Many people think that financial management is a thing of the rich people, undergraduate as a group with no independent source of income that does not need to learn and master personal finance. This is wrong viewpoint; financial management is a lifelong for everyone. In anyone's life, it is including a single period, family formation period, family growth period, children education period, family maturity period and retirement period. The college is an important stage in the life and it belongs to a single period. The characterized of this stage is low income or no income and high expense. And this stage is the first stage for management of personal finance; if undergraduate does not know how to manage his or her personal finance would incur lots of problems. According to the survey, only a very small number of college students are understanding of financial management concepts, but the vast majority student has lack financial sense and lack of real action on manage their personal finance. It would be incurring some severe hidden dangers in their future life.
Personal finance has the most important influence on people's life, but the majority of people cannot learn personal finance in their school except some finance student. It means the most people would be a financially illiterate that they do not how to manage their personal finance. A survey shows these financially illiterates do not understand personal finance always from their university that they did not learn the relevant knowledge of personal finance.
Personal finance is a process of managing of personal asset and capital. It is defined on the basis of data collection of personal income, asset and liabilities then through the analysis of the risk affordability and preferences of individuals to combine with the target to use such as savings, insurance, securities, foreign exchange, collection, housing investment and other means to manage asset and liabilities in order to achieve maximum capital appreciation of the individual
Undergraduate as a special consumer groups in the current economic life, in particular, they are playing an important role in the improvement of the consumption structure. Consumption status and financial status of college students can support a reflection of the current life status and value orientation of undergraduate. Therefore, understanding factor that affect on the personal finance of undergraduate and give them suitable financial advice in order help them manage their personal finance.
1.2 Problem statement
An analysis had display lots of university student do not have a good learning and knowledge of personal financial fundamentals. (Bakken, 1967; CFAJAMEX, 1991; HSR, 1993; Langrehr, 1979; NAEP, 1979). Otherwise, in a recent report include 1509 students from 63 schools has displayed more students has a poor ability to make decisions when they are leaving school. (Mandell 1997)
If the undergraduate does not know how to manage their personal finance it would be incurring those problems:
Irrational consumption structure. The daily consumption of college students should have the cost of living and learning costs. However, clothing, cosmetics, digital product consumption becomes the major consumption.
Moonlight clan. The moonlight clan is means a man which monthly cost equal monthly income and no saving.
Affect on their future finance. Any personal finance skill needs a long time to develop and adjustment. If it lacked on the first stage that it would incur lots of losses on future finance.
So, undergraduates must understand without good personal finance to lead to big trouble in the future life,
1.3 Project objective
The purpose of this research is to determine the financial situation of undergraduates who was in APU. Then examine those factors that would be affected on APU student personal finance. Identify there is a significant relationship between those factors and personal finance of APU student. Discuss further demographic profile of those factors of APU student and examine whether those towards their personal finance by demographic segment. There have four variables would be discuss such as APU student's consumption concepts, consumption pattern, personal finance awareness and personal finance method.
In this research, the researcher would use quantitative research approach to finish research process, in order to better complete research objective so research data must be reliable and accurate. The researcher would to use a random survey to collect research data to ensure there is a reliable and accurate outcome. After that, the target group of this research is APU students. The target group mainly consists of the students who are studying in APU degree course. The researcher would create questionnaires sent to APU student randomly and this inquiry scale would be conducted with 100 respondents.
Attempting to understand personal finance has Significant influence on the financial situation of undergraduate. This study indicated that consumption concepts, consumption pattern, personal finance awareness and personal finance method are relevant individual difference variable for personal financial of APU undergraduate.
Hypothesis a: consumption concepts
Hoa: There is a relationship between consumption concepts towards the personal finance of APU students.
H1a: There is no relationship between consumption concepts towards the personal finance of UCTI students.
Hypothesis b: consumption patterns
Hob: There is a relationship between consumption patterns towards the personal finance of APU students.
H1b: There is no relationship between consumption patterns towards the personal finance of APU students.
Hypothesis c: personal finance awareness
Hoc: There is a relationship between personal finance awareness towards the personal finance of APU students.
H1c: There is no relationship between personal finance awareness towards the personal finance of APU students.
Hypothesis d: personal finance methods
Hod: There is a relationship between personal finance methods towards the personal finance of APU students.
Hod: There is no relationship between personal finance methods towards the personal finance of APU students.
The college should be the initial stage of the personal finance and it is also is a golden era for learning personal finance. Then for undergraduates who have no income source should learn and master personal finance and develop a correct financial management habits in their daily life. In this study, researchers need to research some factors that have affected on undergraduate's personal finance and to support advice with useful and helpful to undergraduate for current or future development.
At last, base on the above paragraph, this chapter is mainly introduced the definition of personal finance and why people need to manage personal finance. After that, it also explains why undergraduate need to learn to personal finance and what problems would be rise if undergraduate without personal finance awareness and knowledge. Otherwise, this chapter has simple explain research objective and research methodology to the audience. After that, this research will focus on personal finance of APU student. Even though, APU student is not able to represent all the personal finance of undergraduate in the world, but this research would be more specific and the result release can be more valid.
2.0 Literature review
According to Zhao (2004), personal finance is referring to how individuals to dispose their own money. The purpose of personal finance is to use a lower cost to achieve the reasonable consumption and maximize avoid of financial risk. After that, the personal fiancé also aim to make an optimal interemporal configuration of individual's capital.
There is a major theme for the current college student is finance problem. 52 percentages students think cannot find a suitable job and 51 percentages people think they are has poverty in their life and 49 percentages people think that the current economy is not prosperity. The students which depend upon student loan are more than owe over$25,000. (Exploring the College Experience, 2003)
2.2 Consumption concept
According to Jiang (2010), Consumption concept refers to the attitude about to the level of consumption, style of consumption and other view. Consumption concept is an important part of economic ethics. In general there are three kinds of consumption concept in the world consist of thrift consumption concept, the luxury consumption concept and moderate consumption concept. These consumption concepts would incur the difference personal finance to the undergraduate. A correct concept of consumption can be more reasonable guide college students to manage their personal finance. Otherwise, poor financial conditions always come from the incorrect concept of consumption
2.3 Consumption pattern
According to Jiang (2010), Consumption pattern of current undergraduate always has few characters such as rationalization trends, diversification trends and electronization trends. The difference consumption pattern has an important effect on the personal finance of current undergraduate. Although an overdraft consumption patterns can meet the consumer demand of current university students because the student can use the future money to finish the current goals, but there would be taking a big financial crisis in the future.
In some authors' analysis of the financial situation of Generation Y, it state most generation Y has a relatively high level ability of disposable income but more research has displayed that the generation Y consumer does not have high financial literacy .(Palmer, Pinto, and Parente, 2001: 105)
2.4 Personal finance awareness
According to Jerry Mason (2000) refer most consumers are "flunking personal finance" (p. 125). He thinks financial problem always is high among the people's life and it becomes to the primary factor which incurred the personal bankruptcies and people divorce. Lots of old people with a poorer life than others'. Otherwise, many college graduates face a huge debt (from student loans, auto loans, and credit card debt) and low income because they do not have a right awareness of personal finance.
According to Chen (1998) refer that most college students do not have a good awareness of the personal finance. So low finance awareness would lead to a weakness on resolve their financial problem. According to Chen's survey, he provides questionnaire to the respondents and questioned within questionnaire about respondents' knowledge of savings, borrowing, insurance and investments, at last, the survey display that there are about 60 percent of the investment questions answered incorrectly. Base on can result refer to "individuals cannot manage their finances because they lack awareness of finance; it becomes a problem for society. This challenging issue needs to be addressed"
According to Chen and Volpe (2002), they take a research on Gender Differences in Personal Financial Literacy among College Students. They used a large sample consist of 924 usable responses which from lots of college and universities in USA. The research majority focus on the difference financial awareness among men and women and the relationship between the financial awareness and education and experience. Base of the analysis they find there are close relationship between participants' financial awareness and participants' education and experience level. The researcher thinks that the people who are business majors are having more awareness of personal finance that the people who are non-business majors.
2.5 Personal finance method
According to Bowen & Lago (1997), it refers lots of college students are living on the edge of financial crisis and they always lack enough financial knowledge to manage their money. When the students study in the college, they were starting to accumulate debt by student loan and credit cards. After that, they do not believe these debts would be making an effect on their future life but they would find without personal finance skills that they are hard to manage their personal finance.
According to Neal Godfrey, (2002) refer that the children do not learn any financial knowledge in their life and the all of the people live in the largest capitalist nation in the world, but the children never received and financial education within their school life. So as educators and parents why we do not teach them financial skills that how to help their children who are lack of personal finance methods.
According to Robert (2001), it refers to each person should learn the methods of personal finance, if people do not learn personal finance methods and do never to try use those methods to manage their personal finance, that means poor man never be to the rich man if the poor given up mange his personal finance. Otherwise, the steps of personal finances has included 5 steps, the first one makes sure and develop a financial goal, then check the status of assets or capital. The third steps is understanding of each investment risk and considers the trend of investment, after that, allocation asset follows investment appetite and at last, review the performance of the investment and make adjustment according to the performance.
A study of journal of college teaching& learning found that the people always got personal finance skills in several ways, there are 70 percent of the financial skills that people got them from their father or mother or other family members. There are 60 percent of finance skills that people study them from their college. Parents are the first teacher of children and children always like copy their parents, but some evidence displays in the USA, lots of adults do not have enough personal finance skills so the children in this family got nothing in the finance area. (2002)
According to Musk & Winter (1998), there are lots methods to manage individuals personal finance, a good personal finance also as a money management plan, it would cover several factors such as regular generation of financial statements; budgeting; control of spending; recording income and expenses: and tax, insurance, investment, retirement and estate planning" (p. 1) According to Chen & Volpe, (1998), for many students, it is hard to create and use money management plan because this is student has a poor understanding on personal finance methods, after that, Chen & Volpe, (1998) think about the poor understand about personal finance methods of college students is because their school do not support personal finance methods studying for their students. According to The Youth and Money Survey (1999), it found that there are 65% of the students had an opportunity to study personal finance methods, but there are only 21% of these students to study it. According to Kendrick (1999), there are 44% of student know the term "budget", this is not the best worse, according to Elliot (1997), there are only 18% of the general population has a basic simple personal finance kills to manage their personal finance. After that, these people only can face a simple financial problem because it is limited by their personal financial ability.
At last, the prior research has provided knowledge and understanding of undergraduate personal finance. But there are also has few weaknesses on this issue. Lots of prior reports only research on the personal finance skills but lack the outside factor which can give effect to the undergraduate personal finance.
According to Sekaran (2002), research is referring an inquiry about a specific problem with organized, systematic, data based and critical objective. Then the final purpose of research is finding answers and solutions which can resolve this research problem. In other ways, the goals of research is support of researcher necessary information which is meet the needed of resolve research problem. After that, in order to better finish the research goals the researcher must be choose and use appropriate research methods which would be apply in the research process.
According to Mackey& Gass(2005), there are two common research approach always use in the research process, one is quantitative and the other one the qualitative. Quantitative research approach always use when the research design need a quantification data and the research result is statistical which from numerical analysis. Qualitative approach is use when the research data is not easily quantified and the result of research is interpretive not statistical. Otherwise, qualitative approach refers a describing of characteristics or feature of research objective without compare with other statistical data. After that, for quantitative methods, the result of research is from a compare with statistical data. So in this research, researcher should take a quantitative approach apply to the research process because these research factor can be compare with the collection data and the result is from the statistical analysis.
3.2 Data collection methods
Data in research process can be divided to primary data and secondary data. Primary data is means the data is from primary sources that means the primary data is from the researcher to finish their research through collect and conclusions some outcome by himself. According to Macqueen(1998), secondary data source always from books, articles, and other publications source. Compare with primary data, secondary data always from other people's work or knowledge.In this research, Data which necessary for the research are distribute in APU student. Researcher would take a Convenience survey that use in APU student. The data from this survey is the primary data collection because the data is from the survey of researcher. Otherwise, in order to better complete research objective researcher also chooses use lots of secondary data to support research process.
In this study, researcher would create questionnaires sent to APU student randomly. This questionnaire support lots of investigation question with single choice answer. The questions include several aspects such as the consumption level, the source of consumption, consumption structure and student's financial management concepts and capabilities and so on. This is one of the forms of Quantitative research.
This research involves populations that can be identified with geographic area such as APU campus. There is a small sample size and respondents are mainly from APU student. This study would be conducted by 60 respondents. The target group in this study is APU student. It mainly consists of the student who is study in APU degree course.
The questionnaires will be divided to 5 main sections; section 1 is collecting the basic information of respondents included of gender, age and studying course. Section 2 to 5 is focusing on the factors which have affect on respondents' personal finance. In section 2, all of the questions are testing whether the consumption concepts factor has affect on the respondents' personal finance. Section 3 is majority focus on the consumption pattern factors whether has affect on respondent's personal finance. Section 4 and 5 is main focus on the personal finance awareness and personal finance methods. It is collecting the feedback of respondents whether those factors have affected on their personal finance.
Limitations of thesis are from the survey because limited of the time and funding and the survey is focus on the APU student. Because this questionnaire is only distributed at APU campus and the survey is not a comprehensive survey then it cannot fully reflect the personal financial situation of the APU students. So this research is not particularly accurate and strict to reflect all of personal finance on other undergraduate.
For research of this project, firstly, it makes a full understanding of personal finance to the researcher. Though this research it also provides some advice to examine those factors how affect on undergraduates' personal finance. In the future, if the researcher enters finance or investment industry, this research provide a basis of finance and make an easy way to work. Otherwise, in the process of research project, the researcher had got some experience on data collection and communication with others. It also would provide benefit on the future employability.
4.0 Reference list
Bowen, C. F., & Lago, D. J. (1997). Money management in families: A review of the literature with a racial, ethnic, and limited income perspective. Advancing the Consumer Interest. p32, 11p
Bakken, R. (1967). Money management understandings of tenth grade students. National Business Education Quarterly, 36, 6.
Chen,Haiyand &Volpe, Ronald P. (2002). Gender differences in personal financial literacy among college students. Financial Services Review, 11, 289-307
Chen, H. (1998). An analysis of personal financial literacy among college students. Financial Services Review. Vol. 7 Issue 2, 107-129.
Exploring the college experience. (2004, March). Trends & Tudes, 2, 1
Elliot, J. (1997). Young and in debt: A focus on prevention. Credit World. 85 (4), p35, 3p.
Jang Liu.(2010). A Study on Contemporary College Students' Consumption Value. P3, p8-11.
Godfrey, Neal (April, 2002). The 'dud' generation. ABA Banking Journal. 94 (4) 47
Kendrick, E. (1999). Give `em credit: When is it right for students? Austin Business Journal. 19 (25), p26, 3/8p
Musk, G., & Winter, M. (1998). Real world financial management tools and practices. Consumer Interests Annual (44), p19, 6p
Mason, J. (2000). Educating Consumers. Advisor Today, Vol. 95 Issue 2, 125-130.
Mandell, L. (1997). Personal financial survey of high school seniors. Jump Start Coalition for Personal Financial Literacy, March/April. Washington, D.C
Palmer, T. S., Pinto, M. B., & Parente, D. H. (2001). College Students' Credit Card Debt and the Role of Parental. Journal of Public Policy & Marketing, Vol. 20 Issue 1, 105-114.
Robert, Kiyosaki. (Apr 2001). Sharon Lechter. Rich Dad Poor Dad. USA. Warner Book Ed
Youth and money survey. (1999). American Savings Education Council, 16p.
Zhao Lin-Hang.(Aug 2004). The Logic Basis and Development of Individual's Financing. Academic Exchange Serial. No.125 No.8