College is an important chapter in the life of the students. It is the stage of relative “freedom” to the students. Some decisions usually done by the parents are already delegated to them. One of the key decision-makings is related to finances. Students, most especially those who came to Cotabato City for college education are given allowances; the least enough for 15 days or a month budget for their daily needs on food, fare, school projects, room rental and others. Being new in handling finances, one may succumb to overspending, thus, sacrificing some most needed things for their education. Resorting to money borrowing then is another arena for financial management. Wise decision must be done in order not to create bigger issue on finances. The students who are residents of Cotabato City are not spared of this reality. They may have smaller allowances given on a weekly basis but still they are left in some time to decide how much, what to spend and when to spend their allowances. In line with this students should be aware of the level of their financial literacy in terms of their spending and saving habit. Financial literacy is defined as ones’ “knowledge of facts, concepts, principles, and technological tools that are fundamental to being smart about money” (Garman & Gappinger, 2008). Meanwhile, Mason and Wilson (2000) defined financial literacy as a “meaning-making process” in which individuals use a combination of skills, resources, and contextual knowledge to process information and make decisions with knowledge of the financial consequences of that decision. In addition, A. Atakora 2013 study, Norman (2010) defined financial literacy as having the right set of skills, knowledge and sufficient understanding on the use of money and its importance. Financial literacy is the ability to understand finance. Such skills and knowledge helps an individual to make effective and informed decisions of their finances.
Being financially literate is a one-time investment that we can never lose. Financial literacy is component of sound financial decision-making, and many young people wish they had more financial knowledge (Lusardi et al., 2010). Furthermore, it helps to prevent students to engage in extensive debt (Shaari et al., 2013). Financially literate individuals make fewer mistakes and are in better financial condition than financial illiterates (for surveys, see Lusardi and Mitchell, 2007; Bernanke, 2006).
Therefore, the aim of this study is to examine the different level of awareness among first year students of Notre Dame University Cotabato City on Financial Literacy. By assessing the financial literacy level in terms of spending and saving habit of first year students, we could understand how they handle their financial decisions.
Review of Related Studies
In the society today, one of the major worries has been financial illiteracy, from money savings and knowledge about credit to payment of essentials to learning how to manage payback check. Literacy in finance is essential for consumer competence creation, many researches carried out by researchers and agencies have shown that lack of knowledge by the youth on money management will result to inefficiency on finance when adulthood is attained (Sorooshian & Teck 2013). The term financial literacy is one that is not new. Financial literacy is perceived as important and as something to be encouraged in those who are not financially literate. Financial literacy topics such as record keeping, budgeting, personal finance and savings were viewed to be more important to lower-income individuals. This suggests that financial educators should not only teach how to save or ways to save, but also the why’s to save (Rhine and Comeau, 2000). In this study the researcher used these four topics to measure the financial literacy of micro entrepreneurs. In this study, academic courses are one of the independent variables (IV) in which business...
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