According to existing literature review on personal financial literacy which has been discussed before, the theoretical framework of this study has been developed. The literature review increase our understanding on the issue of how well of the personal financial literacy among undergraduates and the key factors which affects their decisions.
The objective of this research is to investigate the personal financial literacy among undergraduates. The review of variables has been done in chapter two and this framework is divided into two parts which are independent variables and dependent variables. The dependent variable is the personal financial literacy. The independent variables are financial knowledge, financial attitudes, parental influences and peers influences.
At the end of the research, undergraduate students's financial knowledge level is defined and how well the respondents understand about the finance matters such as general financial knowledge, saving and borrowing, insurance and investments. Besides, the financial attitudes among undergraduates are defined regarding to their perception of money and finances. Parental influences are also one of the important factors in determining the personal financial literacy among undergraduates because parents always have great influences to their children. Furthermore, peers influences are also determined to know do the peer influence on the thoughts and actions of students towards financial issues.
In this research, the factors which affect the personal financial literacy among undergraduates is the main criteria and need to be determined. Therefore, the dependent variable is the personal financial literacy among undergraduates.
After recognized the significant variables which been discussed in previous literature review, the relationships between variable is introduced through the theoretical framework. Next, the relationship between independent variables and dependent are tested to check whether the relationships are accepted or rejected.
Financial knowledge: Chen & Volpe (1998) identified that undergraduates students lack of personal finance education have inadequate knowledge. This influences students and they fail to make correct decisions. However, students are more knowledgeable with the issues which they are familiar. Ibrahim, Rabitah and Zuraidah (2009) stated that students who have low personal financial literacy do not know how to manage their income and cause to unnecessary waste. This is can be explained due to the inadequate knowledge they have. Besides, Fletcher et al. (1997) conducted a personal finance workshop to evaluate the knowledge improvement among peoples and the respondents are able to make better decisions. Hence, the study comes out with this hypothesis:
H1: Financial knowledge has relationship on personal financial literacy.
Financial Attitude: According to Melissa, Susan and Janaan (2009), students appear have some of their financial strategic towards financial matters. The attitude of students affects them towards the spending or saving habits. Hayhow (2000) stated that credit cards have become more accessible among undergraduates. The positive attitude of students towards the usage avoids the unnecessary waste and debt. However, the negative attitude towards finance matters brings devastating effect on students and cause to worst decision. This lead to hypothesis below:
H2: Financial attitude has relationship on personal financial literacy.
Parental Influences: Annamaria, Olivia and Vilsa (2009) stated that personal financial literacy among undergraduates is strongly get influences by family background. This supported by Mandell (2008) statement which revealed that the personal financial literacy among undergraduates were disproportionately those whose parents had higher education. Children always follow parent's pattern and there is a statement from Robert Fulghum which is "Do not worry that your children never listen to you; worry that they always watching you". Brown et al. (1993) indicated that parents have effective influence on their child. Therefore, the hypothesis as below:
H3: Parental Influences has relationship on personal financial literacy.
Peers Influences: Duflo and Saez (2003) stated that the peer act as an important factor that affect individual's financial literacy. Mutchell (2006) also found that there was high fraction of the students answered they were consult by friends during the researcher addressed the question about how they make financial decisions. According to Jon (1999), peers act more influential at the product evaluation than parents. This is because students spend more time with peers when they get older especially in the study life in college. Hence, the following hypothesis:
H4: Peers Influences has relationship on personal financial literacy.
3.5 Sampling Method
In this study, convenient sampling is used to analyze the findings. Thus, the samples is from Multimedia University (Melaka branch) students and the data for this study is obtained from the samples of 130 students of different Faculty.
3.6 Data Collection Method
3.6.1 Primary data
Primary data source is the information that is obtained first hand by the research on the specific to that study. Under primary data collection, questionnaire survey is used to obtain the needed data. In this research, the questionnaire is distributed to undergraduate students of Multimedia University (Melaka branch). The information is collected as primary data sources for the study issue.
3.6.2 Secondary Data
Secondary data is an important data source for the research. The data is accumulated mostly through online information databases such as Emerald Insight. Besides, the information can be obtained through other internet sources such as Google which are used to collect some published information. The use of secondary data can be obtained quickly and there is some of the free access provided by the campus computer lab. This help to save the cost and time. The information also can be obtained from other resources such as newspaper, magazines and journals. Secondary data is important because it provide the framework to help researcher to complete the research.
3.7 Questionnaire Design
The questionnaire is design to understand the factors that affect the personal financial literacy among undergraduates. It is a set of questions that are being given out to respondents to collect primary data which generate answer for the study that are being conducted. It is an efficient data collection method and the results are referring to the respondent themselves.
In this research, the questionnaire started off with a brief introduction which explains the purpose of conducting the survey. After that, the questionnaire that is distributed to students for this study is divided into two parts.
Part one contains the questions which regard to the respondent's background. This part is seek to find out the respondent' s personal characteristic such as age, gender, race, income level, education attainment and others. Part two contains the questions which regard to the independent variables analyzes earlier in this research study. The financial knowledge and financial attitude among undergraduates is tested by several questions which related to finance matters. In addition, several questions are design to measure the factor of parental influences and peers influences which affect the personal financial literacy among undergraduates.
3.8 Data Measurement Scale
In this questionnaire, it is basically use two types of rating scales which are Nominal Scale and Likert Scale.
3.8.1 Nominal Scale
Nominal scale enables to assign subjects to certain group or categories. It measures indicate only that there is a difference among categories. For example, the question with variables of gender, the respondent can categorized as female or male.
3.8.3 Likert Scale
In this study, Likert scale is used for the measurement. Likert scale is designed to measure how the view of respondent towards the statement is. This scale is chosen because it has been widely used for previous researches to test the hypothesis. There are two types of Likert scale used in this research. One is rate the items on a scale of 1- 5 (1= not at all true of me and 5= very true of me). The other scale was applied as below:
1=Not important
2=Somewhat Important
3=Not sure
4=Somewhat Important
5=Very Important
3.10 Data Analysis Technique
To analyze research findings in this study, Statistical Package for Social Science (SPSS) is used to evaluate the relationship between variables. The data will be coded before transferred to the processing stage. SPSS is a computer program used for statistical analysis. Statistics included in the base software such as Descriptive statistics: Cross tabulation, Frequencies, descriptive, Explore, Descriptive Ratio Statistic, Bivariate statistics: Means, t-test, ANOVA, Correlation, Nonparametric tests, prediction for numerical outcomes: Linear regression. In this study, the descriptive statistics are designed to provide information about the distribution of the variables.
3.11 Chapter summary
This chapter started with the research methodology which included theoretical framework of independent variables and dependent variables. Following is the hypothesis development, sampling method, data collection method, questionnaire design, data measurement scale, pilot testing and data analysis technique. In this study, the data is analyzed by using SSPS version 18.0. There are some of advances statistical methods are used in this study such as correlation analysis, T- tests and ANOVA to examine the hypothesis and the independent variables which affect the personal financial literacy among undergraduate students.
