CHAPTER 1

THE PROBLEM AND ITS SCOPE

Introduction

Rationale One of the highly celebrated doctrines in Economics is the doctrines of intertemporal choice. In this context, the rationality of the person is not measured based on basic mental prowess but on his spending pattern. It is highly regarded as worthy emulating when one foregoes current spending in lieu of future choices provided the derived benefit is greater. However, no matter what mode of spending is adhered to, what dominates as a phenomenal event is the surging up of international prices of wide range commodities. A soar in price of the major needs of consumers is of special concern to the worlds economy particularly to developing countries like the Philippines. Even though Philippines is now one of the newly industrialized countries, thousands of Filipinos still becomes frustrated due to low standards of living in the country. An increasing number of the Filipino workforce leaves the country everyday to seize better income opportunities in order to cope with the recent crisis. In todays era, families financial management practices like saving, spending, budgeting, and borrowing are issues commonly discussed daily in every household. These issues arise due to the sharply rising of prices that threatens the stability of the family. Moreover, the increase in prices of commodities offers few means of substitution

and adjustment of personal finances through proper saving, spending, budgeting and borrowing. Many households do saving for their future needs and assurance of selfsufficiency. Through proper saving, everyone can get from where they are to where they want to be. Mainly in urban poor households, they usually borrow money for their daily consumption. The greater the amount they borrowed, the more chances of meeting financial problem. Many households reduce their borrowings through restriction of spending which is necessary to accumulate resources for future financial security. Minimizing the unwanted spending of every household can be done in the course of proper budgeting. Budgeting will not eliminate everyones financial worries but it helps develop and create decisions in managing money. As financial management students, this is basically the reason why the proponents conducted this study. This paper intends to explore the financial management practices of every household in terms of the following categories: saving, spending, borrowing, and budgeting. It further intends to study the differences of every households financial management practices in accordance with their economic classes. Through the conduct of this study, the researchers aim to gather the desired information that will point out the best financial management practices of the selected households in Tagbilaran City that may be used as a basis in attaining financial growth and stability.

THE PROBLEM

Statement of the Problem The primary focus of this study is to determine the financial management practices of the randomly selected households in Tagbilaran City in accordance with the soaring prices of commodities. Driven by curiosity, the researchers wanted to ascertain the views behind the following objectives: 1. The profile of household heads in terms of: a. Age b. Civil Status c. Gender d. Educational Attainment e. Number of members in every household 2. What are the financial management practices of every household in accordance with the following categories: a. Saving b. Spending c. Budgeting d. Borrowing

Significance of the Study In todays growing economy, financial management would be a great help to improve the economic status of the people and its nation. Acquiring new ideas about financial management and sharing it to the following sector may contribute a lot to go

beyond our limitations of thinking in terms of money management. It may provide practical practices in raising the level of our knowledge and behavior and leading us to become financially aware how prices affect the income of every household. Households. They will become more aware of the magnitude of their finances which correspond to the advent increased of prices of commodities over the years. They would also learn how to cope with this phenomenon while learning from their best practices. Business. Through this study, these firms and organizations will know the impact of the increasing prices of commodities on the behavior and practices of every household. Local Government. The government will be more aware on the situation of consumers today with regard to the increasing prices of commodities. This may open their consciousness to legislate and implement interventions in order for them to help ease the burden of every household regarding this. Researchers.During the conduct of this study, the researchers will learn about the proper management of money while enhancing their knowledge and skills in research. The researchers will likewise improve their interpersonal skills as they work in teams. Future Researchers. This study will be helpful for other researchers who may be focusing on understanding the concept of managing finances of every household in relation to other economic phenomena. The notable significance of this study is the possibility that other researchers may be able to use the findings of this study for future related studies that will create an impact to society.

Scope and Limitation This research will be conductedin the fifteen (15) barangays of Tagbilaran City to determine the financial management practices of every household wherein the prices of major commodities are rising. This is limited only to the four areas of financial management: saving, spending, budgeting, and credit management. The researchers will adapt a purposive sampling to find out specific correspondents. This study is using dwelling as the specific parameter. Furthermore, the result of the information being gathered from the selected respondents will be limited only to their willingness and honesty in answering the survey questionnaire.

RESEARCH METHODOLOGY This research will be conducted in order to determine how every household manages their finances when the prices of major commodities are driven up. In order to answer this research goal, the researchers opted to use the descriptive survey method with the assistance of a questionnaire which gathers information about the present existing condition.

Research Environment Tagbilaran city is the provincial capital of the province of Bohol: the hub of commerce and the lone city of the island. It is the principal gateway to the island province of Bohol and is known as the City of Friendship. Tagbilaran lies on the southwestern part of the province, and has a total land area of 32.7 km, with about 13 km of

coastline. It is composed of fifteen (15) barangays the Bool, Booy, Cabawan, Cogon, Dampas, Dao, Manga, Mansasa, Poblacion I, Poblacion II, Poblacion III, San Isidro, Taloto, Tiptip and Ubujan wherein the study coversto know the financial management practices of households in respect with their economic classes.

Research Participants Since the research is multi-stakeholder wise, specifically the researchers wanted to solicit reliable information from100 respondents which will be categorized based on the economic classes specifically on the general appearance of their house or dwelling units. The classes provided by the Research Center of Holy Name University are described as follows:

AB(Upper Class)

- Made of heavy high quality of materials, very well constructed, well painted, generally has a lawn or garden, located inexpensive neighborhood,

expensive furnishings C (Middle Class) - Made of mixed heavy and light materials, painted, well-constructed, may or may not have a garden, adequate furnishing but not necessarily expensive D (Lower Class) - Very light, cheap materials, poorly constructed, generally unpainted, generally has no garden, scanty furniture, located in shabby surroundings

E (Extremely Lower Class)

A barong-barong type of dwelling or one-room

affair in a poorly constructed house, dilapidated, bear with hardly any furniture, located in slim districts or interiors, no yard or garden

Research Instruments

The study will be using a group made survey questionnaire with two parts as a tool in gathering information. The researchers will distribute personally the questionnaires to the chosen respondents. The first part is for the respondents profile. The second part evaluates the type of financial management practices of the respondents. It will also adopt a structured interview to the affected consumers.

Respondents will be asked to answer the research instrument by writing the necessary data on the first part and by checking among the choices in the second part. Research Procedure Gathering of Data.The researchers will secure the number of households in Tagbilaran City from the City Hall. After identifying the number of households per barangay, the researchers will go to the selected respondents administering the questionnaire. Researchers will conduct a house-to-house visit to the identified class AB, C, D, E respondents basing from the economic classification. A letter of permission from the researchers will be sent to the Barangay Captains in Tagbilaran City that we will be conducting a research study in their community

concerning the consumers financial managem ent practices in relation to the rising prices of major commodities. Afterwards, the questionnaires will be retrieved for data analysis and interpretation. Treatment of Data.In determining the significance of date being gathered, Descriptive Measures specifically tabulated description (i.e., tables), graphical description (i.e., graphs and charts), and statistical commentary (i.e., interpretation of the results) will be employed. They were specifically use to identify the financial management practices of every household.

DEFINITION OF TERMS Financial Management Practices are habits on how financial matters will be managed and used. Household is a group of people who are related by blood, by law or either of the two and living under one roof which constitute a family. Behavioral Methods are analysis of individuals' actions to identify behavioral patterns as a result to a certain stimuli. Cognitive Methods are ways that focuses on how individual thinks and assesses in stressful situation.

THE FINANCIAL MANAGEMENT PRACTICES OF SELECTED HOUSEHOLDS IN TAGBILARAN CITY

MEMBERS: SARMIENTO, GEVIENA PINKY CAGOCO, CINDY MARIE EJERA, GRACE FLORES JUYAD, JECEL MAE POTANE, NHORIEN SARMIENTO, GEVIENA PINKY

DR. ERNESTO O. GOLOSINO CLASS ADVISER

MS. MARIE NOREEN MARCOJOS, MBA TECHNICAL ADVISER