‘‘THE COST OF UNAWARENESS: Assessing the Economic Impact of Financial Ignorance

on non-ABM Students of PLTC Inc., SMU, and NVSU, Bayombong Campus.”

BOBILA, APRIL ANNE T.

PADICLAS, MELISA A.
SAAVEDRA, JHOVELLE H.
SOMERA, RUTHIE GAYLEE B.
VALENTIN, JONABELLE P.

RESEARCH STUDY

BACHELOR OF SCIENCE IN BUSINESS ADMINISTRATION: MAJOR IN

FINANCIAL MANAGEMENT

APRIL 2024

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 TABLE OF CONTENTS
TITLE PAGE

TABLE OF CONTENTS 1

CHAPTER I. INTRODUCTION 3

Background of the Study 3

Statement of the Problem 6

Objectives of the Study 6

Significance of the Study 8

Scope and Delimitation of the Study 8

Conceptual Frameworks of the Study 9

Operational Definition of Terms 10

CHAPTER II. REVIEW OF RELATED LITERATURE 12

Financial Ignorance 12

Financial Education 12

Financial Behavior 13

Financial Knowledge 13

Learning Capacity 14

Money Management 15

Financial Training 16

CHAPTER III. METHODOLOGY 17

Research Design 17

Research Setting 18

Respondents of the Study 18

Research Tools 18

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QUESTIONNAIRE

REFERENCES 19

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 CHAPTER 1

INTRODUCTION

Background of the Study

In the scheme of life, what you don’t know yet has the potential to change your situation

than what you currently know. What you know brought you this far but what you don’t know is

capable of taking you to the next level of life. To be financially ignorant is to lack the knowledge

& skills required to make sound financial decisions. Many people are ill-equipped to make

crucial personal and family financial decisions. Stress & hardship always abound where there is

financial ignorance. Finance is a very important discipline but by far the least understood

because many people avoid learning its language. The cure for financial ignorance is financial

education. Knowledge is the keyword as far as finance is concerned. You can be transformed

only to the extent to which you are informed. The quality of information available to you

determines the quality of your life (Omotoye,2017).

In our current generation where college life, careers, and adulthood are top priorities, a

lack of financial knowledge serves as a significant barrier for individuals, hindering student’s

capacity to make informed choices and protect their financial futures. Financial ignorance takes

different shapes, spanning from simple budgeting deficiencies to misconceptions about intricate

financial products. Fear of admitting limited knowledge, particularly regarding financial matters,

often prevents individuals from openly acknowledging their ignorance on these subjects. The

reluctance originates from a fear of being seen as lacking knowledge, leading to ineffective

communication, an absent of queries, and a deficiency in financial education. As a result, many

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people don't have the right information to understand money well and stay financially secure.

(Zimmermann, 2023)

The financial behavior and challenges faced by students, particularly those in college, has

been limited, reflecting a growing concern over the financial habits of young consumers. Studies

such as Dunes, Huddleston, & Boyce (1999) in the United States and similar research in other

countries have highlighted that while college students have significant spending capacity, they

often lack adequate financial knowledge and tend to make impulsive purchases. This trend is also

observed in Malaysia, as evidenced by Sabri, MacDonald, Hira, and Masud's (2010) findings,

which indicate low levels of financial literacy among Malaysian college students. Moreover, this

knowledge gap is influenced by factors such as ethnicity, childhood consumer experiences, and

the type of institution attended, be it public or private.

Understanding cost of financial ignorance, or the lack thereof, impacts savings habits and

specific financial challenges among college students is crucial for designing effective financial

education programs. While (Bernheim, Garrett, & Maki, 2001; Peng, Bartholomaz, Fox, &

Cravener, 2007), studies have explored the relationship between financial education and savings,

they have not directly addressed the role of financial knowledge during college years.

Additionally, existing research on the financial problems and practices of college students (e.g.,

Lyons, 2004; Lawrence, Cude, Lysam, Marks & Machtmes, 2006) has not thoroughly linked

these issues to financial literacy.

In Philippine context in 2021, a significant proportion of young adults, forty-two percent

(42%), reported learning about personal finance through social media, while seventy-five percent

(75%) cited their parents as their primary source of financial knowledge. Despite this, only a

fraction of young individuals demonstrated sustained interest in investing, with many

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abandoning their efforts along the way. Among those who had completed their education, fifty

percent (50%) or fewer relied on their parents for learning about saving money, saving for

college, earning income, and budget management (Turner, 2023).

The Philippines faces considerable challenges in financial literacy, with notable gaps in

understanding and fundamental financial concepts. Surveys indicate subpar financial literacy

levels in the country, with only two out of ten Filipinos achieving outstanding scores in the

Bangko Sentral ng Pilipinas poll, and seven out of ten respondents correctly answering only

around half of the questions. These findings mirror the Philippines' performance in international

financial literacy assessments, where only twenty-five percent (25%) of adult Filipinos

demonstrated a grasp of basic financial concepts (Medalla, 2022).

Additionally, many students in the Philippines come from low-income households,

compounding the financial pressures they already face alongside their academic responsibilities

(Pratt, 2019). This exacerbates the challenges they encounter in managing their finances

effectively and saving money, often leading to overspending and misuse of credit. Such financial

behaviors can result in high levels of debt, low income, and financial instability, hindering

economic mobility. Financial ignorance acts as a barrier to accessing financial aid and

exacerbates disparities in educational opportunities (Abichuela, 2021).

This study serves as a tool to deepen understanding of the issue and raise awareness on

Financial Literacy. Furthermore, it aims to be a tool to improve how current and future

generations perceive and respond to financial ignorance as challenges arise. By shedding light

on the prevalence and implications of financial ignorance, this research can inform efforts to

address these issues effectively and assess the economic impact of financial ignorance amongst

the college students.

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Statement of the Problem

The study will focus on the assessment of financial literacy and the impact of financial

ignorance on a total of 300 non-ABM students of PLTC Inc., Nueva Vizcaya State University,

and Saint Mary’s University located in the Municipality of Bayombong, Nueva Vizcaya. This

study will focus on addressing a pressing issue that often remains in the shadows: financial

ignorance.

Another purpose of this study is to look at the factors affecting the spending behavior

among college students of the Municipality of Bayombong, Nueva Vizcaya, in terms of attitude,

family background, lifestyle, and financial knowledge. This study may help the researcher to

better understand how these factors influence the spending conduct of non-ABM college students

and their financial behavior. The researcher-made-questionnaire may be used as the main

instrument for data collection, interviews can be conducted to answer clarifications, verification

of answers, and solicit additional information from the respondents.

The e-questionnaire gathers data on how much knowledge the students have about

investing/investment, savings, & emergency funds, the importance of financial literacy among

college students, their idea about the potential consequences of financial ignorance, the practical

steps to enhance financial knowledge and decision-making, and the kind of approach do the

students take with their financial decision-making.

Objectives of the Study

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 The general objective of the study is to assess the economic impact of financial ignorance

amongst the college students. The results or outputs of the study can be utilized as input or

reference as additional information or criteria for requirements in the accomplishment of each

course offered by the higher education institution.

Specifically, it aims to:

1. Determine the demographic profile of the respondents:

1.1 Age

1.2 Gender

1.3 Course

1.4 Weekly Allowance

2. Determine the knowledge of the students in terms of:

2.1 Investment/Investing

2.2 Saving

2.3 Emergency Fund

3. Determine the level of financial literacy of college students in terms of basic knowledge

of their personal finances such as:

3.1 Budgeting skills

3.2 Debt management

3.3 Understanding of investment

Significance of the study

The result of the study will be beneficial to the following:

Students

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 The students will be benefited with this study since it aims to provide improved financial

understanding by educating students regarding the basic principles of financial literacy.

Individuals and Society as a whole

This research aims to be beneficial to both individuals and society as a whole since this

could be a basis for evaluating the impact of financial ignorance to the economy.

Higher Education Institutions

This study will be beneficial to higher education institutions as a tool in determining

practical steps to enhance financial literacy and decision-making among students.

Future Researchers

The future researchers will be benefited on this study because it could serve as a

reference in choosing a study related to this research. It can provide them additional information

which was studied and examined carefully.

Scope and Delimitation of the Study

The scope of this study is to focus on the knowledge gaps and challenges that students

face when it comes to understanding their finances.

This study is delimited from the 300 students of PLTC Inc., Nueva Vizcaya State

University, and Saint Mary’s University located in the Municipality of Bayombong, Nueva

Vizcaya. The main purpose of this study is to investigate the level of financial literacy among

college students and this study also aims to identify the gaps among respondents. The

questionnaire will be the basis of the implementation and evaluation of the research.

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Conceptual frameworks of the study

The conceptual framework typically revolves around components: Financial literacy

knowledge, budgeting skills, attitudes, investing, emergency fund, and saving strategies.

Financial Literacy refers to understanding financial concepts and products, skills involve the

ability to apply that knowledge in real-life situations such as budgeting, investing, and saving,

while attitudes encompass the behaviors and beliefs individuals have towards money, including

their financial goals and risk tolerance. The composition of demographics, including variables

like a college student of different higher education institutions here in Bayombong, Nueva

Vizcaya, can influence their financial literacy. The challenges and opportunities faced and

investigated by students are examined within this context. They can also advocate for financial

literacy education in their respective institutions and within their communities, encouraging

institutions to provide resources and support for students to learn about budgeting, saving,

investing, and having emergency funds. By analyzing the correlation between these factors, this

framework provides valuable insights to enhance financial literacy among students here in

Bayombong, Nueva Vizcaya.

Engagement in financial activities or association in daily transactions that require the use of

money has been an integral part of human nature. Because of this, we acquire our needs and

demands for survival. It is and will always be crucial to effectively manage finances. Thus,

financial literacy suggests the capability of individuals to be knowledgeable and mindful of their

allocation of financial resources such that there are multiple fractions in life that need to be

funded and provided with monetary attention.

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 Independent Variable Dependent Variable

Demographic Characteristics:
-Age
-Gender
-Course Level of Financial
Ignorance (will be
measured based on their
basic knowledge of their
Assessing the Economic Level of Financial Literacy in personal finance
Impact of Financial terms of:
Ignorance on non-ABM -Spending
Students of PLTC Inc., -Saving
SMU, and NVSU,
Bayombong Campus. -Budgeting Economic Impact of
-Emergency funds Financial Ignorance
-Cost of Unawareness
Level of spending habits in terms of:
-Allowance
-Personal Consumption (Online
Shopping, Travelling, Food)
-Educational Consumption

Figure 1. Conceptual Framework

Operational Definition of Terms

Allowance will be asked in this research study since this is one of the sources of money for the

respondents.

Budgeting is one of the variables of this research study because it helps determine the level of financial

knowledge of the respondents.

College students are the target respondents of this research that aims to determine their knowledge of

financial literacy.

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Demographic Characteristics is also one of the variables of this research study to determine whether

financial literacy differs amongst gender, age, and courses of the respondents.

Economic Impact this will be assessed through this research study since the level of financial knowledge

will be determined through the e-survey.

Emergency Fund is one of the variables of this research study because it helps determine the level of

financial knowledge of the respondents.

Financial ignorance this is also one of the basis of whether the respondents lack the knowledge & skills

required to make sound financial decisions.

Financial knowledge is one of the objectives of the study, this would be determined in conducting the

research.

Financial Literacy such as budgeting, investing, borrowing, and personal financial management is one of

the variables that will be used in this research study to determine the Economic Impact of Financial

Ignorance on non-ABM Students of PLTC Inc., SMU, and NVSU, Bayombong Campus.

Higher Education Institutions are the target place for conducting the research study.

Investment will also be asked to the respondents since this is one of the determinants of their level on

financial literacy.

Savings is one of variables of this research study because it helps in determining the level of financial

knowledge of the respondents.

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 Chapter II

REVIEW OF RELATED LITERATURE

This chapter presents a review of the related literature and studies on the cost of financial

ignorance that give significant help in the development of this present study.

Financial Ignorance

Financial ignorance leads to wrong financial decisions which hamper the path to achieving

holistic well-being. Correct and timely financial decisions lead to financial security. (Nigam &

Jain, 2017). It also refers to a deficiency in understanding various financial aspects, ranging from

fundamental principles like budgeting and saving. It can impact individuals regardless of their

age or income bracket, resulting in detrimental effects on their financial health. In terms of

investments and financial management, ignorance poses a serious risk. Experts concur that

people are not financially literate enough to make critical, self-serving financial decisions. Those

lacking financial knowledge may find it challenging to make informed decisions, potentially

leading to indebtedness and instability. Moreover, this ignorance can extend its repercussions to

broader societal levels, potentially influencing economic growth and stability.

Financial education

The increasing complexity and vitality of financial markets are making financial education an

increasingly critical concern for most economies. Financial education involves consumers

expanding their understanding of financial products and concepts through information and

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objective guidance, enabling students to make decisions rooted in their knowledge to enhance

their prosperity. It is an educational approach that empowers the public to cultivate the skills

needed for informed decision-making while also proposing strategies to bolster their financial

well-being OECD (2005).

Financial Behavior

Student financial behavior refers to the way individuals understand and utilize financial

knowledge to make prudent investment choices. It elucidates how people employ financial

concepts and knowledge in their decisions, whether active or passive. Consequently, financial

behavior reflects the impact of financial literacy on consumer or individual actions (white 1999)

It also pertains to one's mindset and actions in handling finances, serving as a measure for

studying expenditure and saving patterns. It directly correlates with how individuals handle and

monitor their financial resources. Financial behavior encompasses cash flow management, credit

utilization, and savings habits. It reflects personal accountability in financial matters, including

prudent practices like budgeting, evaluating debt obligations, and planning for the future within a

reasonable timeframe.

Financial Knowledge

Individuals possessing the capacity to apply their financial acumen towards making sound

decisions for managing their monetary assets tend to exhibit higher levels of financial literacy

(Asaad, 2015; Robb and Woodyard, 2011). Numerous studies have scrutinized the extent of

financial knowledge among students, consistently revealing a deficiency in this area. While this

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has prompted various authors to explore financial knowledge as a means to enhance financial

behavior, findings have been inconclusive. For instance, Xiao et al. (2011), Allgood and Walstad

(2016), and Mountain et al. (2020) have observed a positive correlation between financial

knowledge and financial behavior, whereas Borden et al. (2008) and Tang et al. (2015) have

argued that financial knowledge alone does not suffice to alter financial behavior. an integral

element of financial literacy, is defined by Huston (2010, p. 307) as a “stock of knowledge

acquired through education and/or experience specifically related to essential personal finance

concepts and products.” Financial knowledge is therefore associated with the awareness of

important financial principles and proficiency in personal financial matters relevant to everyday

life. It encompasses the use of one’s understanding of financial concepts and procedures to solve

financial problems (Candamio & Díaz, 2020). According to OECD (2016), financial knowledge

is a critical component of financial literacy The higher levels of financial knowledge are

associated with better decision-making and financial outcomes, such as improved financial

planning, debt management, and stock market participation (BSP, 2019; OECD, 2016; Hastings

et al., 2013). Moreover, Lusardi and Mitchell (2011) proposed that people with higher financial

knowledge are more likely to accrue higher wealth and have plans for retirement.

Learning capacity

Beyond understanding and self-assurance, each person holds the primary responsibility of

actively acquiring new information and skills to effectively manage their personal finances

(Loibl & Hira, 2005). The rapid and continual changes in financial environments and

opportunities exert significant pressure on individuals' adaptability and resources (Jarvela, 2006).

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Acknowledging that learning is central to this process (Jarvela, 2006), we contend that an

individual's capacity for learning serves as a valuable asset that promotes responsible financial

behavior.

Money Management

Beginning college marks an exhilarating yet occasionally daunting journey for numerous

college students. It's frequently the initial step away from the familiar comfort and security of

their parent's home, thrusting them into independent living and self-management. A particular

challenge faced by students during this transition is mastering the art of budgeting.

Ibraham et al (2009) defines it as a tactic aimed at maximizing the interest value of investment

assets. Numerous scholarly studies underscore the crucial role of money management skills, as

they shape the spending behaviors of students on campus. Many students arrive at college

lacking fundamental money management knowledge, leading to inadequate financial literacy.

Consequently, students who enter college without these skills may encounter difficulties. College

students face a unique scenario during that period due to limited wages and significant expenses

(Micomonaco, 2003). Many college students, according to Holland (2016), are unaccustomed to

dealing with money.

Financial Training

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Financial training aims to equip participants with fundamental skills in financial management,

tailored to their everyday needs and utilizing relevant technology. Participants will gain

knowledge in banking, savings, mobile accounts, e-wallets, borrowing wisely, investments, risk

management through insurance, and financial planning. Additionally, they will develop practical

skills such as maintaining a financial diary and utilizing e-wallets, online banking, and online

insurance for daily financial tasks. (OECD2005). Financial training for college students should

follow a structured approach that educates them on practical topics essential for their lives, while

also addressing the challenges they are expected to encounter.

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 CHAPTER III

RESEARCH METHODOLOGY

In this chapter, the research methodology and its comprehensive framework were outlined,

covering aspects such as research design, research setting, respondents of the study, research

tools, data collection procedures, and data analysis methods. These components are essential for

collecting relevant information for the study and processing and analyzing the data gathered.

Research Design

Survey research, defined as "the collection of information from a sample of individuals

through their responses to questions" (Check & Schutt, 2012, p. 160) will be used in conducting

this research study. This type of research allows for a variety of methods to recruit participants,

collect data, and utilize various methods of instrumentation. Survey research can use quantitative

research strategies (e.g., using questionnaires with numerically rated items), qualitative research

strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is

often used to describe and explore human behavior, surveys are therefore frequently used in

social and psychological research (Singleton & Straits, 2009).

The study primarily utilized a quantitative strategy to analyze and assess the impact of financial

ignorance among the student in different universities here in Bayombong. This was achieved by

employing a descriptive evaluative research design, which effectively investigates the identified

problem and align with the study's objectives. It enables a systematic exploration of the factors

influencing the impact of financial ignorance in the context of college student.

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Research Setting

The research study will take place at PLTC Inc., Nueva Vizcaya State University, and

Saint Mary’s University located in the Municipality of Bayombong, Nueva Vizcaya since the

target respondents are the students of these higher education institutions.

Respondents of the study

The respondents of this study are the 300 students of PLTC Inc., Nueva Vizcaya State

University, and Saint Mary’s University located in the Municipality of Bayombong, Nueva

Vizcaya. The respondents should not be taking any Business Management related course.

Research tools

This research will use a questionnaire to collect, analyze, interpret, and communicate data and

information during the research process. The questionnaire will also have consent that is

applicable to the provisions of the Data Privacy Act of 2012 or Republic Act no. 10173.

Google Link for the Survey:

[Link]

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