Philippine Technological

Institute of Science Arts and Trade

RESEARCH TITLE:

Wise Asset Allocation: The Role of Assets and Liabilities in Enhancing

Financial Decision

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 Philippine Technological
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Chapter 1
The Problem and Literature Review

Finance is defined as “an art and science of managing money”. It recognize there exist

four distinct categories of finance: personal, corporate, private, and public. Personal finance,

which applies to everyone, is the most prevalent kind of finance. It focuses on how an individual

distributes and manages money, the application of financial concepts to financial choices made

for personal gain, a person’s ability to manage their personal finances, whether it be through

borrowing, investing, saving, or spending, demonstrates their level of literacy. Having financial

education, which includes understanding various financial ideas and possessing financial

abilities, is referred to as financial literacy (De Guzman & Reginalde, 2022).

Teachers and staffs are one of the most influential people in our society. They become a

role model of their students to set an example and assist them in becoming socially and

financially responsible adults by being financially literate and managing their personal finances

well. Unfortunately, a lot of teachers and staff lack financial management skills (Gade et

al.,2017).

For a number of reasons, it is crucial to examine the investing and saving practices of

teachers and staffs. First of all, it offers crucial data regarding teachers and staffs financial health,

which affects their job satisfaction and productivity. Second, as teachers and staffs include a

significant share of the workforce, their financial choices have an impact on the local and

national economies. A stable teaching staff is provided by wage and retirement benefit schemes

that take into account their financial behavior. Additionally, it draws attention to disparities,
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which supports efforts to achieve social and economic equality. Examining these trends is

particularly crucial since it offers a historical viewpoint that aids in spotting trends, problems,

and possible areas for intervention, promoting educators’ financial security and stability

(Sampigethaya et al.,2023).

When it comes to financial welfare for both individuals and households, saving can be

seen as a positive financial behavior. While short-term or emergency savings offer purchasing

power protection in the event of income shocks, long-term savings give people the chance to

engage in regular consumption throughout their lives (Mahdzan & Tabiani 2014).

Teachers can make more informed borrowing decisions if they have a better

understanding of money management, including investments, spending, and saving. Teachers are

more prone to take out significant loans to meet their everyday needs and wants, as well as to

raise their welfare and standard of life, if they lack the skills to manage savings, expenses, and

investments. Financial literacy training will improve teachers’ financial behavior by teaching

them to set away money for investments and savings after creating a carefully thought-out

budget for their expenses and needs. “Different financial literacy activities, such as seminars and

training, will assist teachers in making wise financial decisions and ultimately achieve individual

financial well-being and free to employ a solution of their own choice” (Abaya et al.,2021).

Asset

Asset highlight the significance of investing in teacher quality as a valuable asset in

educational financing. This study reveals that districts that invest in hiring and retaining good

teachers have better economic outcomes, emphasizing the relationship between asset

management and financial decision-making (Chetty et al.,2014).

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Liabilities

In personal finances, a liability is a debt you owe a lender, such as home mortgages,

student loans, car loans and credit card debts. A lack of budgeting and financial planning skills,

and the prevalence of informal borrowing, which makes them at risk of usurious loans, are

further contributing factors. Another factor that may have contributed to the teachers’ financial

troubles was the fact that many of their partners were unable to make enough money for the

family (Ferrer,2017).

Allocating Money

The final area of this study focuses on teachers and staffs practices in relation to their

financial stability. This involves investing in the stock market, contributing to a mutual fund

account, setting up an emergency fund in a bank savings account, and keeping emergency funds

on hand in case someone loses their job or anything unanticipated occurs. Debt repayment may

also fall under this category. Any additional payments made to lower principle and future interest

are seen as savings, even when minimum payments fall under the necessities category. Saving

increases alternatives, provides peace of mind, and makes it simpler for a person to save more

money. This study examined the spending patterns of the savings (Bante, 2023).

Financial Decision

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The crucial function that human capital management plays in the educational system and

makes the claim that teachers are a valuable resource that should be strategically managed and

invested in. According to their research, teacher effectiveness and student results can both

significantly improve with the implementation of effective human capital initiatives, such as

focused professional development. This connection shows how effective asset management can

improve financial decision-making in the educational sector (Gillies, 2015).

Financial Awareness

Financial stability in an increasingly globalized economy requires financial awareness.

The evidence identified shows financial literacy components, including financial awareness.

Thus, perceived knowledge is a key factor in decision- making since it affects financial

awareness. Individuals’ financial decision-making is influenced by their knowledge of financial

services (Khan, 2015).

Financial Capability

A more comprehensive idea, financial capability encompasses financial literacy, financial

conduct, and self-efficacy in terms of money (Shim et al., 2014). Additionally, it encompasses

financial habits, resources, access, and knowledge (Mottola, 2014). Financial capability is the

capacity to use relevant financial knowledge and engage in desirable financial behaviors to

achieve financial well-being. Moreover, financial capability refers to managing finances and

planning. Explained that financial capability is an individual’s knowledge and skills to

comprehend financial conditions and motivation (Priyadharshini,2017). In assessing financial

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capacity, they employed both subjective and objective financial literacy, as well as desirable

financial competence index, financial conduct, and perceived financial capability as indicators.

Financial Skills

Assessing a person’s level of financial literacy is made easier by one of the determinants

of financial literacy. The capacity to effectively handle money and wealth is known as financial

skills. The notion that financial skills are the capacity to make well-informed decisions in order

to minimize financial difficulties (Priyadharshini,2017). Research on financial literacy that is less

common has focused on internal factors. Via which customers learn financial and economic

abilities. These investigations seek to determine the elements that influence financial

performance and direct effective governmental financial strategies for better financial literacy

abilities (Riitsalu & Põder, 2016). According to Mien & Thao (2015), Financial literacy reduces

issues, helps one make wise choices, and more.

Theoretical Framework

The Life Cycle Hypothesis was first conceived in the 1950s by Franco Modigliani, an

Italian-American economist. According to this hypothesis, the way individuals arrange their

spending and saving over lifetime is explained by smoothing their consumption according to the

expected lifetime income. The implication of the life cycle model is that the average individual

accumulates less when he or she earns low incomes in early years, accumulates more at middle-

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aged ages when incomes are the highest, and draws down the savings at old age when incomes

decline. This theory connects to the study because it also deals with the management of assets or

what people own, and liabilities or what they owe to make smart financial decisions over time.

The Life Cycle Hypothesis emphasizes balancing money across life stages, just as the study has

pointed out effective financial management for stability and growth.

Figure 1: Conceptual Framework

The study made use of a conceptual framework that outlined the steps involved in

collecting data on the study’s variables and producing the desired results. The research process

was divided into five boxes, as depicted in the diagram above.

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Asset and Liabilities and Financial Decision is designated as the variable of interest in the

first box of the conceptual framework. The dynamics within Assets and Liabilities are

significantly influenced by this characteristic, which is essentially the basis of Financial

Decisions. The respondents, Teachers and Staffs of Philippine Technological Institute of

Science, Arts and Trade Central Inc GMA, Cavite are specifically mentioned in the second box.

Teachers and staffs are the focus of this study, and it will examine their experiences with Assets

and Liabilities. The third box ties to the preceding one by stating that the researchers completed a

researcher- made survey questionnaire meant to determine the relationship between the Assets

and Liabilities to the financial decisions of the teachers and staffs. The main instrument for

gathering data is this questionnaire, which enables the researchers to measure and examine the

experiences and performance indicators of the respondents. In the fourth box, the collected data

from all the responses are subjected to statistical treatment in search of patterns, correlations, and

relationships conceming Assets and Liabilities to Financial Decisions of the teachers and staffs.

This step within the method is significant as it transforms raw data into meaningful insights to

further support the conclusions drawn for the study. Lastly, the last box describes the conclusion

of the research as it narrows down to the relationship of Assets and Liabilities to Financial

Decisions of teachers and staffs. As the study analyses the statistical results, it is able to

determine how Assets and Liabilities influence the Financial Decisions of teachers and staffs of

Philippine Technological Institute of science, Arts and Trade and discovers how to make

strategies in mitigating them.

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STATEMENT OF THE PROBLEM

The main objective of this study is to examine the role of saving and investing money in

generating income among teachers and staff. To obtain the objective, the following questions

will be an answered:

1. What ways do teachers and staff allocate money?

2. How do teachers and staff budget finances?

3. How do teachers and staff overcome shortage or fund insufficiency?

SIGNIFICANCE OF THE STUDY

This study aims to improve wise assets allocation and determine the role of assets and

liabilities in enhancing financial decisions. The results of this study will benefit the following:

Future Researchers -The results of this study can be used by future researchers to enhance its

scope and gain a comprehensive understanding of teachers’ financial literacy and money

management practices.

Institution – This study will help institution to gain valuable insights and improvements of

financial policies and strategies. It developed skills and knowledge of employees to enhance

financial and community services.

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Staffs – This study will help school staff gain valuable knowledge by enhancing financial

management skills and improve budgeting resource allocation. It increased financial literacy and

awareness.

Teachers - This study will help teachers understand the right asset allocation and the way of

lowering risk. They will be able to determine the outcome of their investments and achieve their

financial goals.

SCOPE AND DELIMITATIONS OF THE STUDY

This study will focus on investigating the role of assets and liabilities in enhancing

financial decision-making within the Philippine Technological Institute of Science Art and Trade

at General Mariano Alvarez. This paper considered 50 respondents as a sample of this paper,

through standardized questionnaire. The purpose of this study is to investigate closely the

possible benefits that asset and liability management can offer to financial performance and

institutional decision making.

DEFINITION OF TERMS

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Asset assets can be liquidated or leveraged to meet cash flow needs. This flexibility allows

businesses to respond to market changes, fund new projects, or navigate financial challenges

effectively (Brealey et al., 2020).

Asset Allocation refers to the strategic distribution of an investor’s portfolio across various

asset classes such as stocks, bonds, real estate, and cash equivalents based on their financial

goals, risk tolerance, and investment (Malkiel, 2021).

Finance managing money, investments, and other financial assets is the art and science of

finance (Investopedia, 2022). Allocating and managing resources throughout time while

accounting for the risks and difficulties related to future events is the focus of finance (Brealey et

al., 2020).

Financial Decisions understanding psychological factors influencing financial decisions can

enhance decision-making processes. Behavioral finance examines how cognitive biases affect

investor behavior and decision outcomes (Shiller, 2022).

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Liabilities understanding liabilities is crucial for maintaining positive cash flow. By effectively

scheduling debt repayments, organizations can ensure they meet their obligations while still

investing in growth opportunities (Brigham & Ehrhardt, 2019).

Staffs School staff employees are those who help the school function on a day-to-day basis,

including operating the main office, performing vital behind-the-scenes tasks, assisting teachers

with students, focus on the financial literacy of employees in various industries also it highlights

current challenges related to saving and managing debt, it does not explore how staff members,

especially lower-income workers, historically made financial decisions (Tiongson et al.,2019).

Teachers teacher’s and staffs is the professional personnel directly involved in teaching

students, academic personnel, classroom teachers and special education teachers who work with

students as a whole class, in small groups, or in one-to-one teaching (Ureta, 2020).

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