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

21 1.4 Hypothesized factors affecting personal financial management skills of young people in Vietnam .... Besides, the arrangement and planning of spending will contribute to the format

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 6 th 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 6 th 2022

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 3

ACKNOWLEDGMENT 4

LIST OF TABLES 7

LIST OF ABBREVIATIONS 8

INTRODUCTION 9

1 Introduction 9

2 Research rationale 11

3 Object and scope of the study 11

4 Objectives and research questions 12

5 Research method 12

6 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 6 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 PERSONALFINANCIAL 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

INTRODUCTION

1 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

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 do 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

2 Research rationale

There have been many foreign studies on personal financial knowledge, but it only stops at the research on the factors affecting theoretical knowledge, there have not been any thorough studies on the factors that affect personal financial management in general In general, most of these studies find a positive relationship between demographic factors such as age, gender, place of residence, income, education, etc., and knowledge and ability to manage personal assets Ibrahim and Alqaydi (2013); Robb and Sharpe, (2009) have investigated the relationship between personal financial management behavior and financial knowledge Another study by Kharchenko & Olga (2011) also shows that the main factors affecting financial literacy in Ukraine are gender, education level, occupation, region, and wealth level Many studies have shown the importance of gender when arguing that men are better

at financial management than women such as AI-Tamimi & Hussain (2009), Arrondel

et al (2013), Koenen & Lusardi (2011) There are also other studies that have concluded that place of residence affects the understanding of personal finances Cole

et al (2008) show that Indian students living in rural areas are found to be more financially savvy than students living in urban areas In addition to factors of individual characteristics, researchers show that factors about family circumstances such as parents' education level, parents' occupation, and family's economic situation are also important, have an impact on students' financial literacy (Mohamad, 2010; Nguyen Thi Hai Yen, 2014; Yap et al., 2016) Murphy (2005) found that students from well-educated families are more financially savvy and that regularly exchanging financial knowledge with their parents strengthens students' perceptions of financial literacy Cordero and Pedraja (2016) conducted a study to find out whether the implementation of intensive courses on basic financial concepts

in schools had a significant effect on the students' ability to apply knowledge and skills to real financial situations Factors that affect personal financial literacy will also partly affect a person's ability to manage personal finances Cordero and Pedraja (2016) conducted a study to find out whether the implementation of intensive courses

on basic financial concepts in schools had a significant effect on the students' ability

to apply knowledge and skills to real financial situations Factors that affect personal financial literacy will also partly affect a person's ability to manage personal finances

3 Object and scope of the study

Research subjects: Are the factors affecting the ability to manage personal finances,

including demographic factors such as age, gender, marital status, education level, income and image influenced by these factors

Research scope:

Content scope: The topic studies the theoretical bases of personal financial

management, some financial management models, and hypotheses about influencing factors, which offer some solutions and recommendations

Geographic scope: The research team selected the majority of young people living,

studying, and working in Hanoi to conduct the survey, and a small part of the survey questionnaires was divided into a number of people living in rural areas to expand the scope of the study

Time scope: The study was carried out from December 2021 to April 2022 The

research team conducted the official survey from March 10, 2022, to March 25, 2022

4 Objectives and research questions

The objective of the study is to assess the current situation of personal financial management of young Vietnamese people, and assess the factors affecting financial management, thereby making suggestions and recommendations to help improve the effectiveness of the personal financial management of young Vietnamese In order to achieve the above objectives, the topic focuses on answering 3 questions:

(i) , What is the current situation of young people's personal financial management in Vietnam today?

Vietnam today?

ability, helping individuals manage money effectively?

5 Research method

5.1 Data collection method:

Secondary data used in this study are collected from books, reports, and websites and refer to previous research articles on the topic of personal financial management Primary data was collected by the research team by distributing questionnaires to research subjects in the form of an online survey through Google form The number of votes issued was 250 votes, the total number of responses was 213; and after a ballot filtering procedure, the number of responses that were reliable and included in the analysis was 203 (approximately 95%)

5.2 Methods of data analysis:

Data was entered, processed, conducted, and statistically analyzed through Microsoft Excel 2016 software This study includes steps of descriptive statistical analysis, and reliability checks Cronbach's alpha and analysis by the regression model

Descriptive statistics are coefficients that succinctly describe or summarize a given data set, which may be representative of the whole or a sample of a population Descriptive statistics are divided into mean statistics and frequency statistics (Hayes, 2022)

Frequency statistics are often applied to qualitative variables, in this study the

variables on demographic characteristics, sex, age, location, etc., including the Frequency columns (showing the frequency of each group), Percent, Valid Percent, and Cumulative Percent The results of frequency statistics help us to evaluate the structure of each qualitative variable

Average statistics are used to assess the general opinion of survey subjects with Likert quantitative questions with 5 levels including the research sample size, the minimum value of a variable, the maximum value of a variable, the mean value of a variable, and the standard deviation of the variable The average statistic is just a general description of how much the survey subject's rating is on the scale used

Cronbach's Alpha coefficient will have a variable value in the interval [0,1] The higher the Cronbach's Alpha coefficient, the greater the reliability of the scale However, if Cronbach's Alpha coefficient is too large (above 0.95), there will be an overlapping phenomenon in the scale, that is, there is no difference between many variables in the scale (Nguyen Dinh Tho, 2013) The scale is considered a good measure when the value of Cronbach's Alpha coefficient is in the range from 0.8 to 1; coefficients in the range of 0.7 to 0.8, the scale is good to use; coefficient of 0.6 or more, the scale is qualified

6 Research structure:

Chapter 1: Theoretical background

Chapter 2: Research on factors affecting personal financial management skills of young people in Vietnam

Chapter 3: Conclusions and recommendations

CHAPTER 1: THEORETICAL BACKGROUND

1.1 Definition

1.1.1 Personal Finance

Personal finance is the activities that occur in life with the appearance of money All financial decisions made by an individual including income, savings, insurance, and debt are considered personal financial activities (Rubing, 2017) Personal finance is the application of financial principles to an individual or family's money and the process of planning and managing expenditure activities such as income, savings, investments, and insurance and meeting the individual's financial goals including short-term and long-term goals Therefore, personal finance plays an important part for individuals or families, so it is necessary to use it properly and most effectively

In personal finance, money is often referred to as income, spending, savings, insurance, and investments (Kenton, 2022) Income is the foundation of personal finance It is the inflow of money, which individuals derive from various sources such

as salaries, pensions, income from real estate, or investments The opposite of income Expenditure is the cash outflow that individuals use to pay all the expenses they have Savings includes all the money from income instead of being used for spending that is kept to prepare for the future Investing is a different definition from saving While savings is the amount of income after deducting expenses, investment is a purchase and sale from which individuals can earn income or savings The investment will include activities that bring good returns such as stocks, bonds, real estate Insurance

is something that protects individuals from risks such as financial risks, risks in daily life Insurance can protect the individual or the objects he or she has an eye on from difficult events in the future (Russ, nd)

1.1.2 Personal financial management

To use income and savings in the most optimal way, it is necessary to have reasonable management and spending plan A person can manage personal financial activities through financial planning All financial plans depend on income, spending, needs for life, and personal desires, thereby shaping a plan that is suitable for each individual's financial ability Financial management will help individuals control their expenses over a certain period of time When you know how to manage your finances,

individuals will know their daily expenses, because if you don't know what you're spending, you won't be able to manage your money When gradually controlling the source of money, individuals should consider the goals set What are the short, medium, and long-term goals? and long term and which one to focus on the most There are many different tools and methods of financial management, but most methods apply a common theory which is to divide income into small amounts The intentional division helps individuals know how much money to spend on each intended goal Planned spending is a good way to prepare for long-term goals Making a spending plan requires meticulous personnel, weighing between goals to decide how much money to use for those goals Avoid spending too much on yourself and don't have a budget for other more important goals When managing finances, individuals will also be more proactive in unexpected situations because they have been prepared financially in advance Strict financial management helps limit borrowing or control borrowing more When financial division is reasonable and investment plans are planned, the number of assets of individuals will also increase compared to unmanaged

Today, people have higher incomes than previous generations, but the amount

of knowledge about money management has not kept pace (Thulasimani, 2015) Therefore, to be able to manage finances optimally and effectively, knowledge of financial management is a must Understanding personal financial management is an important skill in today's modern life Financial management skills are not only a skill but also an important tool to create a free financial life According to Noctor et al (1992), financial management literacy is the ability to use and manage money based

on accurate predictions and sound decisions The minimum requirements for financial management are the ability to keep track of cash flow and payment obligations, know how to open a savings account and apply for a loan, and have a basic understanding of health insurance and personal insurance

1.1.3 The role of personal financial management

Managing personal finances in daily life helps us to lead a comfortable life with security in the future The importance of financial management is present in all areas

of an individual's life Every individual, whether strong or weak financially, must learn and study financial management and adapt it to improve life (Munohsami, 2015)

Personal financial management helps to improve living standards, and better health by reducing some of the stress Besides, it also allows individuals to make better decisions, reduce debt, and increase savings and investment (Munohsami, 2015) Financially savvy people take the initiative to solve financial problems effectively and responsibly based on their knowledge of all aspects of finance (Beal & Delpachitra, 2003) Individuals with knowledge of financial management will know how to organize and allocate funds according to the importance of the goals they want to achieve Understanding financial management helps consumers limit mistakes in making spending decisions, as well as make the most of financial resources Individuals with knowledge of personal financial management will know the importance of financial management in daily life Understanding personal financial management helps each person have a less stressful life, will not have to go through a life that only raises children and works until old age Instead, individuals will have many important life goals that they want to achieve, and they are willing to achieve them with the allocation of costs and available savings and investments

Many of us young people tend to have little knowledge of personal financial management, only defining the importance of financial management but not doing it Young people have a low and unstable income, so a strict financial plan helps them worry less about expenses and focus more on future plans Moreover, there are a lot of exciting fun activities for young people, if they can't control their own spending, their life will be more difficult and more stressful In short, every individual must know the importance and benefits of managing their personal finances, helping them lead a free, stress-free life and secure their future

1.2 Personal financial management models

1.2.1 "Kakeibo" Notebook

Kakeibo, in Japanese, is a traditional household spending book In this notebook people can freely write down a spending plan for themselves or for their whole family Moreover, Kakeibo is designed to help people think and understand why they are making each purchase (Bergen, 2021)

The way to manage money according to the Kakeibo Notebook helps the essential and basic needs to be met, as well as bring a comfortable life Besides, the Kakeibo Notebook also helps users to easily adjust to achieve their money saving goals and future plans

The idea of this particular method of money management came from the first female journalist in Japan - Mrs Motoko Hani In 1904, Mrs Motoko Hani published the first spending book designed specifically for housewives (Harvey, 2020)

According to Bergen, users can learn Japanese people to use Kakeibo book to manage their expenses easily, with the following simple steps:

Step 1: Build a ledger: It is necessary to record the incomes and expenditures that will

definitely be deducted every month – for example, house rent, electricity, and water bills, etc After recording the receipts and expenses daily, users will be able to clarify the actual spending

Step 2: Determining monthly savings for future financial intentions and goals: It is

necessary to determine a realistic level, as well as to follow the discipline to not use this savings in the short term

Step 3: Dividing spending into four main categories:

- Needs: Spending on daily necessities: Important items spent for living, moving, working, eating, or treating illness when having illness

- Wants: Spending on selectable items: Communicating with friends, daily coffee, entertainment, shopping These spending activities serve the needs of spiritual life, personal interests, love and/ or relationships

- Culture: Spending on culture, skills, and spirit: Investing in cultural and intellectual development with the habit of reading books, listening to music, buying magazines to serve the needs of understanding, and searching for information

- Unexpected: Spending on unexpected expenses: Expenses for weddings, parents' birthdays, visiting sick people, etc or necessary items to maintain family and social relationships

Step 4: Based on the information about the expenditures have been classified

specifically, starting to make financial commitments, cut unnecessary expenses or reduce them to save money

Step 5: Summarizing the Kakeibo notebook at the end of the month to evaluate the

spending for that month Expenditures are quite clear, helping each person to assess their spending and income From there, users can balance and adjust their spending decisions more appropriately

1.2.2 The 50/20/30 Rule

The 50/20/30 rule is mentioned in the book: “All your worth: The ultimate lifetime money plan” published in 2005, and introduced by Senator Elizabeth Warren

Group of essential needs – accounting for 50%:

In this group, 50% of the income is deducted for essential needs and critical activities

to live, study and work, such as expenses for food, housing, travel, electricity and water bills, important relationships… (Society One, 2021) In this group, the basic needs of each person are almost the same- basic and indispensable People need to plan and manage their spending for these essential needs, so that their total spending

is no more than 50% of their income However, in case the money spent on the essential group is more than 50%, it is critical to review the expenses, cut down money spent on unnecessary activities, or adjust to cut 5% of each job

Group for savings and investments – accounting for 20%:

The amount of 20% of income will be used for future savings, combined with profitable investments This is a necessary part to ensure a monthly amount to accumulate for users' future and long-term purposes Saving is a necessity that people, especially the young, need to start implementing and creating good habits to ensure a safe future The money should not be left entirely in a savings account A part of the money should be deducted to invest profitably in some ways to diversify sources of income or to increase income (Whiteside, 2022)

Groups for personal desires and preferences – accounting for 30%:

This is the last spending group that people should think about after having established the two groups above Spending on necessities can't be overlooked, saving money and reinvesting are important, but catering to personal needs and preferences is also a great thing Modern life needs such as travel, shopping, entertainment, extra learning for personal interests, reading books, personal passions need to be nurtured to build

a good spirit to work effectively This demand group makes up 30% of the total

income because it is quite flexible with many tasks and needs of each person

1.2.3 6 JARS money management system

The recipe of 6 jars - This money management method comes from the famous and best-selling book “Secrets of Millionaire Mind”, introduced by T Harv Eker, which is a relatively simple and effective system that works for everyone (Trang, 2021)

By applying this method, people will know the sources of money in and out and separate what is needed and which is to save From there, individuals will be able to make reasonable spending decisions for themselves, to have more financial freedom

To successfully manage money and move towards financial freedom, the first thing to

do is to plan how to use the money earned wisely When applying the “6-Jar” rule, each person's money will be divided into 6 financial funds (or jars) Each jar has a name and serves a different purpose

JAR 1: Necessities - NEC (55% Income):

Necessities (NEC) helps people to meet the essential needs, daily activities of life such as: eating, living, paying bills, groceries, taxes, transport, expenses of rent, etc This is the jar that accounts for the highest percentage of their income It basically includes anything that a person needs to live, the necessities Thus, the advice is, do not take any money from this jar for other purposes or activities Sometimes people may find it difficult to maintain their life within the 55 percent, but they need to follow this rule in a strict way to decrease unnecessary spending Besides, it also shows that if a person is using more than 80% of his/ her income for essential expenses, he/ she needs to increase the total income or change his/ her lifestyle or cut down spending (Trang, 2021)

JAR 2: Long Term Savings - LTS (10% Income):

People use this long-term savings (LTS) for big, long-term goals like buying a car/ a house, having a baby, chasing dreams Having a LTS fund will help people see their purposes, chase for them, and have an incentive to gradually save for them This jar is also very critical when people get retired so “do not bother, save now and spend later” (Peach, n.d.) Moreover, it is important that people start saving as soon as they receive the income, thereby avoiding spending this money One of the easiest and most effective ways to save is to use online installment savings products (Trang, 2021)

JAR 3: Education Funds - EDU (10% Income):

People need to deduct 10% of their income for further study and knowledge

improvement People can use this educational fund (EDU) to buy books, attend courses, training, and share meetings from successful people An investment in education is an investment in themselves The effect of this account is to help people constantly develop their own capacity, thereby generating more income If users are satisfied with their current level of education, spend this jar for their children’s university (Trang, 2021)

JAR 4: Enjoy - Play (10% Income):

Saving and reaching financial security is significant, however, people should not forget to have fun To truly reach financial freedom, the spirit must also be happy (Smedra, 2021) That’s why users should set aside a small amount of the total budget

to spend on Play, such as enjoyment, luxury shopping, trying new things, enhancing experiences, This expense helps people to be motivated to work better In addition, the “PLAY” fund needs to be consumed continuously If people don't use up their PLAY funds, it means that they may be losing their life balance and not taking care of themselves enough (Trang, 2021)

JAR 5: Financial Freedom Account - FFA (10% Income):

Financial Freedom Account (FFA) is when people have the life, they want without having to work or financially depend on others This is the jar containing the money

in people’s investment plan The goal of this jar is to help people have an outside income that doesn't depend too much on their main job When using the FFA, users can participate in any investment plan they want, for example, activities that generate passive income such as savings, investment, business capital contribution Or people can spend this amount of money on the Three Pillars of Wealth: real estate, businesses, and the stock market (Peach, n.d.) Users do not need to deduct any money, do not mess up their life, do not give their headaches about money rotation, simply because they have a reasonable budget for the investment they have made in advance This way, people have created a goose that lays golden eggs to use when no longer working It is noted that users should never spend money in this fund

JAR 6: Charity Funds - Give (5% Income):

This is the money people use to do charity, help the community, relatives, friends, accounting for only 5% of people's earnings If people have more to pay for, reduce this percentage, but always take part to help others When people share their wealth with the less fortunate, they will be rewarded in kind by the universe (Smedra, 2021) After considering carefully, our research team decided to follow Harv’s method - the

“6 Jars money management system” since this is the most widely used money management method, a lot of people have followed this method, or at least heard of it once before Harv successfully taught over 1.5 million people through his online courses on how to freely manage finances through his method (Karim, 2017) Moreover, the 6 Jars System has a higher success rate because it establishes the consistency in each person's savings habits This method gives people a tangible way

to track their expenses and know where the money is spent monthly In addition, it also helps to highlight unnecessary spending that reduces the long-term targets (Smedra, 2021) Thus, our team would like to evaluate the competence of people, especially young people at the age of 18-34, of managing their money based on the "6 Jars money management system"

1.3 International experience in improving the efficiency of personal financial management

There have been many campaigns built and organized on a global scale, helping to raise awareness as well as behavior and financial management skills of young people

Global Money Week is a global awareness campaign organized annually This

campaign is about the importance of making sure that young people, since an early age, have awareness of finance and gradually acquire the knowledge, postures, skills, and behaviors needed to make the right decisions related to financial issues, and finally achieve financial resilience and financial well-being GMW takes place for one week in March every year, coordinated by Child & Youth Finance International (Child & Youth Finance International, 2013), has taken place in 80 countries with more than 1 million children participating GMW encourages children around the world to unite their voices, take action and expand their knowledge and participation

on the financial issues that matter most to them Through national and global events, young people learn about how to create livelihoods, get jobs, and even start their own businesses Central Banks, the Ministry of Finance and Education, NGOs, schools, corporations, professional bodies, and the media all participate in the organization of GMW events

The week is filled with activities like visiting stock exchanges or banks to learn about how they work In addition, young people can also participate in seminars, directly exchange, and talk with central bank governors Debates on financial education, and employment issues that help young people gain new perspectives and

knowledge on financial issues “Build your future, be smart about money” is the official theme of Global Money Week 2022 This theme not only encourages young people to look to the future but also encourages GMW participating organizations to think about the future when planning GMW 2022 activities, for example, providing flexibility to address issues such as sustainability or the digitization of financial services

During GMW, a worldwide event conducted between the 10th and 17th of March and organized by the World Economic Forum in 2008 to encourage financial literacy, 1287 new young participants were introduced to the 'I Can Manage My Money' program

Since 2009, the Turkish Ministry of Development has collaborated with the United Nations Development Program (UNDP), Habitat Center for Development and

Governance, Visa Europe, and member banks on the project "I Can Manage My

Money" which aims to train 20.000 young people and reach a total of 200,00 people

The outcome of the project and the results of the impact analysis will be presented to the government as a policy suggestion on financial literacy The initiative will support youth socioeconomic empowerment and will make a substantial contribution to the implementation and achievement of UN Youth Policies and Millennium Development Goals Budgeting, financial planning and management, personalizing credit cards, loans, good credit standing, and the effects of financial awareness on sustainable development will be taught by trainers to members of the National Youth Parliament's Training and Coordination Group and two representatives from each local youth council As a result, the initiative will form a task force of 320 young volunteers in 64 cities across seven geographical areas

Through a peer education model based on volunteering, this program focuses

on financial literacy and budget management for young people aged 15 to 30 The project trainings aim to enable young people to prepare a payment schedule by focusing on cash flow and budgeting, savings and debt; develop a budget; differentiate between compulsory and luxury consumption; compare fixed income with compulsory expenditure; prepare a debt repayment schedule; understand the economic role and functioning of the finance industry and its products; understand the regulations concerning consumer financial rights and obligations; develop principles for healthy financial behavior for self and family and strengthening financial consumer protection The initiative also intends to include financial literacy classes in

secondary school curricula across the country (Child & Youth Finance International,2014)

In Turkey, a recent research study commissioned by Visa Europe yielded some intriguing results According to this report, 97 percent of young people make major financial decisions without seeking advice from a professional 87% of them are not saving for near-term financial needs such as education, transportation, and housing Only a small percentage of individuals who do save maintain their money in the banking system This shows that young people have a poor level of financial knowledge Prior to the course, 56% of the participants said they were informed about personal finances However, following the training, this number jumped to 84 percent, indicating that the program had a beneficial influence on participants' perceptions (VISA, 2011) As a consequence, 84 percent of young people who attended the program are aware of their monthly spending, 75 percent have adopted a regular budgeting discipline, 87 percent stick to their budgets, and 62 percent keep a regular record of their spending patterns 75 percent of participants said their banking transaction knowledge had improved, 84 percent said they can now tell the difference between wants and needs, and 74 percent said they now understood savings and financial instruments

Besides these activities, there are also some countries that have experience in financial education for children from an early age The research team gives two typical examples of Japanese and Jewish children in orienting their children's financial thinking from an early age to illustrate international experiences in terms of financial education

In May 2021, Prudential Vietnam conducted a qualitative study on the perceptions, reality, and concerns of Vietnamese parents when teaching their children about money Traditional parent groups say that teaching children to manage money

at a young age is not as important as learning culture Parents often tend to manage money for their children, apply high discipline when teaching children to manage money, and do not let children spend money early (Le, 2021) However, contrary to this way of teaching, parents in Japan teach their children to spend money from an early age, in order to want children to understand the value of money and manage their own spending accordingly Japanese parents give their children spending money once at the beginning of the month, if they accidentally spend it all, they will not be given any more Therefore, from the very beginning, the children had to learn how to

calculate and spend appropriately in 1 month Japanese parents will guide them to record their monthly expenses, how much are they given? What do you want to buy? How much? … (UMIT, n.d.) Let the children self-organize what is worth buying and not worth buying so that next month's spending will be more reasonable In addition, Japanese parents also have a method that if their children aspire to a certain financial- related plan, they are forced to work to receive remuneration and accumulate to achieve the money needed for that plan So, from an early age, children learn how to manage their personal finances, and as they grow up, they still have to apply financial management methods like the Kakeibo manual to ensure the management of their finances managed effectively, making their lives more stable and fuller

Jews are said to be some of the most creative and intelligent money managers

in the world (Khanh, n.d.) Research has shown that managing money is one of the hardest things in life Once you know how to properly manage money, all other things

in life will be easier to handle Therefore, the Jewish people have had ways to teach their children to use and manage money very early and very special They also believe that money is not something that stains the child's soul Giving children early exposure to money will be very helpful in fostering their entrepreneurial skills Jewish families also let teenagers imitate their parents in managing bank accounts to help their children better prepare for their future lives When children are 10-12 years old, Jewish parents help their children open a separate account in their name at the bank with a certain amount of money Hence, children can experience their parents carrying out banking procedures Since then, they have been more responsible for their account Parents also inform family members about their spending situation, helping their children understand how they need to manage family finances (Khanh, n.d.)

In addition to teaching their children to use money scientifically from the age

of 8-9, Jewish parents also encourage their children to work for pocket money such as doing housework, helping at the grocery store, cleaning, and running a business … the Jews also teach their children to manage assets according to the “five jars” principle, dividing money into different amounts to manage closely There have been many Jewish billionaires such as George Soros, and Warren Buffett who succeeded partly because they inherited wealth management skills from an early age

1.4 Hypothesized factors affecting personal financial management skills of young people in Vietnam

Many studies have found a relationship between personal budget management

skills and factors Demographics such as gender, ethnicity, course, and current residence of young people are factors that have a great impact on personal budget management skills (Chen and Volpe, 1998; Servon and Kaestner, 2008) ; Xiao et al., 2008)

First, gender differences have also been noted in many studies on personal budgeting skills Although society has progressed, ensuring equality between the sexes, there are still significant differences in the way each gender manages money Men and women have different preferences for spending and saving Men tend to be more confident in their financial knowledge and more open to risky investments Compared to men, women tend to be more cautious and weigh the potential costs more carefully Men tend to shop more practically and efficiently They are not influenced by labels or brands but focus on the effectiveness of the product or service, thereby limiting unreasonable spending Research by Danes and Hira (1987) and Hayhoe et al (2000) showed that the practice of financial behavior has differences between men and women, female students are more likely to set a written budget, plan their spending, keep bills, receipts and savings more often Similarly, Davies and Lea (1995) found that male students were more likely to have debt than female students

Hypothesis 1: Gender affects personal financial management skills

Research by Robin Henager et al on financial literacy and long-term and short- term financial behavior in different age groups have concluded that in older age groups, different financial knowledge is more strongly related to longer-term financial behavior (Henager and Cude, 2016) Another study by Haiyang Chen et al showed that lower levels of financial literacy were found in subgroups that included non- business majors, at lower ranks, women, under 30 years old, and having little work experience Research on age differences in financial decision-making has examined age differences in financial decisions (Chen and Volpe, 2002) A few recent studies

by Agarwal et al (2009), Bartley (2011), and Sinha (2018) again show that the group

of people between the ages of 18 and 24 have the lowest financial literacy while the group with the highest financial performance is between the ages of 53 and 55 years old

Hypothesis 2: Age affects personal financial management skills

There have been a number of studies in the world that have shown a close relationship between the level of financial literacy and the financial management of

each individual Remund (2010) states that "Financial literacy is a measure of understanding of basic financial concepts and ability and confidence to manage personal finances through decision making make reasonable short-term informed decisions, make long-term financial plans, and live responsibly or with regard to life and changes in economic conditions" It is easy to see those successful people who have a background in finance always have a very clear plan Not only do they make plans at work, but they also have reasonable plans and methods of spending Improving financial literacy will improve financial decision-making, which in turn leads to an improvement in an individual's ability to plan and manage their lives Financial literacy is particularly vital, according to Hogarth (2002), since informed and educated consumers make better decisions for their families, improve their economic security and welfare, contribute to important, thriving communities, and encourage community economic development

Hypothesis 3: People who have studied or learned about finance are better able to manage personal finances

According to Laura Levine, executive director of the JumpStart Coalition, the best opportunity to improve the money management skills of today's youth is through financial education at school, after school, and at home (Financial Literacy Society,

2006, pp 1-2) Texas Democratic Representative Ruben Hinojosa stated: “Personal financial literacy is essential to ensuring that individuals are prepared to manage money, credit and debt, and to be productive workers.” responsible, householders, investors, entrepreneurs, business leaders, and citizens (Financial Literacy Day, pages 1-2) Breitbard (2003) found that spending and saving habits form early and that the best way to tackle personal financial problems seems to be through education, which begins in kindergarten and continues through the end of grade 12

Hogarth (2000) expects that educational attainment is positively related to personal savings Higher education means that people have a better understanding of personal finances, and therefore, they have a better ability to make financial decisions and plan their finances for the future Alessie (2011) also pointed out that those with the lowest financial literacy scores are in the group with primary or secondary vocational education, and those with higher education and higher education are among the group with the highest basic financial literacy

Hypothesis 4: Education level has an effect affects personal financial management skills

The Consumer Finance Survey found that couples with children under the age

of 18 had the highest median household income ($67,900) in 2007 of all households, including single household with or without children under the age of 18 (Bucks, Kennickell and Mach, 2009) A family's net worth is the sum of all of its assets minus any liabilities it may have Married households tend to have the largest net worth The economic power of married families differs dramatically from divorced families, living together, and single families, according to wealth formation data

Wealth accumulation also occurs at a much higher rate in married families Married households experienced $3,000-17,000 more net worth growth (within two years) than other family structures, according to data from 1992-2006 (Zissimopoulos, 2009)

The median household wealth of married Americans ($132,000) in 1994 was nearly four times higher than that of unmarried Americans ($35,500) and divorced Americans ($33,670) (Lupton and P Smith, 1999) This shows that married people have a better ability to accumulate assets as well as better manage their finances, save and invest

Hypothesis 5: Marital status affects personal financial management skills

In most cases, poor households' earnings are insufficient to meet their fundamental needs Financial assistance is frequently required of poor families This may put you at risk of being financially reliant on financial institutions or payday lenders, which could in turn lead to excessive indebtedness (Mashigo, 2006) Having

a higher income will make it easier for them to allocate investments and savings Moreover, the high level of income also supports actively learning about financial management and personal financial solutions

Hypothesis 6: Income affects personal financial management skills

Financial in rural areas is often limited due to the lack of infrastructure and the presence of financial institutions This indirectly hinders local people's access to personal financial management Research has shown that urban households plan and execute personal finances more specifically in rural than in rural areas Rural and urban households are financially savvy, however urban households are slightly more financially savvy than rural households (Gade and Sarma, 2018) According to a study

on financial sustainability of youth from rural areas in the Visegrád Groups shows that, although the development gap between modern urban and rural areas has decreased, along with the increase in the educational attainment of rural youth, as well

as changes in their attitudes and aspirations to live, students from non-urbanized areas

in the Visegrád Groups still have a lower level of financial literacy than those in cities (Szafrańska, 2019)

Hypothesis 7: Living area affects personal financial management skills