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The Financial Management Of Secondary School Students Finance Essay

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Financial literacy is the ability to understand finance. More specifically, it refers to the set of skills and knowledge that allow an individual to make informed and effective decisions through their understanding of finances. It's also an essential part of planning and paying for postsecondary education. Everyone needs to understand the options with respect to the vast array of financial products, services, and providers to make sound financial decisions. Financial literacy as having the knowledge, skills and confidence to make responsible financial decisions. Knowledge means understanding personal and broader financial matters. Skills are the ability to apply that knowledge in everyday life. Confidence means feeling self-assured enough to make important decisions. This is often a key factor in galvanizing people into action. By responsible financial decisions, we mean that people will be able to use the knowledge, skills and confidence they have gained to make choices that are appropriate to their own circumstances.

Financial literacy also can define as understanding how to manage money effectively. Financial literacy is the knowledge and skills to make informed decisions regarding money matters. Financial literacy helps an individual fulfill personal, family, social and governmental responsibilities. What does it mean to be financially literate? It means that you know basic money principles. You understand financial principles such as interest rates, risk and return, credit management, guaranty, banking, insurance, time value of money and taxes. Everything else being equal, people who are financially literate are more likely to achieve their financial goals than people who are not financially literate. Financial literacy can help people buy a home, save money for emergencies, afford college tuition, start a business, and live comfortably in retirement. On the other hand, a lack of financial literacy can be harmful. Financial illiteracy can subject an uninformed person to excessive debt, predatory lending, and misleading investments.

Financial literacy is paramount in today's market place. Consumers are confronted with complicated financial choices that may have huge implications for them and their families. For example, people must choose whether to rent or buy a home, whether to lease or buy a car, whether to insure property, health, and life and for how much, whether to save for education and retirement - how much and through which vehicles. To make decisions, people draw on their existing knowledge in a particular situation and apply it in such a way that is appropriate to their circumstances.


Financial literacy is a management of money. Where, from this research we can investigate the financial management for secondary school students'. We can relate with the students background, financial attitude, financial knowledge and family influence.

From student's background we investigate based on their gender, aged, form and any related with money that they spend. Based on financial attitude, we investigate about their ability to manage money in daily life. Are they having a saving account, ATM card that they can used to draw their money? How much they always saving their money for every month? So, from this research, we can know how much they always spend their money.

In this research paper, this study was conduct to investigate on the financial literacy among secondary school. This research is based on the past study on the related area where the information is collected from journals and primary data.


In today's world of increasingly higher cost of living and tighter personal budgets, the need for prudent financial planning and good money management becomes increasingly crucial. In Malaysia, many people don't know how to manage their money. What they should do when they have a lot of money. They always waste their money with doing activities that not give a benefit to them. So, if there are programs or activities on it, they never addressed directly to young consumers specifically those in between aged 16 to 18 years. It can improve financial literacy of individuals, specifically students at secondary school. So, they can have positive cash management attitudes before they enter to university level or job market. This positive attitude will help them to practice proper personal financial management as working adults.


1.3.1 General Research Question

Are there differences in financial knowledge based on gender, aged and form?

Specific Research Question

Are there differences in financial attitudes based on gender, aged and form?

Are there difference in family influence based on gender, aged and form?

Are there differences in financial knowledge, attitudes, and family based on education level of parents?

Are SMK Datuk Menteri Ayer Hitam students financial literacy correlated with their financial knowledge and attitudes?


1.4.1 General Objective

The general objective of this study is to examine the financial literacy among secondary school.

1.4.2 Specific Objective

To investigate the personal finance literacy (knowledge, attitude, and family) of a sample of SMK Datuk Menteri by gender, aged and form.

To examine parental influences on the level of financial literacy of SMK Datuk Menteri students'.

To examine the relationship between SMK Datuk Menteri students' financial knowledge and attitude, and their financial literacy level.


This research is to contribute overviews and information of the financial literacy among secondary school. Nowadays, many people don't know how to manage their money. So, from this research, we can know how many people or student know to manage their money very well. Furthermore, how much they always save their money for every month. We also can know parents' education level can give effect from this problem.


This study would give a valuable knowledge to the student to improve their financial skill. It also helps them to practice proper personal financial management as working adults.

It is also the first strategy before them go to higher education. Family influence also can give positive effect for student financial management. Every people should take initiative to improve their financial management and give good attitude to student to make sure they also can manage their money properly.


Through this research also, the other researcher will gain the benefit in doing some similar research by referring to the information given. Furthermore, these studies also improve the credibility of researcher due to the improvement of their knowledge skills by referring to this research. Then, this research study also can be used as an additional references and guidance for those who intend to do research in this particular area and to improve other studies in future.


There are several limitations faced during conducting and completing this research study. The limitations are:


Since doing the research is a new experience, there are so many challenges and barriers to face with. The process of doing research has been taught to be more patient and diligent. Therefore, some guidance and references from the professional and expert are required in order to complete this research.


To accurate the research result, data collection are very important. Not all data has been gathered from the sources are accurate and relevant with the scope of study. This may be due to the typing or technical error that might lead to confusion either the data is able to be use or not.


The online journals such as Emerald are used to find the previous literature that related to this study. They are some journals that provide abstract and this research study can be improved if the literature work or finding can be included.



Student's background is an important in doing this research. From this term, can see the different level of education, different aged can give different answer. We can know who can manage their money very well and which groups just waste their money. Between male and female which one more independent in manage their money. Between male and female also we can see who always spend their money in saving than enjoy it.


Attitude is a predisposition or a tendency to respond positively or negatively towards certain idea, object, person, or situation. Attitude influences an individual's choice of action, and responses to challenges, incentives, and rewards. Four major components of attitude are affective like emotions or feelings, cognitive like belief or opinions held consciously. Besides, conative like inclination and evaluative like positive or negative response to stimuli. A branch of economics concerned with resource allocation as well as resource management acquisition and investment. Simply, finance deals with matters related to money and the markets. Finance also to raise money through the issuance and sale of debt or equity.


Knowledge is the awareness and understanding of facts, truths or information gained in the form of experience or learning. Knowledge is an appreciation of the possession of interconnected details which, in isolation, are of lesser value. Financial Knowledge does not affiliate, endorse, or sell any third party financial products or services.


Family influence is very important in educating children. What parents do, children will surely do. So, parents should give a good attitude to make sure children will also do the same thing. In this study, the influence of parents is very important.

A family is a domestic group of people, or a number of domestic groups linked through descent (demonstrated or stipulated) from a common ancestor, marriage or adoption. Families have some degree of kinship. The group comprising a husband and wife and their dependent children, constituting a fundamental unit in the organization of society.

Influence is the power to affect, control or manipulate something or someone; the ability to change the development of fluctuate, fluctuating things such as conduct, thoughts or decisions; the status of being able to dictate the actions or behaviors of an object or person; moral or political power over a person or group; ascendancy. Influence also the capacity or power of persons or things to be a compelling force on or produce effects on the actions, behavior or opinions. He used family influence to get the contract. Besides, influence can define as the action or process of producing effects on the actions, behavior or opinions like her mother's influence made her stay. Influence also a person or thing that exerts influence like he is an influence for the good.




Literature review is the process of reading, analyzing, evaluating, and summarizing scholarly materials about a specific topic. The results of a literature review may be compiled in a report or they may serve as part of a research article, thesis, or grant proposal. (Richard Nordquist)

A literature review is an account of what has been published on a topic by accredited scholars and researchers. Occasionally you will be asked to write one as a separate assignment (sometimes in the form of an annotated bibliography-see the bottom of the next page), but more often it is part of the introduction to an essay, research report, or thesis. (Dena Taylor)

In writing the literature review, your purpose is to convey to your reader what knowledge and ideas have been established on a topic, and what their strengths and weaknesses are. As a piece of writing, the literature review must be defined by a guiding concept (e.g., your research objective, the problem or issue you are discussing or your argumentative thesis). It is not just a descriptive list of the material available, or a set of summaries (Dena Taylor)


Motivational theory suggests that measures of financial literacy should be related to financial behavior that is in the consumer's best interests, (Hilgert, 2003)

Although financial behavior seems to be positively affected by financial literacy, the long-term effects of financial education on financial behavior are less certain; Bemheim, Garrett and Maki (2001) found that those who took a financial management course in high school tended in middle age to save a higher proportion of their incomes than others. (Bernheim, Garret and Maki 2001)

On the other hand, found little positive impact of a well-regarded high school personal finance course on post high school financial behavior from one to five years after taking such a course (Mandell 2006).

The ineffectiveness of high school classes that teach financial literacy to measurably108 L. Mandell. LS. Klein / Financial Services Review 16 (2007) 105-116 increase literacy levels among students that have taken such classes stands in stark contrast to the current efforts to mandate such classes throughout the U.S. (Mandell 2006).

This article suggests that students retain little of what they learn in personal finance and money management classes because they do not perceive that it is relevant to their lives. In his book Engaging Minds: Motivation & Learning in America's Schools, the perceived relevance or irrelevance of the subject matter is an important determinant of whether a learner will "become engaged and stay engaged in any leaming task." (David Goslin 2003)

The need for personal finance education has been identified in many countries and is well-documented by current research in the field. For instance, it is widely reported that many young people do not feel prepared for the financial challenges they will face, such as financing their education, buying a car, using credit, saving and investing, or purchasing a home. Recent analysis shows that sixty percent of young people in their 20s "feel they're facing tougher financial pressures than young people did in previous generations. And thirty percent say they worry frequently about their debt". High credit card debt and relatively low savings rates have become a national concern in many developed, as well as developing, countries. (David Goslin 2003)

Summarized the results of multiple surveys and tests on financial knowledge and reported consistently low average performance of teenagers. (U.S. President's Advisory Council on Financial Literacy 2009)

The lowest scores of 48.3% demonstrated by the 12th graders for over a decade of testing in personal finance. (Coalition 2008)

Even a brief overview of the

previously conducted research on the topic demonstrates the evidence of palpable lack of financial competency among the young people in various countries. For example, provides a thorough overview of the major reasons for increased importance of financial education such as, changing demographics, growing complexity of the financial sector, declining personal savings along with rising indebtedness. (Larry Orton, 2007).

International experience drawn on such countries as United Kingdom, the United States, and Australia shows similarities in poor results on recently conducted surveys to evaluate personal finance literacy. They also proved existing correlation between the levels of education and income as well as overall overestimation of the level of personal finance knowledge by the majority of respondents (Larry Orton, 2007).

Recent efforts in the direction of financial literacy education, including the Colorado legislation previously cited, place heavy emphasis on the instruction of young consumers. For example, the Jump$tart Coalition for Personal Financial Literacy (2009) lists as its organizational purpose "...Advancing the financial literacy of kindergarten through college age youth by providing advocacy, research, standards and educational resources…" (McCormick 2009)

Support for early financial education is offered by the work of McCormick (2009) who concluded from a detailed review of the financial education literature that the earlier students are introduced to financial management topics, the better. (McCormick 2009)

However, other research suggests that the provision of financial education to high-school age students is often less than effective. One study found that while "just in time" education programs (those provided for and immediately prior to the recipient encountering a financial 4 event were effective for older consumers, the impact was less pronounced for young people (Mandell & Klein, 2007).

The authors concluded that for high school populations in particular (to which the Colorado legislation is at least partly directed), provision of financial literacy education often has limited impact because the information is not perceived by the recipient as being particularly useful or relevant (Mandell & Klein, 2007).

Similarly, argued that a limitation to the efficacy of financial education in high school is that even as seniors, high school students might not recognize the importance of the information being presented because of its lack of immediate relevance in their lives. (Bruder 2009)

Perhaps more distressing than low levels of financial literacy is the consistent finding that those who have taken a high school class designed to improve financial literacy tend to do no better or little better than those who have not had such a course (Mandell, 2004).

We do not doubt that the vast majority of students who take such a course attend classes, read the textbook and cram successfully for the final. Nor do we doubt that the teachers are dedicated and educated. We just find no connection between education and financial literacy, measured, in most cases, within a year after taking such a course. (Mandell 2004)

Financial literacy is important at many levels. Certainly, it is most important for the individual who must make complex and expensive financial decisions on 2behalf of him/herself and of dependents. Bad decisions can cause a great deal of misery, and recent changes to the Federal bankruptcy statutes extend these consequences to a wider population. (Mecham, 2005)

If, as appears to be the case, those with higher incomes and greater wealth are more financially literate than those with fewer resources, financial welfare which is a product of the two is likely to be more unevenly distributed in the population than either income or wealth. This could ultimately lead to calls for massive re-regulation in an attempt to give government protection to consumers who are incapable of protecting themselves (Mecham, 2005)

A lack of financial literacy may well distort our financial markets. Those who specialize in behavioral finance demonstrate seemingly irrational investor behavior, such as refusing to sell a losing stock or getting caught up in the "irrational exuberance" of market bubbles. (see, for example, Kahneman and Tversky, 1979)

It is possible to assess the level of financial literacy in any population. However, it is far more difficult to assign meaning and importance to these assessments. (Lyons, et al 2006)

Professor Douglas Bernheim and his colleagues have presented findings that suggest a positive impact of financial literacy education on savings behavior. Using Merrill-Lynch account data for middle-aged investors, he found that those who spent their high school years in states that required a class that taught financial literacy tended to save a higher proportion of their incomes than those who were not required to take such a course. (Bernheim, et al 2001)

In order to assess whether today's classes in financial literacy result in "beneficial" attitudinal or behavioral changes, this author did two pieces of analysis. The first was on the 2004 Jump$tart data which, for the first time, asked students to assess their own level of thrift from "very thrifty, saving money whenever I can" to "very spending-oriented, hardly ever saving money." Thrift was found to be slightly higher for those who took a course related to financial literacy but was not systematically related to financial literacy scores (Mandell, 2005).


In this study, financial management is vital to ensure a good life. Everyone needs to know how to manage their finances themselves. To avoid a shortage of funds, the various initiatives taken to avoid this to happen. Every household should make their own future savings. With the current economic uncertainty, many crises have occurred. So, for avoid trapped away from the crisis, everyone needs take their respective roles. Avoid wasting away from readiness. To ensure a good life, every people should have a good financial management.





A methodology case is one part of the process and phase of the report. Methodology introduces us about the flow of works that contribute in this case study. This chapter contains the procedure and methodology used for the purpose of this study where under section 3.1 presented a data collection process. In section 3.2, discuss about a sources of data. For variables and measurement is presented in section 3.3, theory framework in section 3.4, the data analysis and treatment in section 3.5 and hypothesis statement is section 3.6. Lastly, section 3.7 concludes this chapter.


Data collections of this study are from primary data. All data is gathered from questionnaire that I found from survey in SMK Datuk Menteri, Ayer Hitam Johor. The information sources are from journals, internet, and other relevant materials.

3.1.1 Journal

The online journals such as Emerald were used to find the previous literature that related with this study. The other website also includes in order finding the relevant information that relates to the particular area.

3.1.2 Internet

I used internet to search literature review and other information to get the info. I also refer other journal by using internet. Majority all the data that I found come from searching the internet.


The data for this study will be collected from the questionnaire that provided by survey in SMK Datuk Menteri. These students are currently in form five and six in SMK Datuk Menteri, Ayer Hitam Johor.

The goal for this project was recruit a sample size of 100 students SMK Datuk Menteri. Out of 100 students participated, 92 total students completed the survey. All the data collected were analyzed by using SPSS Windows (Version 13.0). The researcher conducted descriptive analysis for easy interpretation of data. The researchers used cross-tabulation technique to study the relationship between variables. In all, the analysis used basic frequency, percentage calculation, mean, and standard deviation, T-test, ANOVA, Pearson's Correlation and Chi- Square to achieve the objective of the study.


The variables used in this study can be categorized into two main types which are; the dependent and the independent variables.

3.3.1 Dependent Variables

The dependent variable for this study is the Financial Literacy among Secondary School in SMK Datuk Menteri, Ayer Hitam, Johor. From this dependent I will study what can give a big impact in manage money in daily life.

3.3.2 Independent Variables

For this study, there are four independent variables was measured. There are the student background, financial attitude, financial knowledge and family influence. So, from this four an independent variable, we can found which one can give positive effect to financial literacy.


Below is the schematic diagram to show the relationship between the dependent and independent variables:

Figure 1: Schematic Diagram (Relationship Diagram)

Independent Variables Dependent Variables

Students' Background

Financial Attitude

Financial Literacy

Financial Knowledge

Family Influence


3.5.1 Multiple Linear Regression Model:

(Equation 1)


Ye = Dependent variable

= The constant number of equation

= Coefficient Beta value

= Independent variable which represent GDP

= Independent variable which represent Inflation

= Independent variable which represent Interest Rate

= Independent variable which represent Money Supply (M2)

= Error

3.5.2 Coefficient of Correlation (R)

By simple definition, coefficient of correlation (R) is to measure the linear relationship between dependent variable (X). The value of R is always lying between -1 and +1 no matter what the unit of X and Y. Its sign (negative or positive) indicates the direction of relationship between variables directly or inversely. If the correlation is -1, its shows that there is a negative inverse (perfect) relationship between the variable. Apart of it shows +1, it shows that there is positive (perfect) relationship between variable. In between, the SPSS software will acts as an instrument to obtain the value of R for each variable. The equation is to indicate two variables.

Rxy = COV (X,Y)


STDx*STDy (Equation 2)

Where ;

Rxy = Correlation between X and Y

COV (X,Y) = Covariance between X and Y

STDx = Standard deviation of X

STDy = Standard deviation of Y

The level of degree off the correlation of coefficient is expressed as:

R = 1.00 (perfect relationship)

R = 0.8 - 0.99 (very strong relationship)

R = 0.6 - 0.79 (strong relationship)

R = 0.4 - 0.59 (moderate relationship)

R = 0.2 - 0.39 (weak relationship)

R = < 0.2 (very weak relationship)

3.5.3 Coefficient of Determination (R2)

It is the test of goodness of fit. It is used to determine how well the regression line fits the data. R2 measures the proportion of total variation in the dependent variables. The higher the value R2, the higher explanatory power of the estimated equation and it is more accurate for forecasting purposes. Coefficient of determination represents the extent of changes in the dependent variables (financial literacy) that can be explained by the independent variables (students' background, financial attitude, financial knowledge and family influence). It determines how well that all the regression line fits the data. It is a number ranging from 0 to 1 (1 > R2 > 0) and it represents the proportion of total variation in the dependent variable that is explained by regression equation. If R2 show the value of 1, it indicates that all the changes in dependent variable used. It shows that there is a strong correlation between dependent and independent variables. But if the R2 shows the value of 0, it indicates that the changes of the variation in dependent variable do not explained by the independent variables.

3.5.4 T - Test

We are called on many times to determine if the mean performance of two groups is significantly different. Those two groups might be students, cattle, plants, or other objects. When attempting to determine if the difference between two means is greater than that expected from chance, the "t" test may be the needed statistical technique. If the data is from a normal population and at least ordinal in nature, then we are sure that this is the technique to use. If you wish to generalize to a population, then the samples must be representative.

"T" is the difference between two sample means measured in terms of the standard error of those means, or "t" is a comparison between two group's means which takes into account the differences in group variation and group size of the two groups. The statistical hypothesis for the "t" test is stated as the null hypothesis concerning differences. There is no significant difference in achievement between group 1 and group 2 on the welding test.


The hypothesis can be defined as a logically conjectured relationship between two or more variables expressed in the form of a testable statement. Relationship is conjectured on the basis of the network of associations established in the theoretical framework formulated for the research study. By the testing hypothesis and confirming the conjectured relationships, it is expected that solutions can be found to correct the problem encountered. Hypothesis serves as tentative predictions on expected outcome based on existing knowledge which is stated in such a way that you could either accept or reject the probability of the hypothesis.

Null hypothesis (H0) is expressed as no (significant) effect between two variables or no (significant) relationship differences between two groups of variables.

Alternate hypothesis (H1) is a statement expressing an effect between two groups of variables or indicating differences between groups.

For this study, there are four hypotheses that going to tested which as follow:

Hypothesis 1

H0: There is no effect between Students' Background and Financial Literacy

H1: there is an effect between Students' Background and Financial Literacy

Hypothesis 2

H0: there is no effect between Financial Attitude and Financial Literacy

H1: there is an effect between Financial Attitude and Financial Literacy

Hypothesis 3

H0: there is no effect between Financial Knowledge and Financial Literacy

H1: there is an effect between Financial Knowledge and Financial Literacy

Hypothesis 4

H0: there is no effect between Family influence and Financial Literacy

H1: there is an effect between Family influence and Financial Literacy


From this study, based on the data collection and data sources, will found the result for this problem. The result will show the relationship between dependent and independent variable. The result will found by using SPSS Window (Version 13.0). All the objective of study will achieve by analyzed using SPSS Window (Version 13.0).

Category: Financial management

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