THE FACTORS AFFECTING THE SPENDING HABITS

OF GRADE TWELVE - ABM STUDENTS IN ILIGAN COMPUTER INSTITUTE

A RESEARCH PAPER

Presented to
The Faculty of
Iligan Computer Institute
Iligan City

In Partial Fulfillment
of the Requirements for the Subject
PRACTICAL RESEARCH 2

ABELLANOSA, JOROSS R.
BANGUIS, MAILLE L.
BUSCATO, JODI ADRIENNE B.
FELICILDA, SOWEN P.
GABE, EFRIL MIE T.
RIZON, ZYRIL MAE M.
SANTOS, HANNAH BEA D.

OCTOBER 2022
CHAPTER 1

THE PROBLEM AND ITS SCOPE

Background of the Study

Teenagers are some of the biggest spenders, especially when it comes to gadgets, clothing,

and entertainment. They’re in their crucial independent stage where they can finally decide on how

to spend their own money and budgeting is the utmost challenge. Their spending habits that can

either be an advantage or a disadvantage to them.

Decision-making in terms of the finances of students differ from one another. Some of them

are knowledgeable and some are not. Although, teens might not spend every money they receive

from jobs, allowances, or from their parents the amount of money they have to spend is significant.

On average, teen spending accounts for roughly $250 billion dollars per year according to the

recent TD Ameritrade survey. For the most part, modern way of shopping can affect the lifestyle

of many students because everything including products has been put online making it more

accessible for them to buy even in the comfort of their home.

As we observe here in the school of Iligan Computer Institute, a lot students are very active

in spending. There are accessible stalls everywhere outside the school, making it easier for them

to spend each peso inside their wallets. We, researchers want to study on how the students spend

their money and what are the factors that contribute to it. We also want to help resolve the problems

that the students encounter in terms of their habits in spending.

Jamal, Mohidin, Osman, Ramlan and Karim (2015) studied how students at higher education

institutions in Kota Kinabalu, Sabah, save money. According to the survey, parental support is
crucial in encouraging adolescents to save money, followed by peer pressure and financial

knowledge. Students' involvement in leisure activities, spending, and interacting with friends about

money matters had an impact on their saving habits.

The point of this study is to determine how Parental Income, Parental Financial Teaching,

Peer Influence and Financial Literacy affect students’ spending habits in a positive or negative

way. We sought to look and determine the financial impact of the aforementioned issues on

students.

Accordingly, the study entitled The Factors Affecting the Spending Habits of Grade

Twelve – ABM students in Iligan Computer Institute was conducted during the first semester

of academic year 2022-2023.

Statement of the Problem

The aim of this study is to identify and assess the different factors that affects grade twelve

– ABM students’ spending habits in Iligan Computer Institute. And the impacts these factors to

them as a student.

Research Questions
This study sought to answer the following questions:

1. What are the factors that affect the spending habits of the students?

2. Does having a higher or lower parental income affect students’ spending habits?

3. Does having financial freedom during the early age of students affect their spending habits?

4. Does Peer Influence positively or negatively impact the students’ spending habits?

5. Does having a broad financial literacy equivalent to wise spending habits?

The study will mainly focus on the different factors that affect the spending habits of grade

twelve – ABM students in Iligan Computer Institute specifically: Parental Income, Parental

Financial Teaching, Peer Influence and Financial Literacy.

It does not seek to include the population of other school, grade levels and strand. Hence,

all sample respondents and theories are only limited to the grade twelve – ABM students of Iligan

Computer Institute.

Significance of the Study

Future Researchers. The results of this study will provide future researchers some knowledge on

students’ spending habits and the social factors that can affect it. It will give them deeper insights

about the topic and will help them better understand current issues involving financial management

among students. At the end of this study, future researchers would know why these factors are

crucial to the lifestyle of every student.

The Administration. They will be aware of the status of every students and it will help them

determine on how to solve or minimize the spending habits of the students. This study will serve

as a basis of the things that the administration need to know and understand about the spending

habits of students.

The Parents. The study benefits the parents whose child has bad spending habits because the

parents may be given an idea on how to discern the behavior of their children as well as the ways

on how to handle or manage them in a way that their children will be a functional individual in the

society.
The Students. The study is beneficial to the students because it will give them an idea and

knowledge about the factors affecting spending habits as well as how to overcome them especially

the bad habits. This study also opens the issue for a broader cause for the students because they

are directly affected by it.

The Teachers. The study is beneficial to the teachers because it will serve as a guide on how

teachers will handle the spending habits of their students productively and wisely. They will be

aware of the things that affects their students’ financial lifestyle.

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents the Review of Related Literature and Studies that supports our research

study and will prove relevance to the topic.

Related Literature

According to Nano et al. (2015), students with higher parental income save less and spend

more because they believe that money flows freely to them. Students with higher family incomes

are more likely to have poor financial habits because they spend carelessly and unpredictably.

Otto (2013) asserted that social learning, watching role models, and direct instruction alone

are not the primary ways that children and adolescents learn to save (such as explanations and

guidance with regard to the spending and saving of pocket money or allowances). Parenting

activities that resulted in stronger self-efficacy beliefs, better self-regulation techniques, and more

independent economic behavior were indirectly associated with skills and attitudes related to

saving.

Sato (2011) stated that children learn the meaning of money through social interactions

mediated by those in their immediate environment, especially their parents. Other than to suggest

that parents came from their own parents in turn, Sato did not go into detail on how parents came

to have this meaning for themselves. The manner in which parents impart worth and meaning to

money for their own children may become more obvious as a result of knowing more about the

origins of these values and applications.

of emerging adults to engage in appropriate money management habits (Grinstein Weiss, Spader,

Yeo, Key, & Freeze, 2012; Jorgensen & Savla, 2010).

Students tend to do something more when our peers mention that they like it. This is peer

endorsement: a behavior is more likely to happen when our peers praise it. (Colin Finkle, 2018).

The insufficient financial knowledge affects to people’s health physically, economically and

psychologically because the difficulties in their financial (Jorgensen and Savla, 2010).

According to (Mouna and Jarboui, 2015), the lack of financial knowledge and skills can

drive to poor financial behavior in gathering and digesting all important financial information and

thus, leads to inappropriate financial decisions and achieve less efficient wealth allocation

accordingly.

People who have great financial literacy tend to select more affordable mortgages and steer

clear of pricey extra fees and high-interest payments (Gerardi, et al., 2010). They also shown that

those who are more financially literate are less likely to fail on their debts.

Related Studies

According to studies, adolescents with high parental income are more likely to engage in

reckless spending, are uninterested in money problems, and don't understand the necessity for

preventive saving. The resources and possibilities accessible to students can be determined by their

social status, lifestyle, and parent's income (Robb and Pinto, 2010).

Bucciol and Veronesi (2014) suggested that parental teaching is more effective than receiving

the formal education at school and based on different socio demographic variables they show
different behavior. They also stated that the most effective strategy is teaching to save during

childhood and adolescence.

Dohmen. T., et al. (2012) also found that Dutch young adult children (ages 18–32) whose

parents taught them how to budget and encouraged them to save were better able to control their

spending and saved more.

Gudmunson and Danes (2011) on their critical review of 100 studies over the past 40 years,

the authors concluded that family financial socialization is a more powerful determinant of

financial behavior than formal financial education and that the quality of family relationships also

influences children’s financial behavior.

Young people also learnt from direct and indirect interaction with peers; through discussions,

rulemaking, reinforcement and modeling. (Salikin, Wahab, Zakaria, Masrukiand Nordin, 2012).

According to Dr. B. J. Casey from the Weill Medical College of Cornell University, teens

are very quick and accurate in making judgments and decisions on their own and in situations

where they have time to think. However, when they have to make decisions in the heat of the

moment or in social situations, their decisions are often influenced by external factors like peers.

In a study funded by the National Institute on Drug Abuse (NIDA) they stated that teens

may find it more difficult to control impulsive or risky behaviors when their friends are around, or

in situations that are emotionally charged. Thus, making peer influence a great factor on students’

decision-making process in spending.

According to Delafrooz and Paim (2011), financial literacy boosts the ability in handling

day to day financial matters and therefore, will reduce the negative consequences of poor financial

decisions that might otherwise take a longer time to overcome, might even take up to years to
overcome them. They also that showed income, age, financial management and financial literacy

as the most influential predictors of saving behavior.

Theoretical Framework

This research is anchored on the Family Financial Socialization Theory by Gudmunson and

Danes (2011). Family financial socialization theory posits that family interaction, even when

indirect, has an impact on financial well-being including knowledge transfer, financial attitude

development, and financial capability development. This model supports the study because the

variables and the factors chosen are closely related.

Family Financial Socialization Theory

Purposive Financial
Socialization & Family
Interactions
Financial Attitudes

Implicit Financial
Financial Behaviors
Socialization

Figure 1. Conceptual model of family financial socialization theory

INPUT PROCESS OUTPUT

Profile of respondents
according to:
1) Data collection of  Assessed factors
a) Name
affecting the spending
b) Gender respondents’ profiles
habits of Grade 12 –
c) Block 2) Conducting the
ABM Students in
d) Age
Survey Iligan Computer
e) Address
Institute
f) Parent’s Questionnaires

Occupation 3) Organization of

Respondents’ allowance respondents’

Respondents’ parental
income

Other personal questions

Figure 2. Schematic diagram of the Conceptual Framework

Cognitive. Refers to "the mental action or process of acquiring knowledge and understanding

through thought, experience, and the senses".

Crucial. Decisive or critical, especially in the success or failure of something.

Curb. Stop something that is happening to control or limit something in order to prevent it

from having a harmful effect.

Factor. A fact or situation that influences the result of something. It affects an event, decision,

or situation.

Finances. The process of raising funds or capital for any kind of expenditure. It is the process

of channeling various funds in the form of credit, loans, or invested capital to those economic

entities that most need them or can put them to the most productive use.

Financial Literacy. The possession of the set of skills and knowledge that allows an individual

to make informed and effective decisions with all of their financial resources.

Peer Influence. When you choose to do something you wouldn't otherwise do, because you

want to feel accepted and valued by your friends.

Reduce. Make smaller or less in amount, degree, or size. Bring someone or something to a

lower or weaker state, condition, or role.

Spending Habits. The repeated and sometimes involuntary routines and practices you have

around using money to purchase experiences, services, and things.

Strategy. Setting goals and priorities, determining actions to achieve the goals, and mobilizing

resources to execute the actions.

Bucciol, A., & Veronesi, M. (2014). Teaching children to save: What is the best strategy for

lifetime savings? Retrieved from the Journal of Economic Psychology, 45, 1–17

https://bit.ly/3FdGgUW

Delafrooz, N. & Paim, L. (2011). Determinants of saving behavior and financial problem among

employees in Malaysia. Retrieved from https://bit.ly/3gzkyQQ

Dohmen, T., et al. (2012). The Intergenerational Transmission of Risk and Trust Attitudes.

Retrieved from https://doc.rero.ch/record/293057/files/rdr027.pdf

Finkle, C. (2018). Peer Influence in Marketing. Retrieved from https://bit.ly/3f8oKGZ

Gerardi, K., Goette, L. & Meier, S. (2010). Financial Literacy and Subprime Mortgage

Delinquency: Evidence from a Survey Matched to Administrative Data. Retrieved from

https://bit.ly/3TDKMjV

Grinstein-Weiss, M., et al. (2012). Loan performance among low Income Households. Retrieved

from https://files.eric.ed.gov/fulltext/EJ1279986.pdf

Gudmunson, C. G., & Danes, S. M. (2011). Family Financial Socialization. Retrieved from

https://bit.ly/3TZpkFS

Jamal, A.A.A., et al. (2015). The Effects of Social Influence and Financial Literacy on Savings

Behavior: A Study on Students of Higher Learning Institutions in Kota Kinabalu, Sabah. Retrieved

from https://bit.ly/3W4Cx1L

Jorgensen, B. L., & Savla, J. (2010). Financial literacy of young adults: The importance of parental

socialization. Retrieved from https://bit.ly/3N6Lu6T

Adults: An Observation from Tunisia. Retrieved from https://bit.ly/3TEQQIW

Nano, D., Llukani, T., Polo, A. (2015). The Impact of Family Income on Students Financial

Attitude. Retrieved from https://bit.ly/3TDYXpf

Otto, A. (2013). Saving in Childhood and Adolescence. Retrieved from https://bit.ly/3N5sghX

Robb, C. & Pinto, M. B. (2010). College students and credit card use: An analysis of financially

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Salikin, N., et al. (2013). Students’ Saving Attitude: Does Parents’ Background Matter? Retrieved

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