Financial Behavior Learning to Grow Children’s Financial Literacy

Khofifatu Rohmah Adi and Fatiya Rosyida

Fakultas Ilmu Sosial, Universitas Negeri Malang, Malang, Indonesia

Keywords: Primary school, education, financial management.

Abstract: This research will discuss the implementation of financial management material in Ngadiluhur I Balen,

Bojonegoro Primary School. The research use descriptive qualitative approach and gain information from

school academics (teacher, principals, and students). Information obtained through in-depth interview. The

results show that financial management learning is very important for give student skill to manage money

efficiently in the future. Financial management better implemented in elementary school because can

provide knowledge and habits. This knowledge and habituation will provide understanding about the

benefits of money saving and spending.

1 INTRODUCTION

The free market that is being undertaken by almost

all countries in the world brings both positive and

negative impacts. One of the positive impacts as

well as the negative impact of free trade is the large

selection of goods and services offered to

consumers. It is said to have two effects because

there are many choices of goods or services offered

to consumers, then they can adjust the taste with the

choices available. In addition, it is also a temptation

for consumers. Temptation here means that if more

choices can encourage consumers to shop

excessively and tend to be impulsive. With

the support of the proliferation of online shopping

system, making the easier the buying and selling

activities. With this convenience again consumers

are required to be smart in spending the money. In

addition, consumers must also be able to distinguish

between the needs and desires so that they can

perform consumption activities in a rational

manner.

Some research indicates that people's

consumption behavior is not based on rationality,

their consumption is based on the preference and

purchase of goods done without any planning and

consideration of the benefit or its usefulness (Astuti:

2013). Another study conducted by Wahyudi (2013)

shows that the intensity of teens go to the Mall every

month tend to frequent, i.e. between 1 to 4 times

each month. This indicates that the behavior of

adolescents leads to consumptive behavior, because

most teenagers who visit the mall is not in order to

market their products but to shop. The results of this

study show little how consumptive behavior

becomes an integral part of people's lives.

This phenomenon is not separated from how the

behavior of children since childhood was formed. In

reality, primary school- age children have

difficulties in managing their personal finances. This

is evidenced by the allowance given to their parents

on average used up to buy food and toys. What they

want they have to have. They have not been able to

appreciate the value of the allowance.

If traced further, the cause is they are rarely

taught how to manage their own allowance. Parents

usually tend to only give pocket money. Parents

rarely teach children to manage finances and take

responsibility for their own finances. Its bias s it is

based on the premise that the duty of parents is to

provide for the child so that people are less likely to

reject the wishes of their children. Though unnoticed

parental behavior like this really does not make the

child become independent and better person.

Consumption activities, basically have a purpose

to meet the needs. This is of course different from

the consumption goals of modern society. Modern

societies are attached to the image consumerist

society not only consume limited for the purpose of

meeting the needs, will be but more than that,

consumption should reflect how a person. Meaning

values of a person become a very important thing so

that consumption becomes a culture.

The culture of consumption in society brings bad

impact to one's life. The irrationality of a person in

consuming can cause financial problems. Financial

Adi, K. and Rosyida, F.

Financial Behavior Learning to Grow Children’s Financial Literacy.

In Proceedings of the 2nd International Conference on Economic Education and Entrepreneurship (ICEEE 2017), pages 361-365

ISBN: 978-989-758-308-7

361

difficulties are not just a result of the absence of

income. However, financial difficulties can also be

caused by consumptive behavior and the inability of

a person to manage finances wisely. Financial

difficulties not only affect the individual, broadly all

aspects of the economy can also be affected. As

expressed by Zait and Patricea (2014) which states

that the financial education of a country (in terms of

knowledge, abilities and behaviors) can be crucial

for a healthy economic life, at the individual, or

multi-nation macro level. This widespread influence

makes education of financial literacy to be very

crucial. Financial literacy is an ability to manage and

manage personal finances. Remund (2010) explains

that financial literacy has five domains including 1)

knowledge of financial concepts 2) the ability to

communicate about money 3) Ability to manage

personal finances 4) Ability to make financial

decisions 5) Confidence to make financial planning

of the future. Financial literacy can help a person to

prosper. This is because a person can afford to spend

his money efficiently.

Education becomes an important factor in order

to teach behavior through knowledge and

habituation. Knowledge is clearly an important

component in financial decision making (Cliff,

2011). Knowledge of finance given to children is

useful to equip children in decision making in

consuming. The ability of children in decision

making will greatly affect the efficiency of resource

allocation. This can impact on welfare in the

future will come.

A person's behavior as an adult is determined by

how their habits are in their childhood. So it is

appropriate when we want to change a person's

behavior would be better by changing bad habits and

or doing habituation since early age. Child learning

from an early age will make children become

accustomed to their personal financial arrangements,

and children can also control themselves to spend

their money. Changing the child's behavior requires

support and cooperation both from the child's family

and the school's role.

Schools as formal educational institutions have

an obligation to shape positive behavior of

children. Education has an obligation to provide

skills and instill a noble character or character (Adi,

et al, 2016). This character can be either a good

behavior or a good attitude of the child. In an effort

to shape positive behavior related to

financial behavior, schools instil financial literacy

values. SDN 1 Ngadiluhur is one of many state

primary schools that instil financial literacy values in

the school environment.

Financial literacy is an ability that must be

owned by everyone. This is because financial

difficulties can lead a person toward a negative, such

as criminal behavior, low self-esteem, and

misery. Having financial literacy is synonymous

with being a savvy consumer. Personal financial

behavior is part of financial literacy. Personal

financial behavior can be established in elementary

school-aged children. Personal finance behavior is

the way in which individuals manage resources

(Money), including how they make decisions on the

use of funds, the determination of sources of funds

and decisions for the future. Research on the

learning behavior of financial management in early

childhood is still rarely done. This encourages

research to understand how to educate personal

financial management behaviors in primary school-

aged children.

2 METHODS

This study was designed using a qualitative

approach that is a study to reveal symptoms in a

contextual holistic through data collection by using

researchers as a key instrument. Informants are

school communities that include Principals,

Teachers, and Students. Information was obtained

through in-depth interviews at SD Ngadiluhur 1

Balen, Bojonegoro. Personal finance behavior as a

research variable has four indicators of

organizational behavior, spending behavior, saving

behavior and wasteful behavior.

3 RESULTS AND DISCUSSION

Financial literacy is a skill in using resources owned

efficiently so as to obtain maximum

satisfaction. This skill is very important to be

possessed by individuals in order to obtain the

welfare of life. Because of these benefits the literacy

education is very important to be given to children,

especially at an early age. Financial literacy

education as an ability, reading, analyzing,

managing, and communicating about personal

financial conditions that affect material well-being

(Vitt, et al, 2000)

The management of personal finance is part of

one's financial literacy. The financial literacy itself

actually has a much broader meaning. Personal

financial management is the way in which

individuals manage the sourceof their power ,

ICEEE 2017 - 2nd International Conference on Economic Education and Entrepreneurship

362

including how they make decisions on the use of

funds, the determination of the source of funding

and decisions for the future. Good financial decision

making is at the core of financial literacy. Because

good decisions related to resource allocation will

have an impact on efficiency. Personal finance

behavior includes the behavior of children in

organizing their resources, how their spending

behavior, how their savings behavior, and the

behavior of brand waste.

The increasingly competitive challenges of life in

an era where the state's boundaries are becoming

increasingly vague demands people to be able to

compete with others. Lifestyle trends are

increasingly leading to consumptive behavior

becomes a common phenomenon we encounter. The

worse the phenomenon of consumptive behavior of

society increasingly widened and lead to Criminal

behavior. It is reinforcing that financial literacy

education should be provided to children

from an early age. Characteristics of children who

are relatively easy to teach good values become the

basic reason why is taught to children. Similar

disclosed by Natty (2016) which states that children

have a characteristic that's a Ngat unique, where the

children have a desire to know something, and the

child still has the potential to be formed and

developed in accordance with their talents and

creativity.

Learning is a long process that involves various

human senses. Learning done by both parents and

teachers in schools has a goal to shape the child's

behavior. Sumarwan (2004) states that learning is a

process to gain knowledge and experience, this

knowledge and experience will result in permanent

change in attitudes and behaviors. Although personal

financial learning has not been included in the

school curriculum, it is possible for schools to insert

it in school. This is like the one done at Ngadiluhur

State Primary School where students are given

simple knowledge about finance .

Learning about financial management is essential

to improve financial literacy and financial ability.

Both component will greatly affect students in

making financial decisions. Financial literacy and

financial capability, are strictly connected with

financial education, which is considered to be the

solution to the problem of illiteracy. Financial

education program motivate individuals to develop

their skills and capabilities and a result, societies to

improve their level of literacy. (Kozup and

Hogarth, 2008; Williams, 2007: Frączek and

Klimontowicz, 2015)

Knowledge of finances is simply delivered by

the teacher through discussion with the child. For

example the discussion is related to scarcity. The

concept of economic scarcity may be very difficult

for children to accept, teachers convey the essence

of scarcity by explaining that children have a

relatively limited allowance, with the money they

can not afford to buy everything they want, so they

should take precedence to buy The goods they need

most. By giving examples of the events they

experienced, learning financial literacy became easy

to accept . Giving an example of this is done because

the mind-set of children aged primary school tends

to be simple and abstract.

In addition to providing knowledge, as a form of

learning, teachers also provide guidance to children

in spending their pocket money. This is done

because children are still unable to distinguish

between needs and wants. Conditions that occur

sometimes their money runs out just to buy a toy

that they only use once. Classroom teachers take

action by getting children to discussions, giving

them understanding of the benefits and

disadvantages if their money is bought toys. Though

at rest, they also feel hungry and thirsty so it is

necessary to buy food and drinks.

The way it is expected they can learn to take

decisions in spending their money, whether to be

used for the purchase of toys or food . Usually, the

teacher will provide an understanding that their

pocket money is limited and not all bus a they

have. Providing understanding will lead them to

make better decisions. Good decisions mean they are

more concerned with needs than desires. Making

financial decisions has become increasingly complex

task; consequently, people need to have knowledge

in various areas and a wide range of skills in order to

make informed decisions about financial

matters. They need to be aware of the potential risks

that accompany various financial choices (Elonge,

2013)

In addition to providing simple knowledge about

finance, learning is done by getting children to save

in school. As recommended by NCEE that in

financial literacy there is a proportion of income set

aside for savings. The savings can be used for the

future will come. Practice is directly done so that the

child can feel the experience of what is

taught. Saving activities can allow children to be

able to organize or manage the allowance provided

by their parents. They will study, setting aside their

allowance for saving. Child expenditure behavior is

indirectly controlled because not all of their money

can be spent. In school practice related to the

Financial Behavior Learning to Grow Children’s Financial Literacy

363

benefits of saving, children are given motivation to

get children to save. The motivation given by the

school is to plan a study tour that will be held at the

end of the school year .

Planting good habits in children is meant that

good values, practiced in good habituation can easily

be manifested in the child. Indirectly, the children

were asked to practice how to organize its own

finances and control spending. This of course will

make learning more meaningful because not just

theory.

The success of private financial management

learning is not separated from the support by parents

and the school. Parents as role models of the child

play an important role in how a child's character is

formed.Support of parents in the understanding of

the importance of saving in children make learning

can run smoothly. In addition, it provides

opportunities for children in terms of financial

decision-making, for example giving parents the

freedom in terms of the portion of allowance to save

also become important to support the success of this

lesson. However, there are still many parents who

have not involved their children in making decisions

related to their allowance. This is caused by the lack

of confidence parents to their children to be able to

manage their allowance for one day. So what

happens in the field of savings activities in schools is

mostly not a child who determines the proportion of

his allowance to save, but parents still play a role in

the decision.

4 CONCLUSIONS

Learning private financial management to foster

financial literacy can be done by providing

knowledge and doing good habituation. Financial

knowledge provided, among others, about scarcity

and knowledge related to needs and desires. Good

habituation is done by requiring students to save in

school and prioritize their needs first (related to

spending money, between food and toys)

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