The purpose of this study was to evaluate the students of Panpacific University, specifically the students in the School of Business and Management Education with regards to the management of their finances in terms of budgeting, spending, saving and borrowing money and how can they make decision with regards to financial knowledge.The proper way of using the finances of the students is a one form of financial literacy.Financial Literacy involves an individual’s ability to interpret and understand basic financial concepts apply that knowledge to make informed decisions. Financial literacy is more than a measure of knowledge – it also reflects competency in actively managing one’s own money from the point of accumulation to the point of consumption (Remund, 2010).
Many researchers define financial literacy as “the ability to make informed and efficient regarding the use and management of money” (Schagen and lines, 1996). Financial literacy is essential than ever in today’s world. It perceived as a very beneficial tool to see how a particular person copes with financial problems. Being aware of money management, budget, borrowing, saving, spending and financing can prepare today’s generation with knowledge to take charge of their finances. If the individuals are confident with financial literacy, they might handle the financial problems better.
We are living in a generation of unusual debt and students are intended to face financial problems in through their journey. It is important that educators and parents begin to equip young individuals with the knowledge and skills they needed to succeed as consumers in today’s global economy. Governments provide attention to financial literacy of their society in order to constitute policies, and solve the financial problems of the society. Also by using financial literacy it can help assess the information from different countries, in that way it is possible to make comparisons.
Every country can learn from different countries if the financial literacy levels between these countries similar or differ to each other. College students are not receiving the financial knowledge necessary to be successful in today’s fast paced economy. Due to an increasingly complex marketplace, college students need greater knowledge about their personal finances and the economy. The financial decisions made early in life create habits difficult to break and affect students’ ability to become financially secure adults. Most recent studies show average personal financial scores declining with average scores close to a failing grade (Jorgensen, 2007). It is valuable for College students to know the value of money, for them to understand how it performs and how to manage it wisely.
Every student must gain financial knowledge while they were still young for them to manage their finances efficiently. This knowledge obtained by the students will help them make decisions on how they suppose to handle and use money to their daily life. Being aware to your finances is one of the best decisions to assure and to keep your finances.
Spending, saving, ; budgeting are some example on how to manage your money or finances. But in today’s economy, it is slight impossible to spend, to save, and to budget your money because of inflation. We are living in a place where the prices in the market are getting higher. So, education and knowledge about financial literacy is a big help on how to use your money effectively..
As an individual you must understand the concept of financial literacy, so that you can make wise decision on how to manage your money. This skill is very important because some individuals do not know this basic knowledge and they are unable to meet their financial expenses.It is important to focus on improving the financial management skills, attitudes and behaviors right from the start of the college experience as financial issues and the need to work are often cited as the number one reason why students drop out of college (Ross, et al.
, 2012).Financial literacy is a basic concept in understanding money and its use in daily life. This includes the way income and expenditure are managed and the ability to use the common methods of exchanging and managing money.
Further, financial literacy incorporates an understanding of everyday situations that need to be understood such as insurance, credit and an appreciation of savings and borrowings. The understanding of financial terms and concepts includes an understanding of key financial concepts central to investing and managing funds to increase wealth and security. Individuals require an awareness of features available for borrowing and investing. This awareness includes the understanding of prospectuses and annual statements, compound interest calculations and delaying the use of funds for consumption. Individuals further need to be aware that high return investments are also likely to involve high risk, the realization that market values fall as well as rise, and the principles of diversification.
This need introduces a new complex set of skills in relation to products and how they work, the advantages and disadvantages. The other component of financial literacy is the skill to utilize knowledge and understanding to make beneficial financial decisions (Wagland and Taylor: 2009, 16-17). Financial literacy helps individuals to improve their level of understanding of financial matters which enables them to process financial information and make informed decisions about personal finance. Financial literacy is directly related to the well-being of individuals (Bhushan and Medury: 2013, 155). Having financial literacy skills is an essential basis for both avoiding and solving financial problems, which, in turn, are vital to living a prosperous, healthy and happy life(Wolcott and Hughes: 1999, 10).
Most importantly, the lack of financial literacy may lead the young adults, the future labor force contributors, to become involved in a higher level of financial problems during school life, which has a significant effect on their present and future family, and professional life.