SPENDING BEHAVIOR

According to Holland (2016) many college students are unused to managing money. One of the
biggest money challenges that they usually encounter is staying on top of what they are spending,
which means that they have a difficulty in controlling the way they spend.
Spending is an activity made by every consumer. It is part of the economic cycle, thus making it as
part of our everyday routine. People may acquire basic goods, even in leisure activities, and
miscellaneous expenses requires the use of money, which makes us spend, that is when it became
a habit. (Keynes, M.2015) considered consumer spending to be the most important determinant of
short-term demand in an economy. Pillai, R., Carlo , R., &D'souza , R. (2010)stated that attitude of
young adults toward spending plays a vital role in sustainability perspectives of their finance and
is a significant variable in financial prudence. Besides, adults with high financial literacy enable
them to decreases their chances of bankruptcy, receiving government assistance and making poor
consumer decision. Huston C. R., Leach, L. J., Turner, P. R., Bruin, M.J., & Lawrence, F. C. (2013).
Studies have shown different factors that can affect the spending behavior of individuals, and
these include demographic factors (Levenson, 2014), age,sex, ethnicity (Villanueva,
2017),qualities and learning or education (Norvilitis, et. Al, 2006).

SEX AND SPENDING BEHAVIOR

In a study conducted by Hayhoe et. al (2000 as cited in Villanueva, 2017), results show that there
is a strong influence of sex in spending behavior. Females tend spend on appearance goods like
clothing while males spend for electronics, entertainment and food. Females were also found to
exhibit more financial practices like keeping a written budget, planning spending and saving
regularly. This result was somehow contradicted by Roberts (2000 as cited by Villanueva,2017),
who claimed that females are more likely to exhibit spending behaviors, particularly compulsive
buying compared to men. It was supported by De Guzman (2011) who found out that female
students tend to spend huge amount of money on food and art materials while male students have
different kind of priorities. Male students also spend more on recreation and females spent more
on books and school supplies outspending males by 15% (Bailey, 2009)

SAVING AND BUDGETING HABITS

Kanting sechaba thobejane, Olawale fatoki (2017).In his study “Budgeting and spending habits of
university students in South Africa” examined if there is a significant gender difference in the
budgeting and spending habits of university students. The findings of the study show that the
majority of university students do not have a written budget. In addition. the majority of
university students spend on on groceries and fast food. Female students are more likely than
male students to have a budget.
Dr. Rekha Attri (2012), in his study “spending and saving habits of youths in the city of Indore” the
analysis shows there is a huge influence of peer group in the youth below 19 years while making
purchase decisions. A difference was also observed on the gender wise purchase behaviour and
their saving habits. The youth also does not believe in spending more on entertainment, gadgets,
eating out and personal grooming.

SPENDING HABITS
Student must prioritize their financial aid to right source to avoid reckless spending. In the ages
past, book stationeries, clothes, and other similar items for study were bought by the students. In
the present time, student’s needs have increased for sure, when laptops or desktops are needed
for assignments, hand phones and for some, transportation outside the basic necessities that a
student should be spending on. The advances in technology and viral trends also have led to
increases in student’s expenses. As the Malay saying goes, that new generation has habit of “Biar
Papa Asal Bergaya” meaning that new generation have the mentality of not minding to have no
money as long as they are following the trend and being up to date. Male students in particular are
attracted to buy gadgets that are known to be costly, while the females more likely spent on
shopping for make up, clothes, bags and shoes that are thought crucial, because they want to look
nice going to classes. (Shahryar Sorooshian & Tan Seng Teck, December 29, 2013).
Young adults often begin their college careers without ever having been solely responsible for
their own personal finance (Borden et al., 2008). It was also pointed out that the young generation
rarely practiced basic financial skills, such as budgeting, developing a regular savings plan or
planning for long term requirements (Birari and Patil, 2014)

SOCIO-ECONOMIC STATUS AND SPENDING BEHAVIOUR

Koc and Ceylan (2012) stated that consumers in lower status groups spend the biggest portion of
their income on food products. He added that the highest status consumers always check the price
labels of the food products with a high percentage (66.67%) before purchasing. A total of 77% of
study respondents stated that they were open to spend in trying new food products. Meanwhile,
consumers within the top socioeconomic groups consider food ingredients carefully before
purchasing.
According to Tew (2016), the spending behavior of students in modern times has emerged as an
essential concern in our society. He concluded that socioeconomic status issue influences the
spending behavior of the students.

IMPACT OF BUDGETING ON SCHOOL EXPENSE

The success and importance of budgeting relates to the identification of organizational goals,
allocation of responsibilities for achieving these goals, and consequently its execution (Shah, &
Robinson, 2007. Drake, & Fabozzi, 2010) It is one of the most successful and useful management
accounting techniques that can reap handsome rewards if properly understood and implemented
(Allaham, et al., 2012.). Students need to understand that their financial behaviour will affect their
future. If their current financial behaviour is poor, there is no guarantee that it will be better in
future if no action is taken. Students need to have well financial behaviour since it will have an
important impact on their future life and personal well-being. In order to do so, students should
empower their financial planning. They need to plan and budget their money on specific things
with priority by differentiate their needs and wants. This is due to the reason that poor financial
planning can lead to financial crisis, as mentioned earlier which will affect students’ future if it is
not solved. Joyce K.H. Nga, Lisa H.L. Yong and Rathakrishnan D. Sellappan (2010) said that
students nowadays are lacking of financial awareness in financial planning concepts. This can be
proven as previous research found that many college and undergraduate students in the UK, USA
and Australia possess low financial knowledge leading to high level of debts, risk of bankruptcy
and lacking retirement planning skills among young adults.
Personal financial management is defined as the set of behaviors performed regarding the
planning, implementing, and evaluating involved in the areas of cash, credit, investments,
insurance and retirement and estate planning. Xiao and Dew (2011) take into account the
personal financial management with regard to cash flow, credit, saving and investing
management. There are many studies in Vietnam before which examining only one dimension of
financial management behavior such as credit card (Nguyen and Lai, 2013; Vuong and Nguyen,
2013).

ETHNICITY AND SPENDING BEHAVIOUR

Ethnicity is an acquired and inheritable characteristic from a typical group. Seen along
these lines, ethnicity is viewed as a steady characteristic that has the capacity to influence one’s
behavior. Studies provide strong evidence for ethnic differences in spending behavior. In the study
of Villanueva (2017), it was proven that White Americans and Asians spend significantly more
than Black or African Americans and other ethnicities. It was also found out that the ethnic
identities had another difference at purchasing amounts of goods, especially on consumption
goods. Some research studies also support the argument that culture based spending behavior is
heavily influenced by ethnic identity and ethnicity (Intharacks 2017).

FINANCIAL KNOWLEDGE, AWARENESS AND LITERATYRE

The foundation of any ability or skillset is arguably the relevant knowledge and understanding
necessary to perform such tasks. While financial literacy is certainly an influence of money
decisions, the degree to which college students understand money is also a representation of
financial situations. Research indicates that most people agree that financial literacy is a
significant determinant of quality of life and future decisionmaking (Brougham, Jacobs-Lawson,
Hershey, & Trujillo, 2011). Despite this, college students, along with the general American
population, tend to score very low on tests of financial knowledge (Beierlein & Neverett, 2013;
Goetz, Cude, Nielsen, Chatterjee, & Mimura, 2011; Gudmunson, Zuiker, Katras, & Sabri, 2015;
Markovich & DeVaney, 1997). Financial awareness, as a side effect of financial literacy, is another
important factor that reflects college students’ financial circumstances. Research by Brougham et
al. (2011) found that, contrary to expectation, students are able to report figures such as their own
credit card balances. However, they struggle more with reporting broader economic facts such as
the current interest rate. Awareness also translates into financial optimism for the future. It’s
common for students to have an optimistic outlook on their future earnings potential and their
ability to pay off their debts. However, research shows that these perceptions counter reality
(Brougham et al., 2011).
FINANCIAL BEHAVIORS AND HABITS.
Research has revealed that college students are not very adept at financial management. Many
students lack the discipline of budgeting and are prone to overspending (Archuleta, Dale, & Spann,
2013). According to Brougham et al. (2011), compulsive buying tendencies, defined as the lack of
ability to control impulsive spending and irrational purchasing decisions, are identified more in
college students than in the general population. In fact, Brougham et al. found that the prevalence
rate for these tendencies among students is 6% to 15%, while the general public is estimated at
about 5.8%. Another aspect of financial behavior involves the reliance on credit cards. In 2010,
Sallie Mae reported that 84% of undergraduate college students had at least one credit card,
though the average number of cards students actually have is 4.6 (Gudmunson et al., 2015;
Leclerc, 2012; Robb & Pinto, 2010).
The fact that students possessing these credit cards also tend to have low income and tendencies
to spend irrationally is a formula that can lead to financial disaster (Archuleta et al., 2013; Goetz et
al., 2011). Researchers Roberts and Jones (2001) reported a surprising statistic that 62% of
incoming college freshmen already had access to a credit card, with 50.9% already possessing
credit card debt from their high school years. Savings, investments, and retirements are not
common terminology among common students. Many may not realize the importance of starting
these disciplines as early as possible. Yang and Lester (2016) published an extensive list of
statistics regarding whether or not students are engaging in these habits. They found that 91.3%
of students had a savings account, 28% of students had investments in stocks, 21% in bank
certificates of deposit, 9% in gold, 6.5% in real estate, and 6.5% in mutual funds. These numbers
may actually defy expectation when it comes to students investing their money. However, it’s
important to note that 91.3% of students may have a savings account, but that doesn’t represent
actual savings behavior.
Yang and Lester also found a relation between savings and investment behavior and student
perceptions. The older their expected retirement age, the less likely students were to be saving
and investing their money (Yang & Lester, 2016)
Brougham et al. (2011) found higher levels of financial awareness and lower rates of compulsive
buying among financially independent students, as they would face the consequences of their own
decisions. This implies that while student loan debt is harder for students, especially independent
students, to avoid, debts more closely related to personal choice are impacted differently by the
same variables.

PARENTAL INFLUENCE AND BACKGROUNDS.

Students who come from families with a higher socio-economic status, determined by factors such
as income and ownership status, tend to be less risky with their money and often have less need
for student loans (Javine, 2013).
Some research has also found that young adults from stepfamilies and single-parents households
are much more likely to accumulate student loan debt than students from two-parent households,
likely explained by findings that step and single-parent families do not contribute as much to
college expenses (Henretta, Wolf, Van Voorhis, & Soldo, 2012; Houle, 2014). Students from
advantaged backgrounds are often assisted by their families, reducing their need to borrow
money (Houle, 2014). High income parents are more likely to have saved for and more able to pay
for their children’s college costs (Choy & Berker, 2003; Steelman & Powell, 1991). Heller (2006)
found that merit-based financial aid is mostly offered to high-performing young adults from
socioeconomically advantaged families, suggesting that these students are further protected from
debt due to their access to such assistance (as cited in Houle, 2014).