lOMoARcPSD|27827034 BỘ TÀI CHÍNH HỌC VIỆN TÀI CHÍNH ---------- CÔNG TRÌNH NGHIÊN CỨU KHOA HỌC CỦA SINH VIÊN NĂM HỌC 2023- 2024 ĐỀ TÀI: “SOLUTIONS TO IMPROVE PERSONAL FINANCIAL MANAGEMENT SKILLS FOR ACADEMY OF FINANCE STUDENTS” Nhóm sinh viên thực hiện: ĐÀO THỊ THU HÀ - CQ59/51.01 KHỔNG THỊ NGỌC - CQ59/51.01 ĐÀM THỊ HẰNG - CQ59/51.01 KIỀU THU HUYỀN - CQ59/51.01 Người hướng dẫn: TS. Tạ Đình Hòa Hà Nội – 2024 lOMoARcPSD|27827034 DECLARATION We solemnly affirm that this scientific research project is the result of our dedicated effort and serious commitment. All information, data, and opinions presented in this research are the outcomes of the research, analysis, and inference processes that we have undertaken. We pledge to ensure the accuracy and reliability of every detail in the research.
Furthermore, we declare that this is an independent and innovative research work, not copied from any other source without proper citation. We adhere to ethical principles and rules of scientific research, and we will take full responsibility for the content and outcomes of this research project. lOMoARcPSD|27827034 ACKNOWLEDGMENTS lOMoARcPSD|27827034 ABTRACT As a university gate opens, many college students look forward to a time when they can pursue the great things that they desire independently. During their stay at university, they experience some degree of financial autonomy, they start to manage their expenses on their own for the first time and move from financial dependence to financial independence.
But young adults, who are inadequately equipped with the essential knowledge about personal finance, make many detrimental financial mistakes until they finally become smart and diligent financial planners. Therefore, it's vital that college students have the correct knowledge and motivation about personal finance when starting out in order to get control of their finances by making wise decisions and avoiding common pitfalls. Understanding these existing challenges, we have chosen the topic of personal financial management for Academy of Finance students to investigate and analyze more deeply. Through this, we aim to identify both strengths and existing limitations, and subsequently propose suitable solutions to enhance the financial management process for AOF students, leading to continual improvement and better outcomes.
Keywords: personal financial management, personal financial management skill, AOF students. lOMoARcPSD|27827034 TABLE OF CONTENTS lOMoARcPSD|27827034 LIST OF ABBREVIATIONS (Danh mục viết tắt) LIST OF FIGURES AND TABLES (Danh mục bảng biểu) lOMoARcPSD|27827034 INTRODUCTION 1. Rationale of the study The management of personal finances has become a topic of widespread societal concern, as everyone desires to spend wisely and achieve their specific financial goals. For students at the Academy of Finance, this topic is particularly pertinent because how they manage their finances reflects the practical application of the knowledge imparted in classrooms.
While some students adeptly utilize their money to meet personal needs and support their studies or work, there is still a considerable number who struggle with imprudent spending, accumulating significant debts in the process. Recognizing this reality, the research topic “Solutions to improve personal finance management skills for Academy of Finance students” is introduced. The aim of this research is to provide insights and effective solutions to enhance students' personal financial management skills. Additionally, the research delves into the application of digital technologies tailored to the current social context.
Aims of the study The main purpose of the research is to provide a comprehensive overview and detailed analysis of the personal financial management issues within the student community at the academy of finance. The study focuses on gaining a deep understanding of the current challenges that students at the academy of finance face when managing their personal finances. These challenges include monthly budget planning, debt management, smart investments and financial savings. In addition to analyzing the current issues, the research also aims to propose specific solutions (especially the application of personal spending tracking technology) and practical measures to enhance the personal financial management skills of students.
Scope of the study lOMoARcPSD|27827034 a. Research objectives The subjects of the research focus on students at the Academy of Finance in all majors and grade levels, from the first year to final year. Scope of the study The research is implemented in the space of the Academy of Finance, and the period is within 6 months, from September 2023 to March 2024. Literature review The landscape of personal financial management has been extensively explored through past studies, shedding light on crucial issues and contributing to our understanding of economic well-being.
Domestically, researchers have focused on the intricate interplay of economic policies, social welfare programs, and individual financial health. Investigations into the impact of educational initiatives and the rise of technology, such as fintech and digital banking, have shaped the discourse on financial literacy and accessibility. Internationally, cross-cultural studies have uncovered variations in financial behaviors, influenced by cultural norms, regulatory frameworks, and economic structures. As we navigate the dynamic realm of personal finance, current research topics extend to cutting-edge areas such as artificial intelligence, sustainable financial practices, and the global implications of digital currencies.
This comprehensive overview reflects the evolution of personal financial management research, from its domestic foundations to the exploration of international and emerging scientific frontiers. Methodology of the study The methods used in the research include data analysis (analyzing and clarifying factors affecting students' personal financial management), online surveys and information collection (collecting information and data about the current situation, results, limitations and factors affecting personal financial decision-making of students at the Academy of Finance). Organization of the study We have organized the rest of this paper in three chapters: Chapter 1: Overview of personal financial management skills Chapter 2: Personal financial management skills of Academy of finance students Chapter 3: Solutions to improve financial management skills for Academy of Finance students lOMoARcPSD|27827034 CHAPTER 1: OVERVIEW OF PERSONAL FINANCIAL MANAGEMENT SKILLS I. Financial management and personal financial management 1.
Definition of financial management The definition of financial management is mentioned by H. Kent Baker, Gary Powell (2009) as “an integrated decision-making process concerned with acquiring, financing, and managing assets to accomplish some overall goal within a business entity”. Jim McMenamin, on the other hand, provided the definition of this term as “the determination, acquisition, allocation, and utilization of financial resources, usually with the aim of achieving some particular goals or objectives”. Specifically, finance management can be understood as the process of “analysing financial situations, making financial decisions, setting financial objectives, formulating financial plans to attain those objectives, and providing effective systems of financial control to ensure plan progress towards the set objectives”.
Financial management, therefore, can be comprehensively understood as the intentional planning and managing of an individual or organization’s financial resources with the aim of facilitating their financial status to align with their goals and objectives. Kent Baker, Gary Powell - Understanding Financial Management: A Practical Guide (2009) Tác giả: Jim McMenamin-Financial Management: An Introduction 1. The Importance of financial management According to C. Paramasivan, finance is called as “lifeblood of business organization”.
Not only to companies, finance can also be the lifeblood of humanities since possessing a good financial background enables us to meet our basic needs. Hence, financial management acts as a pivotal contributory factor in the process of managing and pooling financial resources for both corporations and individuals, particularly in manifold aspects. Goal Alignment and Adaptability Financial management, first and foremost, plays a significant role in ensuring financial activities, especially expenses and spendings within a company or an individual’s budget are in accordance with the established budget. Resource Optimization and Efficiency Secondly, financial management, which is the process that encompasses planning and managing assets in an effective way, will be an optimal methodology to help both executives and individuals allocate their resources reasonably.
By continuously keeping track of every spendings, managers and individuals can ensure that their money and other categories of financial assets such as bonds and stocks are divided into different expenses according to their priority. Risk Mitigation and Planning Since financial management involves assessing risks and managing risks associated with financial decisions, businesses and people can identify beforehand potential threats and take proactive measures to alleviate or even avoid those challenges. Wealth Maximisation and Profitability Rittik Chandra (2013) states that “Wealth maximisation is the main objective of financial management”. Therefore, it can be understood that financial management can be utilized as a way to increase financial assets and profits generated by not only businesses but also individuals.
For corporations, the management of financial resources will aid in maximizing profits while minimizing costs by analyzing costs, identifying areas for cost reductions, and implementing strategies to improve profitability. In terms of individuals, wealth maximization encompasses strategic financial planning and taking practical actions towards that plan to achieve long-term financial goals such as homeownership, financial freedom, and retirement. Personal financial management 2. Definition of personal financial management Personal finance management is a term that refers to the management of an individual’s or a family’s financial resources.
Matewos Kebede, Dr. Navkihiran jit Dalhual Kaur, and Dr. Jasmeendeep Kuar (2015) defined that: “Personal financial management refers to the management of money in its various forms to ensure short and long term financial security”. Financial practice is also generally defined as “a set of behaviors in the areas of cash management, credit management, financial planning, investments, insurance, and retirement as well as estate planning” (Godwin, 1994).
These forms involve comprehending fundamental principles in finance and economics, such as interest and inflation, conducting calculations, diversifying risks, being familiar with financial products, and having the capability to select the one that aligns with one’s personal interests. Therefore, understanding and practicing personal finance management is vital in achieving financial stability and ensuring a secure future. The Importance of Personal Finance Management Personal finance management is crucial for individuals together with families to achieve their financial goals as well as security. In particular, good management of personal finance brings a multitude of benefits to people.
Financial Stability According to Schinasi (2004), financial stability at the macroeconomic level is defined as “Financial stability is a condition in which an economy’s mechanisms for pricing, allocating, and managing financial risks (credit, liquidity, counterparty, market, etc.) are functioning well enough to contribute to the performance of the economy”. However, regarding financial stability at the personal level, individuals attain personal financial stability when they are proficient in valuing, distributing, and handling financial risks in their lives. This involves making informed decisions about budgeting, investing, and handling credit to ensure a resilient and stable financial future. lOMoARcPSD|27827034 Competent management of personal finances typically fosters financial stability.
Through the establishment and adherence to a budget, individuals and families can meticulously address various aspects of their day-to-day and unforeseen expenditures, ensuring that their spending does not surpass their income. This crucial stability is fundamental for meeting basic needs, covering unexpected costs, and planning for the future. Goal Achievement Personal finance management encompasses the process of setting clear financial objectives, whether short-term or long-term together with steps to achieve these goals. These goals could include savings for a house, funding education, building an emergency fund, planning or retirement, which could be attained by establishing and adhering to a budget.
Through strategies such as automated transfers to savings accounts or investment in interest-bearing accounts, individuals can systematically build the financial resources necessary to reach their goals. According to O’Neill et al. (2000) “ Emphasize Automated Savings-Opportunities for payroll deduction and automated saving/investing (e., mutual fund automatic investment plans) are another resource for financial goal attainment.” Personal finance management, therefore, provides a roadmap for allocating resources and tracking progress toward achieving these goals. Debt Management Many individuals juggle various financial problems, ranging from student loans, credit card debt, or mortgages.
Proper personal finance management enables students to understand and manage debt responsibly. Effectively utilising personal debt reduction strategies such as debt avalanche, which means paying off debts with the highest interest rate first, or debt snowball (paying off the smallest balance first), debt consolidation, and refinancing will contribute to the improvement of personal financial health.