CHAPTER 1

THE PROBLEM AND ITS BACKGROUND

This chapter contains the background of the study, statement of the problem,

significance of the study, scope and limitations of the study, conceptual framework and

definition of terms.

Background of the Study

Financial literacy carries the skills and knowledge on financial matters to

confidently take effective actions that best fits an individual and family goals. Financial

literacy provides the understanding and capabilities for individuals to make informed

financial decisions with confidence, to manage personal wealth with efficiency (Ali, 2013).

Individuals are exposed to various methods of handling personal finances, which

can often lead to the development of poor habits (Gutter, Garrison & Copur, 2010). They

work to earn an income that would enable them to bring food to the table, clothe

themselves, as well as to give pleasure or satisfactions that can be obtain through money.

There are people who spend more than they earn. Spending is normal, but more

of it becomes a problem (Forbes,2015). Overspending can be due to more needs, more

wants or both which is not healthy for a family. One of the significant Filipino attitudes

towards money is that we simply don’t plan our personal finances. Most of us spend our

hard-earned money spontaneously (Tan,2017). From everyday spending to long-term

financial planning, effective money management means using money to further your

personal goals no matter what they are.

The Filipino mindset is that spending comes before saving. What is left, is saved.

If there’s none left, then, there’s nothing saved. Savings, according to Keynesian
economics, are what a person has left over when the cost of his or her consumer

expenditure is subtracted from the amount of income earned in a given period of time.

Saving is important for unexpected expenses like medical expenses, sudden loss

of income, and education. Lack of savings will result to big financial burdens from

unexpected events. According to a study conducted by Philam Life, 96 percent of Filipinos

are concerned about their own and their family’s health, however, only 16 percent of them

are prepared to pay for medical costs in case they are diagnosed with a critical illness.

Saving and spending play an important role in the financial aspect as they direct

an individual financial condition. As stated by Adrian and Liang (2018), monetary policy

affects the financial condition.

In order to help the Ube Jam community as one that faces financial shortage, this

study aims to determine their Spending and Saving habits and further determine in what

way to improve their spending and saving habits through the action of Rogationist College

Community Extension Office.

Statement of the Problem

This will determine the spending and saving habits of Ube Jam Community, one

of the adopted communities of Rogationist College.

Specifically, it seeks to answer the following questions:

1. What is the demographic profile of the respondents in terms of:

1.1 Age

1.2 Gender

1.3 Civil Status

 1.4 Educational Attainment

1.5 Number of Family Dependents

1.6 Occupation

1.7 Income

2. What is the spending habit of respondents in terms of:

2.1 Monthly Expenses

2.2 Preference and Values

3. What is the saving habit of respondents in terms of:

3.1 Engagement in Saving

3.2 Means of Saving

3.3 Purpose of Saving

3.4 Achievement of purpose

Significance of the Study

This study is beneficial to the following:

The Rogationist College Community Extension Office

The result of this study will help the Rogationist College Community Extension

Office to improve their assistance towards adopted communities by providing a better

program.

The Residents of Ube Jam Community

The result of this study will help the residents of Ube Jam Community have a

positive spending and saving habits that will lead to their good financial condition by
benefiting from the program to be conducted by the Rogationist College Community

Extension office.

The Future Researchers

The result of this study will help the future researchers in seeking additional

information and references in pursuance of their studies.

Scope and Limitations

This study includes the demographic profile of the respondents in terms of their

age, gender, civil status, income and occupation. It also includes information about

monthly expenses, preferences and values, engagement in saving, means of saving,

purpose of saving, and achievement of purpose of the respondents.

Conceptual Framework of the Study

This research will use the Input-Process-Output model as a guide in conducting

the study. Figure 1 serves as the research paradigm.

INPUT PROCESS OUTPUT

Demographic Profile
of the Respondents in
terms of:
 Age
 Gender
 Civil Status
 Educational
Attainment
 Number of
Family
Dependents
 Occupation
 Income  Data gathering
Spending Habits of Spending and
the Respondents in  Data Sorting Saving Habits of
terms of: Ube Jam
 Monthly  Analyzing and Community
Expenses Interpreting the
 Preference and collected data
Values
Saving Habits of the
Respondents in terms
of:
 Engagement in
Saving
 Means of Saving
 Purpose of
Saving
 Achievement of
purpose

Figure 1. Research Paradigm

This study will used Input-Process-Output (IPO) model. The input includes the

demographic profile of the respondents in terms of age, gender, civil status, educational

attainment, number of family dependents, occupation, and income. It also includes the
spending habits of the respondents in terms of their monthly expense and preference and

values, and saving habit in terms of their engagement, means, purpose of saving, and

achievement of purpose.

The process includes the gathering of information through survey-questionnaires.

After the data gathering, the results will be computed using statistical tools. Then, the

findings will be sorted, analyzed and interpreted.

The output is the Spending and Saving Habits of Ube Jam Community.

Definition of Terms

The following terms are defined for a better understanding of this study:

Age refers to the length of years that the respondents has lived.

Civil Status refers to the distinct options that describe a person's relationship with a

significant other.

Community refers to a small or large social unit (a group of living things) that has

something in common, such as norms, religion, values, or identity.

Educational Attainment refers to the highest degree of education an individual has

completed.

Expense refers to the money that something costs you or that you need to spend in

order to do something.

Family Dependents refer to the person who depends on or needs someone or

something for aid, support, favor, etc. a child, spouse, parent, or certain other relative to

whom one contributes all or a major amount of necessary financial support.

Income refers to the money received, especially on a regular basis, for work or through

investments.
Means of Savings refer to ways on how the person saves his money.

Monthly Expenses refer to the sum of money that is being spent monthly by the residents

of Ube Jam Community.

Preference refers to the certain characteristics any consumer wants to have in a good or

service to make it preferable to him.

Savings refer to the money you put aside for future use rather than spending it

immediately.

Saving Habits refer to the frequently practiced behaviors done without a particular sense

of awareness, with the goal of freeing up funds for saving.

Spending Habits refer to the way you are used to paying money for things, the things

you pay money for, and how much you are used to paying.

Ube Jam Community is the name of the place wherein the study is to be conducted.