Factors Affecting Spending Habits of students at St.

Vincent College taking up BS in

Accountancy

CHAPTER 1

INTRODUCTION

Background of the Study

Money plays a very crucial role in our daily lives. It can be a tool to avoid suffering from
poverty. As a human, money can be used as an instrument for buying basic needs and wants.
And it plays a vital role for all humans, especially students. Developing a good spending habit at
an early stage will help them best finish their education and eventually learn how to be
financially stable in the near future. Spending behavior is an acquired outline of behavior that is
done regularly. A good spending habit is an important tool for one’s financial success (J.TC.
Bona et al., 2018). Spending habits are not a static phenomenon among university students and
constitute financial behavior that depends on the level of financial knowledge and financial
attitudes (money management capabilities). This becomes more challenging when expenses far
exceed the available allowance (Nadome, 2014).

Aligned with this, college students encounter challenges on how they should spend their
allowances. In order to attain a wise saving of money that can help us manage our allowances,
we should learn the basics by tracking our spending habits. The financial independence that
college students experience may affect their lives in many ways, such as their financial and
economic well-being. Moreover, attitude shapes one’s interest in spending. Knowing what to
spend and why you spend the way you do is a way to better understand your finances.
Managing one’s expenses prevents overspending, impulsive buying, and paying too much for
an item. Hence, this helps you keep track of your allowance and your expenses. As a student,
allocating all of your allowances and tracking them before spending is very important because it
helps make college payments easy, but some students often lack discipline in allocating and
tracking the way they spend their money. While you are allocating and tracking your spending
habits, you will realize that there are several factors that affect them repeatedly. It really helps
them pay school fees and any academic expenses. That is why students need to determine
factors and allocate their allowances to keep track of their spending habits. This factor affects
your way of thinking about whether to spend it on necessary or unnecessary things you
encounter in your everyday life as a student. This will also help you save money for emergency
situations. At the end of a busy day full of classes, quizzes, and exams, handling money and
having a financial target may be the last but not the least thing you want to do, but it's worth it
after all.

In today’s generation, still affected by the pandemic, good spending habits help us
students in many ways. As a student, your expenses vary every month depending on your
needs. As a college student in the Philippines, if you know how to control and save money, it
can help you start to cultivate a positive outlook. It is important to learn good financial
management skills for them to practice while they are in college so that they can use them when
they graduate.

The aim of this research study is to determine the factors affecting the spending habits
of students at SVC taking up a BS in Accountancy. It will also seek to determine how beneficial
it is for college students to understand the manner and significance of their spending habits in
order for them to be able to determine how and where their money goes.

Objectives of the Study

This study aims to determine the factors affecting the spending habits of a St. Vincent
College student taking up a BS in Accountancy.

Specifically, this study aims to:

1. To determine the students’ profile according to:

a. Sex
b. Section

2. To determine the factors affecting the spending habits among BS Accountancy

students in terms of peer influence,

3. To determine the factors affecting the spending habits among BS Accountancy

students in terms of parental influence,

4. To determine the factors affecting the spending habits of BS Accountancy

students in terms of financial literacy.

 5. To determine the most influential factor affecting the spending habits of BS

Accountancy students.

Significance of the Study

The findings of this study may be beneficial to the following:

Students. This study will be beneficial to the students in understanding the manner and
significance of their spending habits. This research will also help them avoid making money
management mistakes and become more confident in their financial matters.

Future Researchers. This study might be a reference tool and a guide for future
researchers undertaking similar studies.

Present Researchers. The result of this study could be the researchers' experiential
learning that they could apply in their daily lives and could be a guide and a reference for their
future plans.

Scope and Limitation of the Study

The main purpose of this study is to determine several factors affecting the spending
habits of BS in Accountancy students. The researchers limit the study to accounting students at
the St. Vincent College of Science and Technology—Leganes campus in the school year 2022–
2023.

The respondents in this study will be chosen through simple random sampling, which is a
subset of individuals chosen from a larger set in which a subset of individuals is chosen
randomly, all with the same probability. As a result, simple random sampling is more
advantageous to the researchers. Each of the respondents will answer a researcher-made
questionnaire through Google Forms. The study considers the respondent’s personal
information, such as age, sex, and economic status.
 CHAPTER 2

REVIEW OF RELATED LITERATURE

This chapter presents a review of related literature and studies that served as a basis for
the formulation of some portions of the study.

Spending habits

Kavitha Chavali (2020), in her study "Saving and spending habits of youth in the Sultanate
of Oman," aims to investigate the saving and spending habits of youth in the Sultanate of
Oman. The extent of peer influence, parental influence, and financial literacy on the saving and
spending habits of youth in the Sultanate of Oman is investigated. The adopted method for this
study is a survey designed based on the collection of data through a structured questionnaire
from randomly selected youth. Descriptive analysis and correlation results revealed that the
influence of peers and parents and the financial literacy of youth are significantly correlated with
the saving and spending habits of youth.

(Vhalery et al., 2018) The research paper classifies variables that become factors that
influence allowance management. The population of the study is the college students from the
first year (term one) at Indraprasta University (UNINDRA) PGRI Jakarta. The samples in this
study are made up of 282 people who were chosen randomly with the sampling random
technique. The data collection technique used is the questionnaire, which has already been
validated by experts and field trials. Study questionnaires are divided into two types: those that
are distributed online through Google Forms and those that are distributed manually. The result
shows that factors which influence allowance management are divided into 10 factors, which
are financial knowledge factor, financial motivation and desire factor, wisdom factor, socio-
culture factor, individual status factor, individual attitude factor, family relation factor, individual
friend's environment factor, and also family background factor. The paper, however, does not
take into consideration the various spending habits of students, like shopping, going to the
movies, dining out, etc. It does not give a clear picture of how much an average student spends
monthly on what activities.

Katelin Carlson (2016), in her study "Saving and spending habits of college students,"
looked at the financial behavior of college students and recent alumni as it relates to economic
theory and the life cycle hypothesis. With student loans increasing dramatically and credit card
debt becoming more of a reality, it is critical to understand what drives financial stability or
instability after graduation. The pool of 230 participants was composed of 174 women and 56
men, representing 8 years of graduating classes (2009–2016) from Connecticut College.

Calitz & Fourie (2016) The disposable income of students has been greatly reduced by
the increase in the cost of university education globally. In the recent past, there have been
student protests against increases in tuition fees in some countries around the world. Among
others, these countries include Australia, Brazil, Germany, the Netherlands, the United
Kingdom, Finland, Thailand, New Zealand, and Turkey. South Africa had its share of these
protests. The reason for the increase in the cost of university education is traceable to the
decline in government support for higher education.

Abhijeet Birari and Umesh Patil (2014), in their study "Spending and saving habits of
youth in the city of Aurangabad," say that youth spend more money on shopping and especially
on branded items. It was also noted that both male and female youths have different spending
patterns with a slight similarity.

Kristi Leclerc (2012), in their study "Influential factors contributing to college students'
spending habits and card debt," explores how access to credit, familiarity with debt and financial
education, socialization agents and social identities, academic performance and financial aid,
and family income influence college students’ spending and credit card debt. After a close
comparison of eleven studies, he was able to conclude that easy access to credit cards makes
students susceptible to accumulating debt. Students who perform poorly academically, are
female minorities, and are older tend to be more likely to be in debt than other students. Family
income and the amount of financial aid a student receives also affect their financial situation, as
do the students’ own level of financial education and financial socialization from parents.

Underlying factors behind students' expenditure

(Bona, 2018) study found that students choose to buy the product that will meet their
interests relative to product and price. The study concluded that college students’ spending
behavior is massively influenced by their family background. Parents also play a critical role in
shaping not only their children's attitudes towards financial management but also their general
life attitudes in general. To improve their financial habits, students must take some time to
create concrete measures to help them keep track of their expenses. First, they should create
their own budget and keep track of ways to improve it. Keeping a record of expenses will help
them monitor how much money they spend on clothing, entertainment, and gadgets. They
should not forget to allocate money for savings because a good budget does have savings.
Lastly, they should keep a positive attitude. This study failed to quantify student spending
behavior in monetary terms since it was more qualitative in nature.

To determine the spending pattern of the students

(Stollak et al.) The research paper studies the manner in which college students manage
their money based on various factors like age, personality traits, and knowledge. Some
variables did not show differences in the accumulation of debt, but perceptions varied among
groups. Demographic variables, GPA, and number of hours worked did not play a role in the
amount of debt acquired, but students with a higher GPA or those who worked more were more
worried about their financial status. In this study, they considered the printing budget to analyze
the differences in spending behavior. They examined significant differences between males and
females and found that females had a more responsible attitude towards budgeting their
monthly expenses. There were also significant differences in spending according to various age
groups (freshmen, juniors, seniors, and sophomores). The paper focused on a relatively
homogenous population at one school. There is a possibility of students having dissimilar
outcomes on a more diverse campus.

Kanting sechaba thobejane, Olawale Fatoki (2017), Budgeting and spending habits of
university students in South Africa, IFE Centre for Psychological Studies, ISSN: 1596-9231,
Volume 15, No. 3, 2017. In his study, "Budgeting and spending habits of university students in
South Africa," he examined if there is a significant gender difference in the budgeting and
spending habits of university students. The findings of the study show that the majority of
university students do not have a written budget. In addition, the majority of university students
spend their money on groceries and fast food. Female students are more likely than male
students to have a budget. Recommendations to improve the budgeting and spending habits of
university students are made.

In today's society, the spending habits of students have become a very important part of a
nation's economy because they generate demand for goods and services (Bona, 2017).
Student’s expenses are directly associated with students' resources, and they are considered
one of the most important factors in the total spending in a nation. Besides, the financial
management of university students is one of the major concerns of the public. This is because
people wish to know how they manage their spending and also pay back their debts, which
helps them avoid bankruptcy (Sorooshian & Teck, 2013). In the past year, the issue of financial
management, such as low savings, indebtedness, and bankruptcy, has drawn much attention.
According to Gutter et al. (2013), the individuals are already exposed to various methods of
handling personal finances at an early age, which can often lead to the development of poor
habits. The authors mentioned that financial behaviors were positively related to social learning
opportunities, with youth scoring higher on social learning opportunities when they budget and
save than those who do not budget and save. Since they are financially independent from their
parents, they have to be responsible in dealing with financial challenges such as paying bills,
creating budgets, and using a credit card for the first time in their lives. They will experience how
to deal with such challenges until they become adults and have a job. Desirable or risky
financial behaviors, such as spending habits, depend on the individual’s actions. Although it
may be influenced by external factors such as government policies or economic conditions, it
actually depends on the decisions made by an individual (Robb and Woodyard, 2012).

According to Mendes (2013), in order to make a suitable individual financial decision, it

can be concluded that financial literacy is more than just a simple assessment of knowledge,
reflecting a set of habits and skills. Besides that, Robb, Babiarz, and Woodyard (2012)
mentioned that the actions taken by each individual are a reflection of their individual financial
well-being, apart from influences from external factors. That is why it is considered critical to
understand the relationship between knowledge and personal financial issues. As Bordon, Lee,
Serido, and Collins (2016) stated, there is no significant connection between financial
awareness and effective financial behavior. Besides that, other research also showed that if an
individual learns to pick up consumer behavior during their old age, it will have a strong
influence on them (Lusardi & Mitchell, 2014). According to Mahdzan and Tabiani (2013, as cited
in Hinga, 2012), a positive attitude toward individual saving behavior is shown by people who
save more frequently as opposed to those who do not save. The probability of having a positive
attitude toward saving is significantly related to the saving frequency. As an example, the act of
setting aside a portion of the income as savings would most likely lead to a higher probability of
having a positive saving attitude.

In sum, many past studies have examined the relationship between financial literacy
and behavior in college students. As Greene (2014) and Baker, Bettinger, Jacob, and
Marinescu (2018) examined the relationship between financial literacy and financial behavior
and found that an increase in financial awareness leads to more positive financial behavior in an
individual, According to Idris, Krishnan, and Azmi (2013), the youngster of today is more likely to
be protected by their parents from the realities of society today. This will result in the young
generations not having the ability to face the real condition while it is happening. This situation is
trusted based on the data that recorded the increasing number of people obtaining credit cards,
which caused many issues of bankruptcy due to overspending in credit card usage among the
youth. So, the spending behavior of students has been affected by various factors that will result
in positive or negative issues.

Being a college student is fun, but there are so many responsibilities ahead of that.
Some college students are the first to leave the warmth of their parents and be away from
home. This is the early age of being an adult, so they need to learn to live on their own and
budget their own money. Determining the distinction between necessary and non-essential
objects is another challenge for many college students. Food, clothes, and toiletries are all
essential products for daily life and grooming, as well as, arguably, for schooling. Non-essential
items are items that you don't need on a daily basis, such as a new pair of shoes or an iPad.
Non-essentials are things that you "want to have" but are not "important." Restrict your
expenses to just important goods until you've gotten used to working within your means, which
could be tough at first (Segal, 2020).

According to social learning theory, spending habits are influenced by parents and other
influential individuals. The spending behavior will pass from generation to generation. Moreover,
the spending behavior of students might be affected by peer influence (Gulati, 2017). This is
because students spend more time nowadays. The teenagers will follow the trend that most of
their peers are following because they wish to fit in or be liked by their peers in a group. It will
influence the spending behavior of teenagers. Next, personal traits might influence the spending
behavior of students (Black, 2017). Personality traits can influence people’s decisions on
spending. In the personal traits, there are 5 factors, which are social character, compliance,
aggression, ethnocentrism, and dogmatism, that can affect the spending behavior. Those
factors can have a positive or negative impact on spending behavior (Muniady, Al-Mamun,
Permarupan, & Zainol, 2014). People who are more disciplined with their spending tend to
spend less. If people are less disciplined, then they will tend to spend more. Nevertheless,
knowledge of financial management will also affect spending behavior. So, the students who
have more knowledge of financial management tend to be more prudent in their spending
compared to the students who have less knowledge of financial management.

Through the years, money has been a commodity for everyone. As it is termed in
international trade parlance, it is considered to be "sine qua non," or without which nothing could
be done. According to a study conducted at the Lyceum of the Philippines University in
Batangas, it was determined that the current spending status of the teaching personnel at the
university was more focused on their basic necessities. Furthermore, it also concluded that
aside from their commodities, they’re also experiencing excessive spending on unnecessary
things (Perculeza et al., 2020).