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CHAPTER II

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents the related literature and studies which

covers the study of the impact of financial problems to the motivation of

the respondents where part of several literature materials will be shown

to fully understand the research to be done.

RELATED LITERATURE

On Financial Problem

Foreign

According to Lifeline Australia (2016), financial problem is a

situation where money worries are causing individual stresses. Many

people are facing hard financial times and the impact on mental health,

academic performance or motivation can be significant. This includes

worrying a lot or feeling anxious over money, arguing with loved ones,

headaches, feeling unwell, difficulty in sleeping, feeling guilty spending

money on non-essentials, anxiety, stress, and even failing grades in

school.

A typical financial problem of students is they don't take the time

to assess before they reach an excess in credit card debit or other debts.

Many students who are out on their own for the first time may get caught

up in a cycle of overspending that comes with eating out, buying new

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clothes or partying. This lifestyle can become very expensive quickly and

as a result, it can increase overall debt. To avoid unnecessary expenses,

follow a budget in which you pay your necessary expenses first and leave

yourself a specific amount of your income for entertainment, then stick

to that budget. Try cost-saving ideas such as watching movies at home,

cooking your own meals regularly and buying clothes from discount

stores (McDaniel, 2018).

According to Vierstraete (2013), financial problem is the main

cause of students enrolled in college to dropout. About 30% of Quebec

University’s student population dropout due to financial problems. It

has been established that financial problems contribute to dropping out,

but it is unclear how different methods for financing postsecondary

education influence persistence and academic success in university.

Local

Many governments have adopted a policy of seeking to increase the

number of students entering higher education and to finance this

expansion by transferring costs from the state to the individual. Some

policy has been pursued with relatively little concern for the impact that

the increasing financial burden may have on students. According to

Villa Fuerte (2015), many students are coping with their day-to-day living

costs more comfortably than they had expected to in the first year.
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However, those in a difficult financial position at the start of their period

of study were likely to face greater problems in the course of their first

year. Two difficulties in particular – having missed payments at the start

of the academic program, and having to wait for the first student loan

payment – were shown to have a damaging effect on academic

performance.

Poor financial management is one of the main causes of financial

problems among students. According to Alan Greenspan, “the number

one problem in today's generation and economy is the lack of financial

literacy”. Most students tend to fail in managing their money (Marthen,

2011). These problems are common among students who are attempting

to balance small budgets with living expenses and also for those students

who tend to spend a lot for their wants and not for their needs.

Heavy borrowings and a lack of saving habit have been blamed for

the financial problems the Filipinos are facing in the country and abroad

(Nicolas, 2015). The Philippines has one of the fastest-growing economies

in the present, giving the people the chance to have more financial power

than before. However, all these will only go to waste if we do not

understand how money works and what are the consequences of having

bad money habits, thus leading to financial problems (Go, 2017).

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On Motivation

Foreign

According to the PMBOK (Project Management Body of Knowledge),

motivation is powering people to achieve high levels of performance and

overcoming barriers in order to change. Psychologists have provided

different definitions according to attitude to the motivation phenomenon.

What is certain and must be acceptable to the marked individual

differences is that people have different motives. In addition, individuals

need to know their personal characteristics in driving forces which can

be easily identified before acting with motivation. Generally, motivation is

the driver of guidance, control and persistence in human behavior

(Tohidi & Jabbari 2011).

Motivation is a powerful, yet tricky beast. Sometimes it is really

easy to get motivated, and you find yourself wrapped up in a whirlwind of

excitement. Other times, it is nearly impossible to figure out how to

motivate yourself and you're trapped in a death spiral of procrastination.

According to Lloyd L. (2011), “At some point, everything is ending. Have

you even started?”. In other words, at some point, it is easier to change

than to stay the same. It is easier to take action and feel insecure at the

gym than to sit still and experience self-loathing on the couch. It is easier
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to feel awkward while making the sales call than to feel disappointed

about your dwindling bank account. This is the essence of motivation.

Every choice has a price, but when we are motivated, it is easier to bear

the inconvenience of action than the pain of remaining the same.

Somehow we cross a mental threshold—usually after weeks of

procrastination and in the face of an impending deadline—and it

becomes more painful to not do the work than to actually do it (Clear,

2018).

Local

Motivation is defined as “the psychological forces that determine

the direction of a person’s level of effort, as well as a person’s persistence

in the face of obstacles” (Lockwood, 2010). Motivation provides a goal

that the employee works towards, thereby giving the employee a direction

to follow. The concept of motivation means a process of stimulating

people to action to accomplish desired goods (Constanza, 2012).

A vast body of literature exists on the relationship of motivation

and performance in professional work and organization settings

(Osterloh, Frey & Homberger, 2011). Motivation is the process of

attempting to influence others to do your will through the possibility of

gain or reward (Roque, 2016). Beyond work settings motivation may

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influence performance in academic settings and among university

students.

RELATED STUDIES

On Financial Problem

Foreign

Many students believe that financial problems are having an

adverse effect on their academic performance; a survey of University of

Central England undergraduates has shown a veracious result. The

survey, carried out by UCE's Centre for Research into Quality (CRQ),

found that 51.9% of the 1,139 full-time undergraduates polled believed

their academic performance was suffering and 15.1% believed that there

was a major negative impact.

Financial problem is referred to as inability to manage expenses

(Falahati and Paim, 2012). Therefore, the people’s ability to manage

his/her personal finance has become an important issue because people

looking at different aspect of their financial affair. Most of people no

longer looking at financial affair like saving and borrowings but also on

long–term prospect such as retirement plans, children plan, family future

home and similar items. The investment decision also a part of sources

of finance by individuals. Thus, an individual may seek to borrow from

banks, financial institution such as credit union, through credit card

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and also from friends or family members when they are in need of money

(Ibrahim and Alqaydi, 2013)

Financial problems are quite common and they contribute a huge

percentage of motivational problems found in the work place. In most

scenarios, financial difficulties are a result of poor choices made by the

individual (Ford, 2009). However, in some instances the financial

hardships are a result of situations beyond the control of the individual.

Some common financial problems that are experienced by employees

include: minimal or no medical insurance, mortgage payments, gambling

addictions, lack of savings, and fraud (Shinnick, 2009).

Local

Experiencing financial problem is not unlikely among Filipino

students; government statistics suggest that a significant proportion of

the school-age population experience financial difficulties. Starting at the

basic education level, almost 20% of Filipino children who dropped out of

school mentioned insufficient financial resources as the main reason for

quitting school (Philippine Statistics Authority, 2015).

Dropping out of school was most probable among 17-year olds,

particularly among those from the lowest income families (Reyes,

Tabuga, Asis, & Mondez, 2015). In the college-age population, the top
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reason (mentioned by 37.58%) for not going to college or university was

the high cost of higher education; moreover, about 16.0% of those who

opted not to pursue higher education report that they did so in order to

look for work to earn money for their families (Reyes et al., 2015).

Only 18 percent of Filipinos saw themselves as "thriving"

financially, while the rest of the represented population said they are

"struggling" or "suffering" in terms of economic security (The Philippine

Star, 2015). The recent Gallup-Healthways State of Global Well-Being

Index 2014 reported that Filipinos' perception of financial security is

notably below the Asian and global averages of 25 percent. The study

found that 52 percent of Filipinos reports to be struggling in terms of

financial well-being, while 30 percent are suffering. It also indicated that

suffering is more prevalent among Filipino rural residents (35 percent)

than those who live in urban areas (24 percent). Financial problems can

have many causes, and produce disastrous results when not handled

promptly and properly (Quezon, 2011).

On Motivation

Foreign

Motivation issues experienced in the work place are not necessarily

caused by the work environment. In some cases, external factors not

related to work environment are the primary reason that so many

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workers are incapable of performing to the best of their ability. “People

tend to underestimate the importance of external factors and

overestimate the importance of internal factors as influences on those

behaviors” (Baack, 2012). Through the exploration of how financial

problems can affect motivation in employees and how the motivation of

these employees can be boosted, a better understanding of performance

issues and motivation can be gained.

Motivation is another important factor that affects a student’s

education. It can have a very important impact on the amount of effort

that is exerted. Motivation is defined as the internal force that compels a

person to meet a certain need (Goodman, 2011). Goodman et al.

identified motivation as a starting point, which goes on to directly affect

both effort and academic performance. Then effort also goes on to

directly affect academic performance as well.

Several theories on motivation have been developed throughout the

years. A Society for Human Resource Management (SHRM) white paper

lists the following theories of motivation as the most influential in

generating understanding on the concept of motivation within the

workplace: Maslow’s hierarchy of needs, Herzberg’s motivation hygiene

theory, and McClelland’s needs for achievement, affiliation, and power, to

name a few (Lockwood, 2010).

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Küçüközkan (2015) defined motivation as the sum of the efforts

made for mobilizing the individual towards one or more particular goals

and for ensuring the continuity of this movement, whereas according to

Waterman (2005) it is a force representing the internal factors initiating

the movements that should be performed to fulfill a need and the

external factors that encourage this behavior.

Local

There are certain situations which may cause motivation

breakdown mainly from worries regarding financial problems, especially

for the students (Narciso, 2017). Narciso stated three possible ways to

break free from financial problems among students. First suggested way

is applying for scholarships or students loan. Second, make a business

in order to make extra money. Third, do part time jobs which include

part time contracts or less work hours. These three suggested ways does

not only help the students in regards of financial problem but also in

motivating the students to become social, intellectual and diverse.

The ingredients of motivation lie within all and the internalized

drive toward the dominant thought of the moment (Fernandez, 2009).

Motivation directly links to individual performance to complete task in

much better way than they usually do. Torres (2012) stated that
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motivation helps to share knowledge which can help to reach one’s goals

and objectives.