1.

INTRODUCTION

1.1 BACKGROUND

As students, we are given allowances by our parents. The amount of which

depends on what they will give to us, but the bottom line is how we can maximize

what they give to us. Students have a variety of expenses, some of which they do not

really need at all.

In our years of schooling, we have encountered different people. All have

varying budgets and expenses. There are those who can make use of their money very

efficiently. They can cover their needs, save whatever is left. Another, are the big-

spenders. These people are probably well-off as to afford that lifestyle. The worst of

the bunch however are the schoolmates that spend big, but cannot afford to do so.

They would be the ones saying, Pautang naman. They are the ones who spend just

to follow a trend, eat somewhere he cant afford, or impress people. Looking back at

this has led to this study. What would these different people be when they are adults?

As adults they would have other responsibilities. They will have jobs,

businesses, families, etc. Some relief would no longer come from their parents. They

would have to be the ones making all the calls the big decisions. Often times, the

decisions involve money.

Money is the biggest driving factor of this world. It is the one thing that almost

all people desire. When people have it, they can do a lot of things that is why people

must know how to handle it properly.

1
 1.2 STATEMENT OF THE PROBLEM

Information on financial knowledge is free and readily available, but not all

have access to it. A significant number of Overseas Filipino Workers and their

families are reported by the Bangko Sentral ng Pilipinas that they are not managing

their finances properly due to lack of knowledge about money management.

Furthermore, the Philippine Center for Entrepreneurship illustrated in their study that

most Filipinos believe that they have the entrepreneurial skills needed to start a

business, even if most of them did not receive formal education and training at school.

However, inadequate financial knowledge continues to be one of the major reasons

for business closures in the country, especially in the small-medium enterprises sector.

OFWs and entrepreneurs have families to attend to, like any other household;

they also face problems when it comes to their finances. Since it is in the household

where most financial choices and decisions are made, this study will investigate the

lack/inadequacy of financial knowledge in the Filipino household.

1.3 STATEMENT OF THE OBJECTIVES

Providing the masses with the knowledge to achieve their financial goals

would solve a lot of problems they face. This in turn, will make a lot of people better

off. The overall increase in well-being will eventually make the economy prosperous.

Hence, the study aims to:

Evaluate the financial literacy of the financial decision-makers of

households in selected barangays of Angeles City

Evaluate the financial satisfaction of the financial decision-makers of

households in selected barangays of Angeles City

2
 Evaluate if there is a significant difference between the financial literacy

scores and financial satisfaction scores of the top two and bottom two

barangays

Establish a correlation between financial literacy and financial satisfaction

1.4 HYPOTHESES

The study tested the following hypotheses:

Null Hypotheses:

There is no correlation between financial literacy and financial

satisfaction.

There is no significant difference between the financial literacy mean

scores of the top two and bottom two barangays.

There is no significant difference between the financial satisfaction median

scores of the top two and bottom two barangays.

Alternative Hypotheses:

There is a correlation between financial literacy and financial satisfaction.

There is a significant difference between the financial literacy mean scores

of the top two and bottom two barangays.

There is a significant difference between the financial satisfaction median

scores of the top two and bottom two barangays.

3
1.5 SCOPE AND LIMITATION

The study has the following scope and limitations:

The study focused on the financial decision-makers of households in the

top two and bottom two barangays of Angeles City, based on barangay

income. The barangay profiles can be seen on Appendix A.

The studys assumption of the higher the barangay income, the higher

the financial literacy and financial satisfaction of residents was not

supported by the data.

Only the financial decision-makers of households residing in the said

barangays were surveyed. For the purposes of this study, the researchers

define financial decision-maker as a person who manages the finances of

his/her own family. He/she is the one in charge when it comes to the

households finances. The financial decision-makers considered in this

study are those who are married or a single parent, and has a

child/children. Such restriction was made because the researchers assumed

that they are the ones who face more complex financial decisions e.g.

budgeting for food, education and basic needs of child/children.

In this study, the researchers failed to take into account the following

factors: monthly expenses, family size

Due to financial and time constraints, the researchers only utilized a

sample of 100 per barangay.

4
 1.6 SIGNIFICANCE OF THE STUDY

The study will be beneficial for the local government of Angeles City. The

data gathered about its residents will illustrate the financial literacy and financial

satisfaction of its citizens. This may help the city launch programs with financial

literacy at its core. The study will also contribute to the growing awareness for

financial literacy. The data gathered may also be used by the Bangko Sentral ng

Pilipinas, Department of Finance and National Economic Development Authority as

supporting data for future studies.

5
2. REVIEW OF RELATED LITERATURE

The research SOLAR FLARe: Financial Literacy Advocacy Report of Sun Life

Financial Philippines has mapped out the state of financial literacy in the Philippines.

In the report, 87% of the respondents have positive attitudes about their financial

situation in the next three to five years. However, a paradox was observed. The

respondents were asked about their self-assessment of their financial literacy, 20% of

them claim to be an expert. To overcome the subjective perceptions, Sun Life made

the respondents take a test. The quiz results showed that only 8% scored above 80%.

The respondents were also asked about their definition of financial security. Majority

of them said having more bank savings. This clearly states that most Filipinos have

a narrow view on other forms of investments. Another concept touched by Sun Life is

retirement. In the report, out of 100 retirees 2 are financially independent, 45 still

depend on their relatives, 30 rely on charity, 22 continue to work a clear sign that

most Filipinos dont grasp the concept.

MasterCard conducts an annual financial Literacy Surveys since 2010. In its

recent report Mastercard Index of Financial Literacy Report (2013) accomplished last

April to May 2013, the Philippines ranked 8th place among the Asia Pacific region.

MasterCard surveyed 12,205 respondents aged 18-64 in 27 countries across the key

regions: Africa, Asia Pacific, and Middle East. The survey was conducted to gather

insights on financial literacy of various countries, how well they have done since the

last survey, and how each country fares relative to other countries.

A news article of Manila Bulletin entitled Lotto Winner Spends 14M in just

Three Months (2012) reported that Dionie Reyes, the lotto winner, spent his 14
6
million prize in just 3 months. He lived the life of a millionaire. Extravagance was his

best friend. He bought a 4-million peso house, gave goodwill-money ranging from

1000-850,000 pesos, and gambled and womanized daily. The report clearly shows that

not all people can manage their finances well. Dionie is one of those documented

case. Others may not have the same fortune he had, but still made the same mistake he

did poor management of his finances.

In The Economic Importance of Financial Literacy: Theory and Evidence

(2013), it was stated that financial literacy has been found to affect not only the asset

side of the household balance sheet, but also the liability side. It has undertaken an

evaluation of the fast growing body of research on financial literacy. One of the goals

of this literature is to provide an evaluation of how well-equipped todays households

are to make complex financial decisions. Financial literacy was defined as peoples

ability to process economic information and make informed decisions about financial

planning, wealth accumulation, pensions, and debt.

Interest compounding, inflation, and risk diversification are the basic concepts

that has now become the starting point for evaluating levels of financial literacy

around the world. Using these concepts in the survey questionnaire, the study verified

that low levels of financial knowledge are persistent and recommended that it will be

quite challenging to provide the tools in helping people make more complex and

sophisticated financial decisions.

The study Household Saving Behavior: The Role of Financial Literacy,

Information, and Financial Education Programs (2008) is an in-depth research

showing that financial illiteracy is extensive in the United States. Most individuals

lack knowledge of basic financial concepts, such as the working of interest

7
compounding, the difference between nominal and real values, and the basics of risk

diversification. Financial education was identified to help individuals evaluate their

abilities to make saving and investment decisions and make them understand the

value of financial advice or endow them with tools to successfully transact with

advisors and financial intermediaries. It was also found that there are specific sectors

of the population on financial literacy those with low education and low income

that have different saving habits than the more knowledgeable and well-off

households.

The study The Relation between Financial Literacy, Financial Wellbeing and

Financial Concerns (2013) by Taft, Hosein, Mehrizi and Roshan attempted to

measure the three variables (financial literacy, financial wellbeing and financial

concerns) and examine their relationship. Their findings also suggest that higher

financial literacy leads to greater financial wellbeing and less financial concerns, and

that financial wellbeing leads to less financial concern. Random sampling was used in

the study to gather data through a questionnaire. Correlation test and independent two

sample test based on T distribution and regression were used to analyze the data.

Pearson correlation test was utilized to verify the validity of the relationship between

financial literacy and age, financial wellbeing and age, and financial concerns and

age, respectively. The results of the study have also declined the relationship between

age and financial satisfaction. The paper suggested designing a survey questionnaire

to evaluate the accuracy of the three variables considering social, cultural and

economic situation.

A paper entitled Financial Literacy and Satisfaction in Malaysia: A Pilot

Study (2013) reports the results of a pilot study examining the factors that contribute

8
to the level of financial literacy among selected Malaysian citizens and its relationship

to financial satisfaction. The antecedent variables were basic money management and

financial planning. It was hypothesized that these two variables were positively

related to financial literacy. The research model used assumes that financial literacy

reconciles the relationships between the identified antecedents and financial

satisfaction. Two approaches were used to analyze the data, namely, exploratory factor

analysis (EFA) and confirmatory factor analysis (CFA). To conclude, the paper

proposes a model that can be used to assess the level of financial literacy index among

Malaysian selected public. The model postulates that financial literacy can predict

individuals financial satisfaction. Five antecedents of the financial literacy index have

been identified including basic money management, financial planning, investment

know-how, attitude to money and financial activities. The financial literacy index in

the study is cross-sectional in nature and it will be helpful if it can present suggestions

as to whether or not improvement in the levels of financial literacy and financial

satisfaction has taken place.

Factors and Behaviors that Influence Financial Literacy in US Households

(2012) is a dissertation that used a financial literacy test and comprehensive

questionnaire to gather data for the study. Multiple regression analysis was used to

identify the significant factors and behaviors impacting financial literacy. The survey

respondents were grouped into three groups: 1) debtors; 2) non-debtors; and 3)

debtors and non-debtors combined. The main purpose of the study is to determine the

relationship between financial literacy, characteristics of U.S. households, and other

societal factors. It attempted to use past research to develop a comprehensive list of

factors and behaviors that may have influenced financial literacy. Multiple regression

analysis was used to verify which of the 149 variables were significantly related to

9
financial literacy. It was also tested for multicollinearity. A correlation analysis was

performed to see which variables were highly correlated and reduce the number of

independent variables. Some of those correlated variables were dropped to remove the

problem of multicollinearity. One limitation of the research is that cross-sectional

study was used, which resulted in an inability to interpret causality. Another constraint

is that the results of the samples used in the study were based on a convenience

sample. Consequently, it may not be a representative of the population in the sample

area, much less the country as a whole. The study recommended the comparison of

factors that influence financial literacy in employees of small businesses versus

employees in medium-sized to larger-sized companies. Moreover, it was suggested

that a time series study using Granger statistics be done in order to identify the factors

that influence changes in financial behaviors, motivations and knowledge and

establish the correct direction of causality.

In Financial Literacy and Household Savings in Romania (2013), financial

literacy was found to be positively and significantly related to saving and investment.

It was also found to be positively related to education, as expected. The study

presented new evidence on the level of financial literacy in Romania and analyzed

how it is related to household savings. Based on the sociodemographic characteristics,

the elderly (under age 65) were identified to have the lowest financial literacy while

the 36-50 age brackets garnered the highest. Multivariate regression analysis was used

to analyze if there is a correlation between saving behavior and financial literacy. The

variables used are as follows: independent age, gender, education, marital status,

income, and labor market status; and dependent the number of saving instruments

and whether respondents have pension funds. Respondents who are not working are

less likely to save in contrast to self-employed respondents, who are more likely to

10
save. Concepts such as interest rate, inflation and risk diversification are the three

standard survey questions used to evaluate financial literacy, as first introduced by

Lusardi and Mitchell (2011). Results of the study also showed that financial literacy

does have a bearing on saving behavior.

Also, the Bangko Sentral ng Pilipinas (BSP) has approved the BSP Consumer

Education Committee in 2004. The committee in its early stage gave lecture about

basic financial literacy needs of consumers about financial products and services. It

also aimed to familiarize the public about many banking products and services they

usually encounter with transactions.

Another study Consumer Financial Capability and Financial Satisfaction

(2013) identified that financial literacy is significantly related to financial satisfaction.

Its purpose is to investigate relationships between consumer financial capability and

financial satisfaction. The study measured consumer financial capability using three

sets of variables, perceived financial capability, financial literacy, and financial

behavior. It fills a research gap in the literature of financial satisfaction by

investigating potential effects of consumer financial capability on financial

satisfaction. A series of multiple OLS regression analyses was used to test the

hypothesis of the study. Also, the data set they used is cross-sectional. This limitation

prevents the examination of causality between financial capability and financial

satisfaction. The survey used in the study asked questions regarding the respondents

financial satisfaction, financial capability, financial literacy, financial behavior, and

demographic and socioeconomic characteristics. Only the respondents who provided

specific answers for several scale questions were considered in the sample selection.

Those with incomplete or unspecific answers were excluded. Results showed that the

11
correct answer for a financial literacy question was associated with a higher level of

financial satisfaction. Consumers who perceive themselves as having higher financial

knowledge rate themselves higher in financial satisfaction. Findings also indicate

that desirable financial behavior increases financial satisfaction. Different types of

financial knowledge have different impacts on financial satisfaction. In the study,

financial satisfaction was used to evaluate the financial wellbeing of consumers.

Recommendations stated in the study include the use of longitudinal or time-series

data sets and application of the topic to other developed and developing countries.

The Economic and Financial Learning Program of the BSP has reached 38,000

participants in key cities since its implementation in 2010. It is an umbrella program

for financial and economic education. The program has various programs that will

cater specific audiences like schoolchildren, students (in secondary or tertiary

schooling), the employees sector, OFWs and their beneficiaries, microfinance clients,

and the unbanked.

Assessment a Model of Financial Satisfaction Predictors: Examining the

Mediate Effect of Financial Behaviour and Financial Strain (2012) is a research that

aspires to evaluate the factors that predict financial satisfaction. It also investigates the

mediate effect of financial behaviour on the relationship between financial literacy,

financial attitude, childhood consumer experiences, influence of primary and

secondary socialization agents and financial satisfaction. Stratified random sampling

technique was used to select the sample of 700 university respondents and a self-

administered questionnaire was utilized to gather data. The research estimated model

was tested using Structural Equation Modeling (SEM) through AMOS and the

mediation approach of Baron and Kenny (1986) using Amos was applied to assess the

12
mediating effect of financial behaviour and financial strain. Results indicated that

financial attitude, childhood consumer socialization, socialization agents, financial

literacy, financial behaviour and financial strain contribute to predict financial

satisfaction. The study measured financial satisfaction by using a 6-item financial

satisfaction instrument introduced by Lown and Ju. On the other hand, testing for

correct answers to 25 questions regarding financial goals, financial records and

several financial concepts was used to measure financial literacy. Results showed that

financial literacy significantly predict financial satisfaction among students.

Moreover, results of total path coefficients indicated the high effect of financial

literacy on improvement of financial satisfaction. It denoted that higher level of

financial literacy caused greater financial behaviour and lower level of financial strain

which consecutively resulted in higher level of financial satisfaction.

13
3. CONCEPTUAL FRAMEWORK

In recent years, developed and developing countries including the Philippines

have become increasingly concerned about the financial literacy of their citizens,

however, a number of studies have shown ominous prospects on the financial security

of Filipinos. Nine out of ten Filipinos, as shown in a survey organized by the Social

Weather Stations in partnership with Sun Life, suffered financial shortage in the past

year, mostly in the areas of basic household expenditures, education, health

emergency and debt expense.

With several studies and research programs conducted by private institutions,

or governments, this study will hope to bring the local setting into light. The

researchers will correlate the financial literacy and financial satisfaction of financial

decision-makers of households in selected barangays of Angeles City, and to find a

relationship between financial literacy and financial satisfaction.

Good
Financial Financial Financial
Literacy Practices Satisfaction
Figure A: Conceptual Framework

14
Financial Literacy

For the purposes of this study, the researchers define financial literacy as the

ability of a person to budget and go through with it, knows the value of saving, knows

the concept of investment, and can achieve his/her financial goals.

Good Financial Practices

Even if a person has a good budget or financial plan, it will be useless if they

dont follow it. Simple practice such as sticking to a budget make people relatively

more financially satisfied compared to those who dont stick with it. For the purposes

of this study, the researchers identify the following as good financial practices:

Following a budget

Saving money

Maintaining a low level of debt

Financial Satisfaction

For the purposes of this study, financial satisfaction is defined as the

respondents happiness with his/her current state of finances. However, a timeframe

for current was not considered. The satisfaction rating was measured by questions 18

and 20 in the questionnaire (see Appendix B).

15
4. METHODOLOGY

4.1 Methods of Research

This study is a correlational research since the researchers want to establish a

relationship between financial literacy and financial satisfaction. It is also a survey

research because it employs questionnaires in order to determine opinions, attitudes

and preferences, and perceptions of interest to the researchers. Both qualitative and

quantitative approaches were also used in the study.

4.2 Data Gathering Method

The initial step in the data gathering method was the analysis of the prior

readings cited in the review of related literature. All analogous studies and theories in

the past have been considered for this research. The most appropriate and most

applicable methods and concepts to the Philippine setting were noted. Books,

published articles and online references were used as secondary data. The World Wide

Web was also used to look for additional resources.

Primary data were gathered through survey questionnaires. The respondents of

the study were the financial decision-makers of households in selected barangays of

Angeles City. The top two and bottom two barangays based on barangay income were

chosen.

Data on the income per barangay were verified from the Office of the City

Mayor in Angeles City Hall, however, the ranking of the barangays were the only data

16
given. The number of households per barangay was collected from the official website

of the Angeles City Local Government.

4.3 Sampling

The researchers obtained the number of households per barangay to determine

the number of respondents for the survey. Sample size per barangay was determined

using Lynch et al. (1974) Formula. The formula gives 95% reliability in estimating

the sample size. From the thirty three barangays of Angeles City, the researchers

selected the top two and bottom two barangays based on income. Namely, (1)

Balibago, (2) Pulung Maragul, (32) Margot and (33) Sapang Bato. These barangays

were selected to have a comparative analysis of the financial literacy and financial

satisfaction of the respondents. The respondents from each of the four barangays were

then chosen using random sampling method. This method was used because it can be

considered as a fair way of selecting a sample from a given population since every

member is given equal opportunities of being selected.

However, the researchers were unable to survey the required number of

respondents for each of the four barangays. Instead, they used quota sampling for this

study. Only a sample of 100 respondents per barangay was utilized due to reasons

specified on the scope and limitations of this study.

4.4 The Survey Tool

Questionnaires with the same information and questions were given to the

financial decision-makers of households. To help the respondents understand and

answer the questions easily, the questionnaire was constructed using the local

17
language which is Tagalog/Filipino. It consists of twenty questions and can be

answered by shading the circle and filling in the blanks.

The questionnaire is divided into two parts: background information and

financial literacy quiz and financial satisfaction. The background information includes

socioeconomic factors (such as name, age, sex, education level, occupation), income

level, saving behavior, perception about money and financial literacy, and feeling

about current financial situation. Meanwhile, the financial literacy quiz and financial

satisfaction includes questions about basic financial knowledge, financial practices,

investment and financial satisfaction. A copy of the survey questionnaire can be seen

on Appendix B.

4.5 Tools of Analysis

The preliminary step in the tools of analysis is qualitative. The results of the

observations and relevant pieces of information collected from the survey

questionnaires were noted. Data collected, such as socioeconomic factors and

background information, were tabulated and organized into tables and pie charts for

easier analysis and evaluation.

The research would not be complete without the consideration of quantitative

data. Percentage scores for the financial literacy and financial satisfaction of the

financial decision-makers of households were computed and the figures were treated

using Spearmans Rank-order Correlation, Shapiro-Wilk Test, Kruskal-Wallis H Test

and Students T-Test.

18
5. STATISTICAL TREATMENT OF DATA

5.1 Financial Literacy and Financial Satisfaction Scores

After tabulating the scores of the respondents for each barangay, results

showed that 271 out of the 400 financial decision-makers of households passed the

financial literacy quiz and only 129 failed. Moreover, 236 of them said that they are

satisfied with the current state of their finances while 164 said that they are not

satisfied. The scores were evaluated using a 50% passing score. The financial literacy

and financial satisfaction scores of the respondents for each barangay can be seen on

Appendix D.

The table below shows the summary of the ratings of the 400 financial

decision-makers of households for financial literacy and financial satisfaction:

Table A: Summary Table of Financial Literacy and Financial Satisfaction Rating

Pulung Sapang
Balibago Margot Total
Maragul Bato

FL Passed 80 63 59 69 271

FL Failed 20 37 41 31 129

FS
57 50 74 55 236
Satisfied

FS
43 50 26 45 164
Unsatisfied

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 5.2 Spearmans Rank-order Correlation

The tool used for testing the correlation of financial satisfaction and financial

literacy was Spearmans Rank-order Correlation. The Spearman rank-order

correlation coefficient is a nonparametric test which measures the strength and

direction of association between two variables that are measured on an ordinal or

continuous scale. Most of the time, the Spearman correlation coefficient is often

denoted by the symbol rs or the greek letter . It is a useful test when Pearson's

correlation cannot be run due to violations of normality, a non-linear relationship or

when ordinal variables are being used.

The data available to the researchers fits the first assumption in order to use

the Spearmans Rank-order Correlation. Variables used in the test must either be

continuous or ordinal variable. The variables financial literacy and financial

satisfaction are both continuous variable as they are both test scores.

The second assumption is that the there exist a monotonic relationship among

the variables. Monotonic relationships are when: (1) increase in value together, or (2)

as one variable value increases, the other variable value decreases. Referring to the

scatter-plot diagram below, there exist a monotonic relationship between financial

literacy and financial satisfaction.

20
 Figure B: Scatter plot diagram of Financial Literacy and Financial Satisfaction

After confirming the assumptions, the researchers made use of the program

STATA11 in testing the correlation. The summarized data are as follows:

The researchers made use of a Spearmans Correlation to assess the

relationship between financial literacy and financial satisfaction using a small sample

of 400 financial decision-makers of households. There is a moderate positive

correlation between the variables as indicated by the Spearmans Rho (.3321). In

identifying the strength of the relation the pair referred to Cohen (1988) for the

general guidelines.

21
 Coefficient Value Strength of Association
0.1 < | r | < .3 small correlation
0.3 < | r | < .5 medium/moderate correlation
| r | > .5 large/strong

Table B: Cohen Guidelines in Identifying Strength of Relationship

Thus, researchers must accept their alternative hypothesis that states there is a

moderate positive correlation between financial literacy and financial satisfaction.

The test also indicates that the test is statistically significant at 0.05 level of

significance since p = 0.0000.

5.3 Shapiro-Wilk Test

The Shapiro-Wilk test is a test of normality for frequent statistics. In this

study, it was used in testing if the financial literacy scores and financial satisfaction

scores between the top two and bottom two barangays are normally distributed.

Shapiro-Wilk Test for Financial Literacy of Top 2 and Bottom 2 Barangays

22
 Shapiro-Wilk Test for Financial Satisfaction of Top 2 and Bottom 2 Barangays

For this test, the null hypothesis is that the data is normally distributed. The

results are shown in the table above. Since p-values (0.01385 and 0.00274) for

financial satisfaction are both below significance level .05, the researchers reject the

null hypothesis that the data is normally distributed; hence, the non-parametric test

Kruskall-Wallis H Test will be used in comparing the score between the two.

However, the results for financial literacy are different. With p-values

(0.16369 and 0.06691), in this case the null hypothesis is accepted, indicating that the

financial literacy scores of the top two and bottom two barangays are normally

distributed.

5.4 Kruskal-Wallis H Test

The researchers have employed a Kruskal-Wallis H Test in order to test if

there exist a significant difference in the financial satisfaction scores between the top

two and bottom two barangays.

Krukal-Wallis assumes four assumptions (1) the variables must be continuous

or ordinal, (2) the independent variable must consist of two or more categorical data.

23
(3) There must be an independence of the observations, (4) the same shape or same

variability of the data distribution.

In testing for the significant difference in financial satisfaction between the top

two and bottom two, all assumptions have been met.

Figure C: Histogram of Financial Satisfaction of Top 2 Barangays

Figure D: Histogram of Financial Satisfaction of Bottom 2 Barangays

24
 The Kruskal-Wallis H test was conducted to determine if financial satisfaction

was different between the two groups Top2 (n=200) and Bot2 (n=200). The test

showed that there was a statistically significant difference in financial satisfaction

between the two groups, 2 (2) = 6.920, p = 0.0085. It means that there is a significant

difference in the scores of financial satisfaction between the top two and bottom two

barangays. The median is a measure of central tendency. It is the middle score of a

given set of data; therefore, the midpoint of the data separating the higher half from

the bottom half. The median score 60 for bottom two barangays indicate that the

scores tend to move around this figure, compared to the top two barangay median

score of 52.5, the scores tend to move towards this lower figure. This translates that

respondents living in the bottom two barangays are more financially satisfied, even if

they live in a barangay with lower income.

5.5 Students T-Test

A Students T-Test between independent samples was used in testing for the

difference in financial literacy scores.

25
 Figure E: Histogram of Financial Literacy of Top 2 Barangays

Figure F: Histogram of Financial Literacy of Bottom 2 Barangays

Students T-Test for Financial Literacy of Top 2 and Bottom 2 Barangays

26
 The Students T-Test showcased that there is no significant difference between

the mean scores of the top two and bottom two barangays, since Pr (|T| > |t|) = 0.4245

is way above the significance level of 0.05. This means that the place of residence is

not an indicative factor of financial literacy. Respondents living in the barangay with a

higher income are no more than financially literate than respondents living in the

barangay with a lower income.

27
6. SUMMARY AND CONCLUSION

Based on the sociodemographic data, results showed that majority of the

financial decision-makers who participated in the study are female, 294 out of 400

respondents. Looking into the level of income, most of the households earn between

the ranges of below Php8000 up to Php15000. Moreover, more than half of the

financial decision-makers are college graduates and undergraduates and belongs to the

services sector of the economy. Results also showed that they have monthly savings

between the ranges of below Php1000 up to Php3000. However, 127 of the financial

decision-makers said that they are unable to save. Almost all of the respondents

expressed that they worry about money and that they want to learn about basic money

management, financial planning and investment. The top financial goals of the

households are to save and prepare for the education of their children. When asked

about their idea of investing, most of the financial decision-makers answered

around the concept of business and earning. (See Appendix C for the

sociodemographic data of each barangay)

Based on the financial literacy scores, barangay Balibago had the most number

of passers for the financial literacy quiz, followed by Margot, Pulung Maragul and

Sapang Bato, respectively. The number of passers (out of 100 respondents for each

barangay) are as follows: Balibago 80; Pulung Maragul 63; Sapang Bato 59; and

Margot 69. Looking at the results, it can be said that the financial decision-makers

of households in the said barangays are financially literate. The same is true for

financial satisfaction. Results showed that most of the respondents are financially

satisfied. Sapang Bato had the most number of financially satisfied residents, 74 out

of 100. Meanwhile, Balibago has 57, Margot has 55 and Pulung Maragul has 50.

28
 As the researchers have identified using Spearmans Rank Order Correlation,

there is a moderate positive correlation (R s = 0.3321) between the two variables. One

of the conditions of the test is that there should be a monotonic relationship among the

variables. Looking back at the scatter plot diagram of financial satisfaction and

financial literacy (see Figure B), points have illustrated to some extent some form of

monotonic relationship. However, some plots stray from the monotony, and thus have

an effect on Spearmans Rho score.

For the Shapiro-Wilk Test, the null hypothesis is that the data is normally

distributed. Results showed that p-values (0.01385 and 0.00274) for financial

satisfaction are both below significance level .05, so the researchers reject the null

hypothesis that the data is normally distributed; hence, the non-parametric test,

Kruskall-Wallis H will be used in comparing the score between the two. On the other

hand, the results for financial literacy are different. The null hypothesis is accepted

since p-values are 0.16369 and 0.06691 which indicates that the financial literacy

scores of the top two and bottom two barangays are normally distributed.

After running the Kruskall-Wallis H Test for the financial satisfaction scores

between the top two and bottom two barangays, the researchers established that there

is a significant difference of financial satisfaction scores between the top two and

bottom two barangays since p = 0.0085, which is below the significance level .05. The

median score 60 for bottom two barangays indicate that the scores tend to move

around this figure, compared to the top two barangay median score of 52.5, the scores

tend to move towards this lower figure. This translates that respondents living in the

bottom two barangays are more financially satisfied, even if they live in a barangay

with lower income.

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 The Students T-Test between independent samples was used in testing for the

difference in the financial literacy scores. Results showed that there is no significant

difference between the mean scores of the top two and bottom two barangays, since Pr

(|T| > |t|) = 0.4245 is way above the significance level of 0.05. This implies that the

place of residence is not an indicative factor of financial literacy. Respondents living

in the barangay with a higher income are no more than financially literate than

respondents living in the barangay with a lower income.

Lastly, the researchers conclude that the 400 financial decision-makers of

households are generally financially literate. Out of the 400 respondents, 67.75%

passed the financial literacy quiz while only 32.25% failed. Likewise, the respondents

are generally financially satisfied. 59% of the financial decision-makers of households

said that they are satisfied with the current state of their finances, while 41% said that

they are not satisfied. (See Table A on page 19 for the summary table of the financial

literacy and financial satisfaction rating)

30
7. RECOMMENDATIONS

Given the results obtained from the statistical tests, the researchers have now

come to recommend for future studies regarding financial literacy and financial

satisfaction to employ a bigger sample size. A larger sample size for the study may

reduce outliers. With more data, there is the likelihood of eliminating possible

outliers.

The researchers recommend that local governments should coordinate with the

Bangko Sentral ng Pilipinas and National Economic Development Authority in

intensifying the financial literacy of their citizens, so as to have a wider reach of the

awareness campaigns and education programs provided by the said national

government agencies.

Lastly, the researchers also recommend the use of a shorter but concise survey

questionnaire to ensure full participation of respondents regardless of time constraint.

31
RESEARCH MANAGEMENT

Timeline and Plan of Activities

PERSON/S IN RESOURCES
DATE ACTIVITIES
CHARGE NEEDED

August 8, 2014 Grouping for MUOZ TIME

Thesis TAPNIO

August 13-22, Brainstorming for MUOZ TIME

2014 topic proposals TAPNIO

September 5, 2014 Presentation and MUOZ TIME

approval of topic TAPNIO
proposals

September 10, Individual listing MUOZ TIME

2014 of readings and TAPNIO
important internet
sources

September 17, Brainstorming on MUOZ TIME

2014 individual TAPNIO
researches

September 22, Research at UP MUOZ TIME

2014 Diliman TAPNIO MONEY

September 23, Compilation of list MUOZ TIME

2014 of readings TAPNIO

September 26, Submission of MUOZ TIME

2014 Statement of the TAPNIO
Problem

October 1-7, 2014 Individual reading MUOZ TIME

and summarization TAPNIO
of readings

32
 October 8, 2014 Discussion of MUOZ TIME
previously TAPNIO
summarized
readings

October 10, 2014 Submission of MUOZ TIME

Conceptual TAPNIO
Framework

October 15, 2014 Individual research MUOZ TIME

design TAPNIO
conceptualization

October 17, 2014 Meeting regarding MUOZ TIME

research design TAPNIO

November 25, Submission of MUOZ TIME

2014 research design TAPNIO

January 20-27, Revision and MUOZ TIME

2015 review of final TAPNIO
research design

January 29, 2015 Presentation of MUOZ TIME

research design TAPNIO

February - March Data Gathering MUOZ TIME

2015 TAPNIO MONEY

March 23-29, 2015 Organization of MUOZ TIME

data obtained TAPNIO

March 30-31, 2015 Testing of data MUOZ TIME

TAPNIO

April 1-2, 2015 Analysis of MUOZ TIME

findings from tests TAPNIO
performed

April 3-5, 2015 Individual MUOZ TIME

33
 conceptualization TAPNIO
of the other parts
of the research

April 6, 2015 Proof reading and MUOZ TIME

review of the TAPNIO
research

April 7, 2015 Submission of MUOZ TIME

First Draft of the TAPNIO MONEY
research

April 21, 2015 Meeting regarding MUOZ TIME

necessary revision TAPNIO
of research

April 28, 2015 Submission of MUOZ TIME

Revised Research TAPNIO MONEY
Draft

May 16, 2015 Thesis Defense MUOZ TIME

TAPNIO MONEY

May 2015 Submission of MUOZ TIME

Final Research TAPNIO MONEY

BIBLIOGRAPHY

Books

Cohen, Jacob. Statistical Power Analyses for the Behavioral Sciences (2nd edition).

Lawrence Erlbaum Associates Publishers. 1988.

Mankiw, Nicholas Gregory. Principles of Economics (6th edition). Mason, OH.

South-Western Cengage Learning. 2012.

Journals/Publications

34
Ali, Azwadi, et. al.. Financial Literacy and Satisfaction in Malaysia: A Pilot Study.

International Journal of Trade, Economics and Finance, Vol. 4, No. 5, 319-324.

2013.

Beckmann, Elizabeth. Financial Literacy and Household Savings in Romania. 2013.

Falahati, Leila, et. al.. Assessment a Model of Financial Satisfaction Predictors:

Examining the Mediate Effect of Financial Behaviour and Financial Strain.

World Applied Sciences Journal 20 (2), 190-197. 2012.

Gonzaga, Ruth. The BSP Financial Literacy Campaign (FLC): Providing Overseas

Filipinos and their Beneficiaries Practical Tools for Financial Freedom. Bangko

Sentral Review. 24-29. 2007.

Lusardi, Anna & Mitchelle, Olivia. The Economic Importance of Financial Literacy:

Theory and Evidence. 2013.

Lusardi, Anna. Household Saving Behavior: The Role of Financial Literacy,

Information, and Financial Education Programs. 2008.

Madarang, Imelda and Habito, Cielito. Global Entrepreneurship Monitor: Philippine

Report 2006-2007. Philippine Center for Entrepreneurship. 2007.

Taft, Marzieh Kalantarie, et. al.. The Relation between Financial Literacy, Financial

Wellbeing and Financial Concerns. 2013.

Xiao, Jing Jian, et. al.. Consumer Financial Capability and Financial Satisfaction.

Social Indicators Research. 2013.

Unpublished Thesis/Dissertations

Kehiaian, Scott. Factors and Behaviors that Influence Financial Literacy in US

Households, 2012.

Online Articles

35
Choong, Desmond. Mastercard Index of Financial Literacy Report (2013H1).

Retrieved from

http://www.masterintelligence.com/content/intelligence/en/research/reports/20

13/mastercard-index-of-financial-literacy-report-2013h1.html. 2013. Accessed

September 15, 2014.

Lotto Winner Spends 14M in just Three Months. Manila Bulletin (2012, March

12). Retrieved from https://ph.news.yahoo.com/lotto-winner-spends-p14m-

just-3-months-142725757.html. Accessed September 15, 2014.

Mastercard Index of Financial Literacy Report (2014H1). Retrieved from

http://masterintelligence.com/content/intelligence/en/research/reports/2015/ma

stercard-financial-literacy-index-report-2014h1.html. 2014. Accessed May 17,

2015.

National Financial Educators Council. Financial Literacy Definition. Retrieved from

http://www.financialeducatorscouncil.org/financial-literacy-definition/. Accessed

September 26, 2014.

SOLAR FLARe: Financial Literacy Advocacy Report.Sun Life Financial Philippines.

Retrieved from http://www.slideshare.net/msliannelaroya/flare-final. Accessed

September 26, 2014

Websites

http://www.angelescity.gov.ph/

https://www.facebook.com/ TAKpage

http://en.wikipedia.org/wiki/Angeles,_Philippines

http://en.wikipedia.org/wiki/Shapiro%E2%80%93Wilk_test

36