Financial Problems of Students and Analysis of Their Spending Habits

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Table of Contents

  • Significance of the Study
  • Background of the Study
  • Research Objectives
  • Research Questions
  • Research Limitation
  • Literature Review

What are the first things that appear in our minds when it comes to habits? Commonly, habits are related to negative activities or behaviours that someone always do, time to time. William James stated in his book, Talks to Teachers on Psychology and to Students on Some of Life’s Ideal, that bad perspectives on habits are because people are much used to bad habits; smoking, drinking and swearing habits in their life more than the good habits. The word habit is originated from Latin, the word habere, meaning have or consist of, habitus that means condition or appearance which then converted into an Old French word, abit that refers to the word habit that then used in the Middle English. Habit is a settler or a regular tendency or practice, especially the one that is hard to give up. One of the habits that are barely realized by people nowadays is the habit of money spending. Money is playing a bigger role as a need to human day by day. The importance of money to individuals can sometimes become irrelevant because some people would kill just for money. Everything in this world today is influenced by money. Buying food and needs, going to school, driving and even when using smartphones, money is being spend, either we realize about it or not. Even when we are sleeping, money flows through the electricity used by the fan or air-conditioner, just to make sure that the room temperature are suitable for us to get a good sleep.

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Significance of the Study

Money spending habits, which refers to how a person spend in their routine, might sound as just a random statement. However, these habits give huge impacts on everyone’s life. Money spending habits are extremely important for everyone to manage their living especially students as they rely on their parents or students’ loan even though some of them might have been doing part time jobs. Some research had been conducted on this particular topic, as the economy of the world nowadays is not really stable. Folorunsho (2016) stated in his research that the pattern or the habits on money spending among the youth are very important as it not just enable them to help and support their family, but their future are also depending on the way they spend their money at the current moment. Even though money spending can lead to happiness and joy, this action must be controlled. Currently, there are multiple major problems in Malaysia that are related to the money spending habits. Financial issues among students, claims on the increasing of the cost living in the university and the most worrying problem is the delayed PTPTN (National Higher Education Fund Corporation) loan repayment which also involves the students in higher education. It is obvious that these huge problems are correlated to the way the students spend their money, where, why and if they keep track on what they are spending on. PTPTN repayment is something that had been agreed by the students who applied for the loan. The loan that had been paid back will then help the current and the future students. Delayed repayment causes multiple problems because the total PTPTN loan that had not been paid is not in a small amount. Studying the money spending habits among the students of National University of Malaysia (UKM) might help to discover the main reason behind these problems.

Background of the Study

Multiple research had been conducted on this topic. This shows how money spending habits, generally, being one of the important topics that affects living. Spending money can be satisfying to some people cause many of them spend their money on unnecessary things and waste on things that they might think they need but actually not. Kearns stated in her article, The Psychology of Money- How Saving and Spending Habits Are Programmed in Your Brain, that spenders, or the one who love to spend their money faces hard times in delaying gratification. This somehow is a bad thing as, on the other hand, people who can wait for the satisfaction achieve more success from the spenders in some studies. “Despite the fact that credit-card balances are lower among college students than among older adults, the problem actually may be more severe among students because of their lower income levels.” Norvilitis et al. (2006). This shows that money problems are commonly related to students, especially college students. It might be caused by the studying fees and cost living away from family plus most of college students are unemployed and earn money only from their parents. Furnham (1999) claimed that majority of the subjects’ incomes are from parental allowances.

Research Objectives

This research relies on the problem statement which is “Does UKM students manage their money spending habits well?”. Through this question, we can analyse the way, how the students spend on their daily routine. It can be investigated if the students plan on how they going to manage their financial or they might just buy or pay for everything that they are interested into neglecting the needs of saving for the future usage. As students, habits on money spending are actually important as it influences their daily life and studies. Students really need to manage their savings by learning to differentiate the things that are needed and the things that are wanted. Some of the students rely on scholarships and that is a good start for them to begin on having their own savings. The objectives of this research are to know the way on how the students spend their money, to know if the university life is really high in cost and to study if the money spending habits among the students contributes to the unpaid fees. In addition, the research questions are, how do UKM students spend their money, is university life really that expensive and does the money spending habits among the students contributes to the unpaid fees. Objectives and research questions are directly connected to each other. These two elements assist the research to stay on a topic, nothing more or less. The research questions guide the researchers on how the students manage their financial and if it effects other issues.

Research Questions

  1. What is the average spending of a student in a month?
  2. What is the source of a student’s income?
  3. How do students manage their spending?

Research Limitation

The research conducted based on quantitative method, which the data gained from random subjects. Information on the money spending habits among the UKM students gained through questionnaires with questions on the pattern of how they spend their money as a student and there were multiple sections of questions related to the topic. The subjects or samples are all the students of UKM, both male and female because the research does not specify on gender. Number of samples were limited to 60 students as the maximum number of the respondents which involves students in every faculty and from the first years to the final years in UKM.

Literature Review

Money spending habits are directly connected to the self-control of the person. Roy (2002) had stated in his research, Yielding to Temptation: Self-control Failure, Impulsive Purchasing and Consumer Behavior, ‘Most purchasing impulses are quite resistible, but people fail to resist them often enough to keep the economy humming along’. In his journal, he explained on how self-control works and what are the main problems for someone to control themselves. He also claimed that every person has different self-control which actually related to their personality. In some other part, money spending is also related to happiness. Elizabeth, Daniel and Timothy (2010) had stated in the Journal of Consumer Psychology, ‘The correlation between income and happiness is positive but modest, and this fact should puzzle us more than it does’.

At some point it can be agreed that money can lead to happiness but as a huge contributor. However, there is a thin line that needs everyone to be careful as most people nowadays assume that the more the money that you earn, the happier their life will be. This mindset causes a person to spend more even though the feeling of pleasure is not because of the thing that the money spent on, but the act of spending the money, Roy (2002). For example, in some cases, people who developed habits in stealing or being a pick pocket enjoys the pleasure in taking the belongings from other people even though the things stolen are not a need for them. The act itself which enhance the feelings of satisfaction. This situation applies the same way on money spenders which the act of spending money that creates the feeling of signification. The feelings felt that sometimes leads a person to do something that cause negative effects as the person’s lust overcome their logical way of thinking. ‘Most people do not know the basic scientific facts about happiness- about what brings it and what sustains it-and so they do not know how to use their money to acquire it.” Elizabeth W. Dunn et al. (2011).

However, a study conducted by Elizabeth W. Dunn et al. (2008) stated that their research shows how people spending their money is at least as important as the amount of money they are making. Leclerc, Kristi (2012) claimed that, a lavish scale of consumption affects the students’ to continuously purchasing things. This statement can be assumed into two different ways which, firstly, when a student is surrounded by friends who are living a high-costed lifestyle, there are big possibilities that the student will also consume things that are consumed by those friends, even though he or she has a lower income just to blend in with the crowds, wanted to be accepted. Secondly, conspicuous consumption can also be assumed when someone keep spending on things that are high in cost just to impress others, feeding their greed even though they cannot afford to spend on those things for a long period as they consume more than what they gain.

This behaviour could turn into habits if there is no effort to overcome the actions. Plus, current lifestyle somehow depends on money on higher scale compered to last decades as the cost of living keeps on rising. Lacking in money leads to disordered money behaviours which seems to be the reason why many people assumed that money can overcome stress and any problems that are related to it Klontz et. al. (2008). This unhealthy mindset contributes to bad impacts on how people depends on money. Assuming that money controls everything makes people to be highly dependent on their financial, spending more due to their psychological thinking.

Money spending habits are related to everything about the person, not just the urge of consuming. There are three categories of people that faces problems in managing their financial which are knowledge and attitudes, the personality and the current situation during the process, Norvilitis et al. (2006). It is obvious that these categories need to be understand for someone to manage their habits on money spending effectively. Research found that people who have been saving regularly are different compared to the borrowers in terms of psychological motivation, Furnham (1999). Savers tend to feel that they have failed if they borrow any money from anyone which influences the way on how they spend and manage their financials. As borrowing is a failure, savers will spend on only important needs to avoid any wastage. A student’s spending habits is directly influenced by the way how their parents and families manage their financials, Allen et al. (2006). Families who are commonly spends only on their needs, not desires, mostly produces children with better financial managements and practice higher savings. A family’s spending pattern depends on the income from the employed family member, Coelho (2014).

Obviously, there are obvious difference in the way of spending between families which both parents are employed and those families with only one of them who are employed. Most students start to deal with money problems when they move away from their parents and family, Karlson (2013). This is because when they are separated from their parents, they earn less money and the act of money spending is not monitored anymore. Almost half of students spend over than their money budget but only sometimes, Ganesan (2012). However, there is a positive pattern in how people spend their money on health. Filmer and Pritchett (1997) claimed that there is high money spending on health among the public. It is a positive side which pictures how people still care about themselves and families, spending on the right thing despite all the problems with money. Wenglinsky (1997) stated that some of the ways of spending are related to the achievement of the students.

In this study, it shows that students who spend more, gain higher achievements compared to the lower spenders. The act of spending is not enhancing psychologically but physically, as for example the facilities, books and teachers. Higher money spenders of course get the higher quality of learning assistants, resulting to better achievement in studies. A study conducted by Cummins, Haskell and Jenkins (2009) resulted that 1st years college students knows the basic in managing their financial and there is no obvious difference between male and female students in the way of spending money. Despite that, Sobolevsky et. al. (2016) claimed that age and gender play big roles in influencing the way of money spending and the study revealed that people spend the most in the age of 30-years-old.

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