Philippine E-Journals

The Effect of Financial Literacy On Saving Patterns of Minimum Wage Earners in Malabon City

Pamela Yzabel G. Pahate | Romeo Mangahas

 

Abstract:

Achieving financial stability is a common aspiration, yet many struggle due to challenges in managing their finances effectively. The prevailing culture of YOLO (You Only Live Once) and FOMO (Fear of Missing Out) exacerbates this issue, encouraging short-term spending over long-term saving. This is especially prevalent among minimum wage earners, who face the daily struggle of meeting basic needs amidst rising living costs. Financial illiteracy further compounds these challenges, with a decline in financial knowledge amplifying the risk of poor financial decisions. This study explores the impact of financial literacy on the saving patterns of minimum wage earners in Malabon City, Philippines. Utilizing quantitative methods, data was collected from 214 respondents through a survey questionnaire. Analysis revealed insights into the respondents' financial knowledge, behavior, and attitudes, as well as their saving patterns and perceptions of banking. The findings indicate that while financial literacy does not significantly influence overall saving patterns, specific components such as financial attitude demonstrate a strong correlation. Respondents exhibited a cautious approach to spending, prioritizing financial education and long-term planning. However, challenges such as limited income and lack of trust in banks hindered optimal saving behavior. Demographic factors, particularly education level, were found to have a significant impact on financial literacy and saving patterns. Higher education correlated with increased financial literacy and more effective saving strategies, highlighting the importance of education in financial management. Recommendations are provided to empower minimum wage earners in improving their financial literacy and saving behavior. Strategies include promoting positive financial attitudes, enhancing awareness of banking services, and integrating financial literacy education into formal curricula. Future research should explore the broader implications of financial literacy on diverse demographic groups and geographic regions. By addressing the root causes of financial insecurity and fostering a culture of financial empowerment, individuals can better navigate the complexities of personal finance and work towards long-term financial well-being.