Research on factors affecting personal financial management skill evidence from vietnam

1 BANKING ACADEMY OF VIETNAM THEME TO PARTICIPATE IN THE COMPETITION "STUDENTS FOR SCIENTIFIC RESEARCH" OF BANKING ACADEMY SCHOOL YEAR 2021-2022 TOPIC: RESEARCH ON FACTORS AFFECTING PERSONAL FINANCIAL MANAGEMENT SKILL: EVIDENCE FROM VIETNAM In the field of: Finance Major: Financial Management Hanoi, June 6th 2022 Tai ngay!!! Ban co the xoa dong chu nay!!! 17014128954911000000 BANKING ACADEMY OF VIETNAM THEME TO PARTICIPATE IN THE COMPETITION "STUDENTS FOR SCIENTIFIC RESEARCH" OF BANKING ACADEMY SCHOOL YEAR 2021-2022 TOPIC: RESEARCH ON FACTORS AFFECTING PERSONAL FINANCIAL MANAGEMENT SKILL: EVIDENCE FROM VIETNAM In the field of: Finance Major: Financial Management Hanoi, June 6th 2022 DECLARATION We guarantee the scientific research project " Research on Factors Affecting Personal Financial Management Skill: Evidence from Vietnam " is our own independent scientific research The information and data analyzed and used in the research are honest, have clear origins, and are published in accordance with regulations Some of the conclusions in the study are inherited from previous studies, and some are new findings of the research group on the basis of research and analysis in an honest, objective, and suitable manner with reality Vietnam We take complete responsibility for this research ACKNOWLEDGMENT First of all, the research team would like to express their sincerest thanks to the instructor In the process of doing scientific research, we have received her enthusiastic guidance, support, and give advice She has helped the research team accumulate more knowledge not only in the field of scientific research but also improve many skills in life From the knowledge she conveyed, we have answered the questions on this research topic Scientific research is also completed based on references, learning experiences from related research results, specialized books, and newspapers of many authors at universities, research organizations, and political offices.… The research team would like to thank Banking Academy for organizing the contest "Scientific research students" in the academic year 2021-2022, creating conditions for students to have the opportunity to approach and apply scientific research to solve practical problem Sincere thanks to friends, and survey participants who cared, helped, and facilitated our team during the process of conducting this survey and doing this research Wishing everyone good health, happiness, and success in life! TABLE OF CONTENTS DECLARATION ACKNOWLEDGMENT LIST OF TABLES LIST OF ABBREVIATIONS INTRODUCTION Introduction Research rationale 11 Object and scope of the study 11 Objectives and research questions 12 Research method 12 Research structure: 13 CHAPTER 1: THEORETICAL BACKGROUND 14 1.1 Definition 14 1.1.1 Personal Finance 14 1.1.2 Personal financial management 14 1.1.3 The role of personal financial management 15 1.2 Personal financial management models 16 1.2.1 "Kakeibo" Notebook 16 1.2.2 The 50/20/30 Rule 17 1.2.3 JARS money management system 19 1.3 International experience in improving the efficiency of personal financial management 21 1.4 Hypothesized factors affecting personal financial management skills of young people in Vietnam 24 CHAPTER 2: RESEARCH ON FACTORS AFFECTING PERSONAL FINANCIAL MANAGEMENT SKILLS OF YOUNG PEOPLE IN VIETNAM 29 2.1 The reality of personal financial management of young people 29 2.2 Research model 30 2.3 Description of survey data 31 2.4 Evaluation model of factors affecting young people's personal financial management 35 CHAPTER 3: CONCLUSIONS AND RECOMMENDATIONS 43 3.1 Conclusion 43 3.2 Recommendations 45 REFERENCES 48 APPENDIX 51 LIST OF TABLE Table 2.1: Gender of individuals taking the survey Error! Bookmark not defined Table 2.2: Age of individuals taking the survey Error! Bookmark not defined Table 2.3: Education level of individuals taking the survey Error! Bookmark not defined Table 2.4: Marital status of individuals taking the survey Error! Bookmark not defined Table 2.5: Geographic areas of survey participants Error! Bookmark not defined Table 2.6 : Financial knowledge of survey participants Error! Bookmark not defined Table 2.7: Income of survey participants Error! Bookmark not defined Table 2.8 Variables of the model Error! Bookmark not defined Table 2.9 Model correlation analysis Error! Bookmark not defined Table 2.10 Model regression results for selected variables Error! Bookmark not defined Table 2.11 Impacts of the independent variables on the dependent variable Error! Bookmark not defined Table 2.12 Model regression results for influencing variables Error! Bookmark not defined LIST OF ABBREVIATIONS No Abbreviations Full names GMW Global Money Week OLS Ordinary Least Squared t-stat T-statistic INTRODUCTION Introduction Personal financial management is a relatively common concept in developed countries, but it is still a new concept in Vietnam, especially for today's young people The economic development of Vietnam is posing challenges to the financial management skills of each individual as well as of the whole community Today's generation is enjoying political and economic stability and development, completely different from the Baby Boomer generation (1946 - 1963) and Generation X (1964 1976), who are in the age of our grandparents, our parents They were born and raised when the vestiges of war were still there, the country had just entered the doi moi period with the economy slowly recovering, the politics were still young, and there were still many disagreements in society Different historical contexts have led to different conceptions and ways of life The harsh life during and after the war has formed the habit of calculating, being thrifty, spending planning for previous generations, and preparing to deal with unexpected situations While the stability of the new era and the affluent life allow young people not to focus too much on "protecting themselves" for the future Savings are often created for the purpose of serving short-term needs such as shopping and investing According to Dr Vo Dinh Tri, people often pay a lot of attention to investment or savings, but they have not formed the habit of tracking spending, without a specific plan, leading to excessive spending, and exceeding the norm Not knowing how to manage finances can cause many people to lose control and fall into crisis when struggling with loans Financial management plays an important role not only for individuals but also for the whole economy and society, everyone needs to know to orient well for their future When using their own money properly, each person can actively respond to risky situations in life without falling into a financial crisis Besides, the arrangement and planning of spending will contribute to the formation of a planned way of life for everything; promote the development of problem-solving skills, time management, money management, and risk management… Not only that, but good financial control is also a factor that helps each individual have a basis to approach good conditions in terms of education, health, spiritual life, etc The recent Covid-19 epidemic also had an impact on the trend of personal financial management, when everyone's income and investments were affected by the 10 epidemic People's consumption habits tend to be thriftier, limiting unnecessary spending Covid-19 took a heavy toll on the economy, but it also brought valuable lessons about how to manage personal finances The preparation of a reserve fund is also essential to deal with unexpected risky situations.Raising awareness and skills in personal finance will contribute to improving the quality of life of individuals in particular, and at the same time contribute to improving the operational efficiency of the financial market as well as the sustainable development of society in general Especially in the difficult context of the Covid-19 pandemic, personal financial management becomes even more important, helping young people to proactively deal with unexpected situations Today's young people have access to modern technology at a very early age, think more freely, and have more opportunities to access and improve financial knowledge and awareness They are the generation that plays an extremely important role in helping Vietnam's economy develop, and also an age where it is easy to access, update new things, and learn a new skill This gives them an active, comfortable life, doing their best, and also not hesitate to enjoy life and pamper themselves However, besides that, it will be faced with the problem of not controlling and balancing spending, having bad debts, or not having a risk reserve If young people are not equipped with adequate knowledge and financial management skills, young people can create risks for themselves.Therefore, it is very necessary to propagate awareness and improve financial management skills for young people today Many programs have been organized by businesses, authorities, and banks also focusing on young people However, not everyone knows how to set up reasonable financial management plans There are many factors that are believed to affect an individual's understanding and ability to manage finances, including both subjective and objective factors such as age, education level, etc For the above reasons, the research team chose the topic " Research on Factors Affecting Personal Financial Management Skill: Evidence from Vietnam " with the aim of identifying factors affecting the ability to manage the personal finances of young people in Vietnam, clarifying the impact of factors on understanding and action in financial management, thereby proposing solutions to raise people's awareness of the importance of personal financial management skills