ST. BLAISE COMMUNITY ACADEMY, INC.

SENIOR HIGH SCHOOL

Poblacion, San Luis, Batangas

ACCOUNTATNCY, BUSINESS AND MANAGEMENT (ABM) Page No. ii

CHAPTER 1

THE PROBLEM AND ITS BACKGROUND

The chapter discusses the introduction, theoretical framework, conceptual

framework, statement of the problem, hypothesis, significant of the study, scope and

limitation of the study and definition of terms.

INTRODUCTION

The ability of the entrepreneurship to be financially literate in managing the

financial concerns has been linked to the success of any small and medium companies

(SME). Entrepreneurs must understand how to run a business in terms of having

knowledge of accounting, costing, and budgeting. This is an addition to focusing on

efficiently acquiring, allocating, and distributing resources. Independent of the state of

the economy, business owners that are financially savvy typical succeed.

This paper examines previous efforts to promote financial literacy and discusses new

directions for such initiatives, highlighting the extent and effects of financial illiteracy in

San Luis, Batangas. None of the traditional approaches to financial literacy—employer-

based, school-based, credit counseling, or community-based—has produced strong

evidence that financial literacy efforts have had a positive and significant impact.

Nonetheless, the apparent success of financial planning efforts and simplification

initiatives suggests that there are private actions and public policy strategies that can

influence saving behavior. The private sector can play an important role in improving
 ST. BLAISE COMMUNITY ACADEMY, INC.
SENIOR HIGH SCHOOL
Poblacion, San Luis, Batangas

ACCOUNTATNCY, BUSINESS AND MANAGEMENT (ABM) Page No. iii

financial literacy, and the market is moving quickly to fill the void. The public sector can

play an equally important role by launching a campaign centered on a comprehensive

website and improving the coordination of existing policies geared toward saving. The

authors conclude that improving financial literacy should be a first-order concern for

policy-makers, and that gains could accrue not only to the affected individuals, but also to

their family members and society at large.

Entrepreneurs are renowned sources of innovation and growth but their ability to

achieve such outcomes is fundamentally intertwined with their ability to take correct

financial decisions. Despite the fact that financial literacy is arguably essential for

entrepreneurs to take such decisions, empirical evidence on this topic is scarce. This

chapter reviews the few academic studies that preliminarily investigate the degree of

financial literacy of entrepreneurs. More importantly, we highlight relevant avenues for

future research aimed at understanding how to measure financial literacy for (potential)

entrepreneurs, and what is the impact of such construct on entrepreneurial outcome.

Given the importance of entrepreneurship to ensure success development,

policymakers from all over the world have taken steps to create favorable conditions. To

create public policies, laws and initiatives more general, to guide the action of the

policymaker, it is necessary to know the phenomenon, its characteristics and how agents

respond to changes in the system in which they act. The above considerations lead to the

need for scholars to investigate the phenomenon of entrepreneurship and to provide the
 ST. BLAISE COMMUNITY ACADEMY, INC.
SENIOR HIGH SCHOOL
Poblacion, San Luis, Batangas

ACCOUNTATNCY, BUSINESS AND MANAGEMENT (ABM) Page No. iv

policymakers with the necessary indications for designing a more effective framework,

encouraging more entrepreneurial initiatives.

Therefore, the researchers came up with this study in order to be familiar in the

effectiveness of financial literacy in the success of entrepreneurs. The purpose of this

study is to provides the necessary knowledge, skills, and tools for an individual to make

informed financial decisions. Through the study, it also helps to determine a plan of

action that can be put into place to address every entrepreneur into their success.

STATE OF THE PROBLEM

The effectiveness of financial literacy in the success of entrepreneurs in San Luis,

Batangas. In the Senior High School Department of Saint Blaise Community Academy,

an Undergraduate Research Paper has been released.

This research paper studies the effectiveness of financial literacy in the success of

entrepreneurs in San Luis, Batangas. The researchers conducted interviews to gather data

for the study. The study used both quantitative and descriptive research to answer

important research questions.

1. What is the profile of the respondents in terms of:

1.1 Age

1.2 Gender
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Poblacion, San Luis, Batangas

ACCOUNTATNCY, BUSINESS AND MANAGEMENT (ABM) Page No. v

1.3 Civil status

1.4 Highest Educational Attainment

2. What are the effects of financial literacy in the success of micro-entrepreneurs in San

Luis, Batangas. In terms of :

2.1 Money Management

2.2 Credit Management

2.3 Debt Management

2.4 Risk Management

2.5 Investment & Retirement Planning

3. Is there a significant relationship between the profile of the respondents and the impact

of financial literacy among micro-entrepreneurs?

Q4. Based on the findings, what programs may be proposed to enhance the sale of those

micro-entrepreneurs in their marketing strategy?

HYPOTHESIS

There’s no significant relationship between the effectiveness of financial

literacy in the success of entrepreneurs in San Luis, Batanga

 ST. BLAISE COMMUNITY ACADEMY, INC.
SENIOR HIGH SCHOOL
Poblacion, San Luis, Batangas

ACCOUNTATNCY, BUSINESS AND MANAGEMENT (ABM) Page No. vi

CONCEPTUAL FRAMEWORK

INPUT PROCESS OUTPUT

These are profile of the respondents in

terms of:

1.1 Age

1.2 Gender

1.3 Civil status

1.4 Highest Educational Proposed program for

Attainment
 Survey
Questionnaire financial literacy in the
The following are the effects of financial  Statistical success of entrepreneurs
literacy in the success of micro-
analysis of data in San Luis, Batangas.
entrepreneurs in San Luis, Batangas. In
collected
terms of :
 Interpretation of
2.1 Money Management the result
2.2 Credit Management

2.3 Debt Management

2.4 Risk Management

2.5 Investment & Retirement

Planning

There’s no significant relationship between

the profile of the respondents and the
impact of financial literacy among micro-
entrepreneurs.

Based on the findings, there will be a

programs to enhance the sale of those
micro-entrepreneurs in their marketing
strategy
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SENIOR HIGH SCHOOL
Poblacion, San Luis, Batangas

ACCOUNTATNCY, BUSINESS AND MANAGEMENT (ABM) Page No. vii

FEEDBACK

Figure 1: Research Paradigm of the study

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Poblacion, San Luis, Batangas

ACCOUNTATNCY, BUSINESS AND MANAGEMENT (ABM) Page No. 1

The first box contains the input of the study such as the profile of the respondents

and Factors influencing the effectiveness of financial literacy in the success of

entrepreneurs in San Luis, Batangas. The age, gender, civil status and highest

education attainment. For factors influence we’ll have the money management, credit

management, debt management, risk management and investment & retirement

planning.

The second box shows the process of the study. It consists of data gathering that is

conducted using a survey questionnaire. It also consists the statistical analysis, data

collection, and interpretation of the result.

And lastly, in the third box is the output of the study. The researcher proposed a

program for the effectiveness of financial literacy in the success of entrepreneurs in

San Luis, Batangas.

 ST. BLAISE COMMUNITY ACADEMY, INC.
SENIOR HIGH SCHOOL
Poblacion, San Luis, Batangas

ACCOUNTATNCY, BUSINESS AND MANAGEMENT (ABM) Page No. 2

THEORETICAL FRAMEWORK

FINANCIAL FINANCIAL FINANCIAL FINANCIAL

KNOWLEDGE SKILLS ATTITUDES BEHAVIOR

Understanding The ability to use Readiness to use Behavior in

about the knowledge and
knowledge and specific situations
financial understanding to
economic skills on the financial
concepts and manage as

procedures as expected or an
in various market.

well as the use unpredictable financial

of this situation in order situations.
understanding to solve a financial

to solve problem and

financial convert it to a

problem. benefit and

opportunity to

one’s advantage.
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Poblacion, San Luis, Batangas

ACCOUNTATNCY, BUSINESS AND MANAGEMENT (ABM) Page No. 3

According to Mason and Wilson (2000), a financial literacy is a "meaning - making

process" in which individuals use a combination of skills, resources, and contextual

knowledge to process information and make-decisions with knowledge of the financials

consequences of that decision. From the definition given above, it can be concluded that

financial literacy is an individual decision making that uses a combination of several

skills, resources, and contextual knowledge to process information and make decisions

based on the financial risk of the decision.

Mandell (2009) defines financial literacy as “the ability to use knowledge and

skills to manage one’s financial resources effectively for lifetime financial security.”

Huston (2010) explains that financial literacy is made up of two elements: understanding

and use. Understanding financial literacy implies that a person is knowledgeable about

personal finance, and applies such knowledge in dealing with one’s finances.

Adding to this, in accordance with (Rashid, 2012). Financial literacy is about

spending and credit is how one can manage the spending. In that sense, there is the need

to be proper spending plan and maintain discipline to make expenditures in accordance

with the plans made. It can be such as how to buy something that is actually required or

necessary rather than only for fulfilling the desire. It is important to avoid a deficit; due to

avoid and prevent the deficit is the core of healthy spending. Meanwhile, credit concerns

about how the credit position correctly. The point is to position credit as a tool that is

healthy and not as excess cash to meet various desires misleading. The use of credit is
 ST. BLAISE COMMUNITY ACADEMY, INC.
SENIOR HIGH SCHOOL
Poblacion, San Luis, Batangas

ACCOUNTATNCY, BUSINESS AND MANAGEMENT (ABM) Page No. 4

actually intended to meet the needs and to their use should be tailored to the financial

capabilities.

According to Lusardi (2007) in research by Krishna (2008) financial literacy can

be defined as financial knowledge with the aim of achieving prosperity. It can be

understood that preparations should be made to meet the globalization, more specifically

in the field of financial globalization issues. Meanwhile, according to Houston (2010) in

research Widyawati (2012) stated that financial literacy occurs when an individual has a

set of skills and abilities that make the person is able to utilize the existing resources to

achieve the expected goals.

As for Otoritas Jasa Keuangan Indonesia (2013) defines financial literacy as the

level of knowledge, skills and confidence related to the financial institution and it’s

products and services, as outlined in the parameters or index measurement. Disclosure of

financial literacy index is particularly important in giving a view to the level of public

knowledge of the features, benefits and risks, rights and obligations as users of financial

products and services. Financial literacy is a basic need for every individual to avoid

financial problems. Financial distress is not only a function of income (low income),

financial distress can also arise from the errors in financial management (miss-

management) such as the misuse of credit, and lack of financial planning. Financial

problems can cause stress, and low self-esteem.

Furthermore, Rashid (2012) said that financial literacy occurs when an individual

is capable (literate) has a set of skills and abilities that make the person is able to utilize
 ST. BLAISE COMMUNITY ACADEMY, INC.
SENIOR HIGH SCHOOL
Poblacion, San Luis, Batangas

ACCOUNTATNCY, BUSINESS AND MANAGEMENT (ABM) Page No. 5

existing resources to achieve the goal. Skill (literacy) is an important thing to have for

achieving its objectives. Financial literacy is defined as a person's ability to acquire,

understand and evaluate information relevant to decision making by understanding the

financial consequences thereof (Carolynne LJ Mason and Richard MS Wilson: 2000).

The important thing to note here is that financial literacy only makes a person capable of

making decisions based on relevant information. Financial literacy does not guarantee

that the right decisions can be made. This is because someone does not always make

decisions based on rational economic (Wilson & Zhang 1997 in Carolynne LJ Mason and

Richard MS Wilson: 2000).

SCOPE AND DELIMITATION

The research work focused on the effectiveness of financial literacy in the success

of entrepreneurs in San Luis, Batangas. For better understanding the researcher thought

that it is essential to determine the profile of the respondents in terms of age, gender, civil

status and highest Educational Attainment. The researchers used the variables money

management, credit management, debt management, risk management, and investment &

retirement planning which are factors in the effectiveness of financial literacy among

micro entrepreneurs.

The data is gathered at San Luis public market and sari-sari stores nearby since

the topic is limited for the micro entrepreneurs in San Luis, Batangas. All of them will be
 ST. BLAISE COMMUNITY ACADEMY, INC.
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ACCOUNTATNCY, BUSINESS AND MANAGEMENT (ABM) Page No. 6

used as the sample for the survey. The researchers will provide questionnaire for each

participant.

The researchers concentrate their study on the most critical features of the topic

under consideration. The setting and research participants were chosen with the intention

of collecting questionnaire responses; doing so will help to clarify the study's focus and

improve its validity and relevance. This could serve as a guide for researchers as they

collect data. Moreover, factors such as the availability of resources and information, as

well as the preferences of students, are considered as well.

SIGNIFICANCE OF THE STUDY

The study of the researchers should be published since it has consequences for

future practice, research and policy. This could be used as a guide for micro-

entrepreneurs to help them manage their money wisely, make sound financial decisions,

and achieve financial stability in life. This study provides additional information about

financial literacy.

The study findings would be extremely beneficial to the following;

To the owners – this is study serves as reference of the owners, and co-workers

who will conduct similar research.

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ACCOUNTATNCY, BUSINESS AND MANAGEMENT (ABM) Page No. 7

To the Students – These findings, which are quite significant, could essentially

be used as a measure of potential entrepreneurs’ financial literacy abilities. As a result,

they may discover their passion while studying and become successful.

To the parents - This study would inform parents how important it is to empower

the next generation and teach them to handle their money wisely. Overall, financial

literacy affects everything from day-to-day to long-term financial decisions, and this has

implications for both individuals and society.

To the future researchers – the study serves as reference when they conduct

studies similar to present undertaking.

DEFINITION OF TERMS

EFFECTIVENESS – The term effectiveness is defined by Peter (2005), a

renowned management scholar, wherein Drucker defined effectiveness as doing the right

things, while efficiency was doing things right. He argued that an organization could be

efficient in achieving its goals, but if those goals were not aligned with the needs and

values of the environment or the stakeholders, then it was not effective.

FINANCIAL- the term financial is define by the Nobel Prize-winning economist,

Robert (1997). As the science that studies the valuation of assets, how they are

exchanged, and the risks they pose. In his book "Continuous-Time Finance," Merton
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emphasizes the importance of risk management in finance and how it affects the value of

assets.

FINANCIAL LITERACY- According to Robert (1997), the author of 'Rich

Dad, Poor Dad': "Financial literacy is not just a matter of understanding numbers; it is

also a language and a lifestyle." Kiyosaki emphasizes that financial literacy requires

people to develop a mindset that focuses on creating wealth, as opposed to just earning

income. He argues that financial education should emphasize entrepreneurial skills, not

just financial planning, to create a mindset of financial abundance and independence.

SUCCESS – The term success was defined by Maya (1928), an American poet,

writer, and civil rights activist, defined success in terms of overcoming adversity and

fulfilling one's potential. In her view, success is "liking yourself, liking what you do, and

liking how you do it." Angelou believed that success is not just about achieving goals but

also about having a sense of purpose and self-worth. She emphasized the importance of

perseverance and the power of positive thinking, stating that success is not limited by

one's circumstances but is determined by one's attitude and mindset.

ENTREPRENEUR- The term entrepreneur was defined by William (2003) as

the centered around profit maximization, stating that entrepreneurs are individuals who

pursue profit through innovation and risk-taking. Baumol sees entrepreneurship as a

critical component of economic growth and development.

FINANCIAL KNOWLEDGE
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ACCOUNTATNCY, BUSINESS AND MANAGEMENT (ABM) Page No. 9

FINANCIAL SKILLS

FINANCIAL ATTITUDES

FINANCIAL BEHAVIOR