Review of Related Literature

The following chapter provides an integrative review of the current

literature that will beused to create a context for the research to be completed.

This review is comprised of literaturethat is related to the conceptual

definitions of financial literacy, the financial literacy of collegestudents, the

gender differences found within, relevant college student development theory,

and asummary to combine the sections.

Financial Planning

Financial education is the process by which people improve their

understanding of financial products, services and concepts so they are

empowered to make informed choices, avoid pitfalls, know where to go and

act to improve their present and long term financial well-being. Financial

education programs should be encouraged to promote financial awareness

and encourage people to make better financial decisions (María, 2013).

Financial planning is crucial to effective financial decision making with respect

to budgeting, debt management, wealth creation, retirement planning etc.

Financial decision making requires the abilities to reason, retrieve information

and perform quantitative tasks regarding money (Tannahill, 2012). It is the

ability to make informed judgments regarding the use and management of

money and wealth (Gale & Levine, 2010; Holden, Charles, Laura, Deanna &

Beatriz, 2009). Financial planning provides people with clear and transparent

information to help them make the best decision to fulfill financial needs

(Panday, 2009). The extent to which financial behavior has effect on one’s
present and future life is important to financial educators, particularly as the

study of gender differences is limited. In order to understand gender

differences in financial behavior and outcomes, the way in which males and

females understand money must be examined. Several studies indicated that

positive financial behavior such as financial planning and budgeting are the

main component of one’s financial satisfaction (GarmanandForgue 2006; Xiao

2008) and conversely the frequent financial problems are a symptom of

economic insecurity.

Financial Decision Making Financial planning matters a lot for financial

decision-making. It stimuluses you to examine your current finances and long-

term goals, helping you to prioritize spending and investments to achieve

those goals (Voigt, 2018).Also, it provides people with clear and transparent

information to help them make the best decision to fulfill financial needs

(Panday, 2009). Financial planning is a process, not a product. It is the long-

term method of wisely managing your finances so you can achieve your goals

and dreams, while at the same time negotiating the financial barriers that

inevitably arise in every stage of life. In order to create a sound financial plan,

goals must first be established. Financial decision making is the process by

which people improve their understanding of financial products, services and

concepts so they are empowered to make informed choices, avoid pitfalls,

know where to go and act to improve their present and long term financial

well-being. Financial education programs should be encouraged to promote

financial awareness and encourage people to make better financial decisions

(María, 2013).
Money Management It involves five simple steps that allow you to identify

your budget’s potential and set financial goals for your personal budget. The

budget approach also allows you to create an active plan that can help you

reach your financial goals. It is a process of expense tracking, investing,

budgeting, banking and evaluating taxes of one’s money. A strategic

technique to make money the highest interesting-output, for your budget.

Knowledge of Financial Concepts The core of financial literacy is a basic

foundation and understanding of variousfinancial concepts and constructs. In

recent years, different organizations, national banks,government agencies,

and policymakers have been concerned that consumers lack a

workingknowledge of many different financial concepts (Braunstein& Welch,

2002). The problem maynot just lie with how individuals go about assessing

the knowledge that they possess aboutdifferent financial ideas, but rather with

having any working knowledge at all. As Remund (2010) states, “to effectively

manage money, one must first know something about money” (p.279). The

need for a functioning structure of financial knowledge can not only improve

anindividual’s groundwork on financial literacy, but it can also lead to that

individual making themost use of their situations and taking the steps that are

most advantageous to their economic well-being (Braunstein & Welch, 2002).

Skill in Making Appropriate Financial Decisions Similar to having an

aptitude for financial literacy, decision-making skills are just asmuch a

making skills are critical to effective money management. There are scholars

who describe financially literatepeople as those who “successfully manage

debt” while making decisions that take into accounttheir personal values

(Stone, Weir, & Bryant. 2008).The aforementioned examples bring forth the

ideals of ethics and integrity into theconceptual definitions of financial literacy.

One pair of scholars presents an even more practicaldefinition of financial

literacy. According to Kozup & Hogarth (2008) financial literacy is “also aset of

critical thinking skills, to weigh and assess the pros and cons of a particular

decisionrelative to one’s own personal needs, values, and goals” (Kozup and

Hogarth, 2008) not only seethe importance of having critical thinking ability as

an essential component of effective decisionmaking related to financial

decisions, but it also sets decision-making up as a core competency for

financial literacy.

Confidence to Plan Effectively for Future Financial Needs One of the

more noticeable advantages that scholars talk about when it comes to

personalfinancial literacy is the ability to plan for future unexpected scenarios,

and planning forretirement. However, when scholars do talk of these

advantages, they are only implying one ofthe many benefits of becoming

financially literate. One exception is from Wise Up (2008), whichis a financial

literacy program created by the U.S. Department of Labour that targets

generation Xand Y women. The program talks of responsible saving habits

being essential for thedevelopment of future retirement. David Bach (2008)

discusses how the first fact offinancial life to understand is that planning
ahead is important. One way to view these definitions relates to long-term

financial management just asdecision-making skills are synonymous with

short-term financial management. It is certainlypossible for an individual to

plan without making any drastic life changes or immediate decisions,just as it

is possible for an individual to make abrupt decisions without effectively

planning.Nevertheless, both skills are essential in the development of financial

literacy (Remund, 2010).The aptitude in making the appropriate financial

decisions as these decisions are viewed as the early responsibilities of

college students (Remund, 2010).

Students Financial Education Masud (2004), says that half of both the male

and female respondents agreed that they tend to enjoy shopping and

purchasing products. Higher percentage of male respondents says they hide

how they have spending habits from their families; also the male respondents

revealed that they have debt issues. Furthermore, their data shows that the

respondents have the tendencies of becoming involved in buying products in

an impulse and some are influence through sales and promos. His study

examines what kinds of financial problems students face. By knowing what

problems students encounter and it is possible for educators to offer a course

that teaches the financial skills necessary to overcome these problems.

Gender View This study is all about the people with financial issues, they

mostly have the habit of buying things, therefore it results on their financial

crisis. Some researchers says that the way the students of both gender

handle their finance depends on their level of financial literacy and behavior
towards spending their own allowances, which means some students uses

effective financial planning ways for them to save their money because of

their knowledge in finance. An example of this is stated by Danes and

Haberman (2007), their title "Teen Financial Knowledge, Self-Efficacy, and

Behavior: A Gendered View", Sexual orientation in contrasts were in financial

knowledge, self-efficacy, and behavior after studying a financial planning

curriculum. Females increased more learning using a loan, insurance, and

speculations, despite the fact that guys had more information entering the

course. Females accepted that overseeing cash influenced their future more

than guys, however guys felt more confident in making money decisions.

Subsequent to contemplating the educational program content, guys

announced accomplishing budgetary objectives more than females, though

females revealed budget plans, looking at costs, and examining cash with

family more than guys. In whole, male adolescents strengthened their existing

information, while female teens adapted fundamentally progressively about

accounts in regions in which they were new to before the educational plan.

Strong Evidence for Gender Differences in Financing There are

Laboratory studies that presents members with settings intended to mirror

investment behavior have by and large resonated a similar pattern of gender

related differences. One example of this is stated by Charness and Gneezy

(2012), discovered solid proof for gender differences in hazard inclinations.

The data collected was from a fifteen set of experiments with similar designs,

these trials were directed by variousanalysts in various nations. The

investigation of the genuine speculation conduct of the members yielded a

contrasted with men. In this way, the scientists inferred that females are

monetarily more risk-averse than males. This goes to show that the females

are reluctant to take risks than males.

Determinants of Financial Planning Classroom education has had a

substantial influence in the continuing development of students’ financial

socialization (Bartholomae & Fox, 2002). As children enter school, the

foundations of their values, beliefs, attitudes, expectations, and motivations

about money and gender have already been established through their

internalized norms (Moschis, 2008). Children obtain reinforcements or

contradictions to their internalized, gendered financial role patterns in school

as they learn more about money. Family is a social structure that shapes

experiences and meaning around gender and how each gender category

relates to money (Baca Zinn, 2001; Bowen, 2002; Hibbert, Beutler, & Martin,

2004). Gendered financial role patterns that are experienced over time

become internalized norms, and these norms influence children’s future

expectations and behavior (Greene, 2008). When gendered role patterns

become internalized, people often act on the beliefs, attitudes, and

expectations that undergird these patterns without being consciously aware of

them (Danes, 2017).