finance
process of
management plan
creating a
 Analyzing and
budget and goal,
interpreting
understanding
the results of
the expenses,
the study
saving money,
and the overall
management of
money

Figure No.1

Conceptual Paradigm of the Study

The framework primarily includes the input steps, actual methods and the

produced output of the study.

 The input comprises the knowledge on the different ways of personal

finance management and the senior high school students at Sta. Teresa College

whose allowance is being given weekly.

This will then be followed by interview, survey, and the analyzing and

interpreting of the results to be conducted by the researchers. A basis for finance

management plan serves as the output of this study.

Statement of the Problem

1. What is personal financial management?

2. How do the students budget their weekly allowance?

3. What are the advantages of managing allowances weekly?

4. What are the disadvantages of managing allowances weekly?

5. What effective ways may be proposed to manage weekly personal

finances of the Senior High School Students at Sta. Teresa College?

Significance of the Study

This study hopes to establish an understanding of the financial

management of the Senior High School students at Sta. Teresa College. It aims

to produce an output that will be a basis for finance management plan.

Furthermore, the study could be of importance to the following:

 Students. This study will be beneficial to the students for it aims to

understand their financial management better. The results and the output made

may be their basis for a better management of their personal finances.

Parents. This study will help the parents be informed of the financial

management of their children.

Present and Future Researchers. The research will also give the current

and future researchers a verifiable source of their chosen topic. The research will

provide the future researchers findings and conclusions on the said study.

Scope and Deimitation

The study will focus on Senior High School students of Sta. Teresa

College that receives their allowance weekly. It will discuss about the different

ways that may be followed by the students in order to make a proper financial

management plan that may be adequate and used to effectively budget their

weekly allowance.

This research study is limited to Senior High School students who are

being given their allowance weekly. The researchers will not conduct any

interview or survey from those students who are not concerned in this study.

Review of Related Literature and Studies

This section includes the past studies of professional researchers that are

extremely relevant to the study to be conducted.

 According to the study conducted by Bortz (2012), although high school

students are studying up on calculus, advanced chemistry, and world history,

most aren't learning fundamental money lessons to help them financially navigate

the real world. Some schools don't require its students to take a personal-finance

class to graduate and because of such, the students lack knowledge about the

proper way of handling their personal finances. Parents have also expressed

concerns over their children's lack of financial knowledge. It was found-out that

64 percent of parents with college-bound children are worried about their

children's ability to manage money.

Peng et al. (2007) noted that both high school and college students that

completed a personal finance course displayed improved savings rates following

a personal finance course. They tend to handle their finances properly and follow

budgets better than those who weren’t able to attend courses on personal

finance.

According to a study conducted by Schramm (2015), most students aren’t

making the grade when it comes to learning about personal finance. 65% of the

students interviewed gave themselves a C, D or F when considering whether

they can successfully manage their finances and money. Reports have found a

lack of financial literacy education in high school. Champlain College’s Center for

Financial Literacy, for example, graded each state for their financial literacy

requirements for high school students. The alarming results revealed that 26

states received grades of C, D or F.

 A lack of financial literacy is problematic if it renders individuals unable to

optimize their own welfare, especially when the stakes are high, or to exert the

type of competitive pressure necessary or market efficiency. This has obvious

consequences for individual and social welfare. (Hastings et al., 2013).

According to the research done by Curtis (2013), there are many reasons

why budget fails. First is that because the budget is too restrictive that

sometimes, people are tempted to strip their spending down to the bare minimum

and challenge themselves to live with it. Budgets that are too restrictive may

sometimes be impossible to be followed. Another reason is not setting goals.

Without an aim, one can’t be motivated to stick to his own budget. Not putting

budgeting into practice is another reason. Doing such makes budgeting just a

guess-work. Not planning for emergencies is also a reason of failure because

emergency expenses can completely derail a carefully detailed budget if one

doesn’t account for them. Another reason is not giving budgeting enough time.

Sometimes, people are very impatient with their budget. They tend to be excited

to see the fruits of their labor by obsessively checking their bank balance and

wondering if they’re millionaires yet. However, the truth is that budgets take time,

patience, and a bit of trial and error before they really produce significant results.

And lastly, the reason why budget fails is that because one hates it. Because of

such feeling towards budgeting, one ignores and not pay attention to it.

Many people are often turned off by the simple term budget. They

associate it with restrictions and a lot of hassle and headaches. They may feel

like they are too poor to budget or have other budgeting excuses. However,
budgeting can actually save money, and allow a person to have more to spend

by helping himself make the most of his money. One’s budgeting style can

determine how successful he is at budgeting. So although it is hard, people

should learn how to budget their finances properly. There are several things that

will help one look at budgeting in a new light: budgeting stops overspending,

budgeting helps a person reach hour goals, budgeting helps to save money,

budgeting helps a person to stop worrying, budgeting helps one to be flexible,

budgeting puts a person into control, and that budgeting can be simple (Caldwell,

2017).

As stated by Caldwell (2016), there are five keys that can help an

individual get control of its personal finances. These five keys are starting with

your goals, creating a plan, stick to your budget, get out of debt, and don’t be

afraid to ask for advice.

The importance of financial literacy is obvious as it is typically used as an

input to a model that determines the need for financial education and explained

variations in behavior and financial outcomes such as savings, investment, and

credit behavior (Idris et al., 2013).

Synthesis

This section identifies the relations as well as the overall summary of the

works discussed in the review of related literature and studies.

 As stated by Bortz (2012), students lack the knowledge on how to handle

their finance properly due to the schools not requiring students to take personal-

finance class to graduate. Therefore, they don’t learn the fundamentals of

handling their money and basically have little to no essential knowledge to apply

it in the real world.

According to Peng et al. (2007), high school and college students who

were able to complete personal financial course tends to be better at handling

their finances. They are at an advantage against those who didn’t took the

course, as it is shown that they are able to properly manage their budgets.

As shown in the study of Schramm (2015), students aren’t being taught

adequately about personal finance. The students are getting low grades in this

matter and are given low expectations to themselves in terms of leaning personal

finance as it is shown that there is a lack of financial literacy education.

As indicated by Hastings et al. (2013), the lack of financial literacy affects

the individual’s to optimize their own welfare, therefore it leads to consequences

for individual and social welfare.

According to Curtis (2013), there are four reasons why budgeting fails—

the budget is too restrictive, not setting goals, not giving budgeting enough time,

and one hates it. The underlying problems to why budgeting fails is that people

are having troubles with a restrictive budget, doing budgeting as a guess-work,

they tend to be impatient, and the perspective of an individual to budgeting.

 Caldwell (2017) stated that although it is difficult to budget, it can actually

benefit us. Budgeting can actually save money, and budgeting helps a person

reach their goals, stop worrying, helps one to be flexible, and puts a person into

control. Although the others may look to budgeting in a negative perspective,

budgeting can be simple.

Caldwell (2016) stated that starting with your goals starting with your

goals, creating a plan, stick to your budget, get out of debt, and don’t be afraid to

ask for advice are the five keys that can help to control one’s personal finance.

As indicated by Idris et al. (2013), it specifies the importance of financial

education and financial literacy. It also stated the variations in behavior and

financial outcomes such as savings, investment, and credit behavior.

Definition of Terms

Finance. According to Merriam-Webster, it is a system that includes the

circulation of money, the granting of credit, the making of investments, and the

provisions of banking facilities. In this study, finance is the allowance of the

Senior High School students of Sta. Teresa College that will be studied by the

researchers.

Allowance. According to Dictionary.com, it is an amount of money given

or granted on a regular basis for a purpose, as for expenses. In this study,

allowance is an amount of money given weekly to the Senior High School

students of Sta. Teresa College that will be studied by the researchers.

Personal Finance. It is the application of the principles of finance to the

monetary decisions of an individual or family unit. It addresses the ways in which

individuals or families obtain, budget, save, and spend monetary resources over

time, considering various financial risks and future life events

(http://sfs.gsu.edu/the-financial-aid-process/financial-resources/financial-

literacy/personal-finance-and-debt-management/). In this study, the management

of personal finance of the Senior High School students will be studied by

researchers.

Financial Literacy. It is the ability to understand how money works: how

someone makes, manages, and invests it, and also expends it to help others

(https://www.futurpreneur.ca/en/2013/meaning-financial-literacy/). In this study,

financial literacy is the knowledge of the students regarding to managing financial

resources effectively of the allowance of Senior High School students of Sta.

Teresa College that will be studied by the researchers.

Financial Management. It pertains to planning, organizing, directing, and

controlling the financial activities such as procurement and utilization of funds of

the enterprise. It means applying general management principles to finance

resources of the enterprise (https://managementstudyguide.com/financial-

management.htm). In this study, financial management is the monetary plan for

the weekly allowance of the Senior High School students of Sta. Teresa College

that will be studied by the researchers.