IMPLEMENTATION OF FINANCIAL LITERACY ON COMMUNITY FINANCIAL MANAGEMENT IN TOMOHON CITY
Victoria Neisye Untu 1 , Steeva Y. L. Tumangkeng 1
1 Department of Management, Sam Ratulangi
University, Indonesia
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ABSTRACT |
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During the
current pandemic, people are required to be able to manage their finances
well in order to survive difficult times when facing difficult situations.
However, in reality, not a few people still have difficulty in managing their
finances due to lack of knowledge about good financial management, so that
many people suffer from economic downturns that have even more severe impacts
on the decline in the level of community welfare in the City of Tomohon. This
study aims to determine and analyze the extent to which the implementation of
financial literacy on the financial management of the people in the city of
Tomohon. This research is quantitative research using multiple linear
regression analysis method. Based on the results of the analysis, financial
literacy has a significant and positive effect on people's financial
management, so with high financial literacy, one can form wise financial
behavior and effective financial management. |
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Received 12 October 2022 Accepted 13 November 2022 Published 30 November 2022 Corresponding Author Victoria
Neisye Untu, neisye@unsrat.ac.id DOI10.29121/granthaalayah.v10.i11.2022.4882 Funding: This research
received no specific grant from any funding agency in the public, commercial,
or not-for-profit sectors. Copyright: © 2022 The
Author(s). This work is licensed under a Creative Commons
Attribution 4.0 International License. With the
license CC-BY, authors retain the copyright, allowing anyone to download,
reuse, re-print, modify, distribute, and/or copy their contribution. The work
must be properly attributed to its author. |
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Keywords: Financial Literacy, Financial Management |
1. INTRODUCTION
Current financial
conditions cannot predict how changes will occur. This condition is very
unpredictable in the long term what will happen in the future. Financial
literacy education can be interpreted as a comprehensive and in-depth
understanding of financial literacy education for personal or family financial
management which makes a person have full power, understanding and confidence
in the financial decisions taken. Financial literacy as the ability to read,
analyze, manage, and communicate about personal financial conditions that
affect material well-being. Financial literacy includes the ability to sort out
financial needs, discuss financial issues, plan for the future, and respond
wisely to life events that affect daily financial decisions, including events
in the economy in general. The implementation of education in increasing
understanding about finance in the community is very necessary. Knowledge and
understanding of personal finance are needed by individuals in order to make
the right decisions in finance, so it is absolutely necessary for everyone to
optimally use the right instruments and financial products. Lack of knowledge
about financial literacy is a serious problem and a big challenge for people in
Indonesia. Financial education is a long process that spurs individuals to have
financial plans in the future in order to get prosperity according to the
pattern and lifestyle they live. Managing finances is a reality that must be
faced by every human being in his daily life, where a person must manage it
well in order to balance income and expenses, be able to meet the needs of life
and not get caught in financial difficulties. Therefore, financial intelligence
is something that needs to be considered in modern life like today. Financial
intelligence is the ability possessed by a person to manage his financial
resources, with financial well- being as the ultimate goal.
Financial literacy is
closely related to financial management where the higher one's financial
literacy, the better one's financial management. Financial management is an
application of the concept of financial management at the individual level.
Financial management which includes planning, managing, and controlling
financial activities is very important to achieve financial prosperity. The
rise of online shopping systems and shopping centers that are spread everywhere
have resulted in more consumptive behavior and people tend to make impulsive
purchases. As a result, people's behavior in buying their needs is increasingly
irrational. High consumptive attitude causes financial management to be
difficult. The problems experienced by the community in general are that they
still have less income or are still not in accordance with the desired needs
and limited fund reserves. Proper financial management must be supported by
good financial literacy. Financial literacy is also associated with good
financial behavior.
Based on the above
background, our research team is interested in conducting research on the
Implementation of Financial Literacy on community financial management in
Tomohon City.
2. LITERATURE REVIEW
2.1. Financial literacy
Low levels of public
finance literacy are a particular concern for the government Indonesia.
According to Abreu and Mendes (2010) explain that financial knowledge is will at least
limit individuals in diversifying management portfolios financial statements
may increase the likelihood of risk. According to Yushita (2017) literacy finance is the ability that includes to differentiate financial
options, discuss money and financial problems without inconvenience, plan for
the future, and respond competent for life events that affect day-to-day
financial decisions, including events in the economy in general. Financial
literacy can be interpreted as knowledge to manage finances. The higher the
level of financial literacy that a person has will produce wise financial
behavior and effective financial management. Financial literacy consists of a
number of abilities and knowledge about finances owned by a person to be able
to manage or use a certain amount of money to improve his standard of living
and aim to achieve prosperity. According to the Financial Services Authority,
financial literacy is the ability to understand, namely the ability to manage
the funds you have in order to develop and live a more prosperous life OJK, (2018). Financial Literacy can prioritize the
need to achieve personal financial goals. Financial Literacy focuses on
financial knowledge, abilities, and attitudes towards individual finances to be
managed properly and independently Ismanto (2019).
Financial literacy is a
basic need for everyone to avoid financial problems. Financial difficulties can
arise if there is an error in financial management (mismanagement). Having
financial literacy is the most important thing to get a prosperous life. With
proper financial management supported by good financial literacy, it is hoped
that people's living standards will increase, because no matter how high a
person's income is, without proper financial management, financial security
will definitely be difficult to achieve. The need for education to the public
on financial products, both bank and non-bank, is very urgent so that the
public is not easily deceived by irresponsible parties. The importance of
financial literacy in the form of all aspects of personal finance is not
because it makes it difficult to use the money they have, but it is hoped that
individuals can enjoy life by using their financial resources appropriately Yushita (2017).
According to Prihastuty and Rahayuningsih. (2018), Financial Literacy and What is often called
financial literacy is the ability to understand how money works, how one
succeeds get it, how to manage it and how to invest it (change it again).
Financial knowledge or financial literacy as knowledge Funding and ability to
apply it (knowledge and Skills).
2.2. Dimensions of financial literacy
Financial literacy includes
several financial aspects that need to be mastered. Some aspects of financial
literacy include general knowledge of finance, savings and credit, insurance,
and investing.
1)
General knowledge
of finance.
Financial literacy
includes knowledge of personal finance, specifically how to manage income and
expenses, as well as understanding basic financial concepts. Basic financial
concepts include simple interest calculation, compounding, effects of
inflation, opportunity cost, time value of money, liquidity of an asset, and
more.
2)
Deposits and
loans
Saving and borrowing is a
banking product known as savings and credit. Savings is an amount of money that
is saved for future needs. A person whose income is above their expenses will
tend to save the rest. The form of savings can be savings in the form of
savings at a bank or savings in the form of installment deposits. Whereas,
borrowing is a facility to borrow money and pay it back in a certain time with
interest.
3)
Insurance
Insurance is a form of
financial protection that can take the form of life insurance, property
insurance, education insurance, and health insurance. The purpose of insurance
is to receive compensation in the event of an unforeseen event such as death,
loss, accident, or damage.
4)
Investation
Investing is saving or
using money to make more money. The way someone typically invests is by putting
money in securities, including stocks, bonds, and mutual funds, or by owning
real estate.
2.3. Financial Management
Financial management is
an effort made by a company in designing activities related to the storage and
control of funds and assets. Given the importance of financial management, you
must plan carefully. Financial management (financial management) according to
Horne in Kasmir (2013) is all activities related to the acquisition,
funding, and management of assets with several overall objectives. According to
Hartati (2013), the entire process is
carried out to obtain company revenue by minimizing costs, in addition to the
efficient use and allocation of funds to maximize company value. goals that
have been set so that it is useful for humans. Financial management as part of
activities Personal financial management is the process by which an individual
meets the necessities of life through the activities of managing financial
resources in an organized and systematic. Sina and Andris (2012) explains that financial experience is the ability to
make judgments or invest in the future. With good and right investment planning
and management, you will achieve peace and comfort in life Yulianti and Silvy (2013). Financial management is
closely linked to financial literacy. Good financial management and supported
by good financial literacy, hopefully people's standard of living will
increase, because even if one's income level is high, without good financial
management, security finance will certainly be difficult to achieve. Yushita (2017) said financial literacy is a basic need for people to avoid financial
trouble. With a high level of financial literacy in a society, it is hoped that
they can enjoy life with adequate financial resources.
Finance is an important
part of lifewide community. Your financial information can help with this in
determining people in decision making financial products that can optimize
decision making the economy. Financial knowledge is very important so as not to
make mistakes later when making financial decisions. Margaretha and Reza (2015) in Amanita (2017).
3. RESEARCH METHOD
3.1. Research Approach
Research is basically an
activity to obtain data/information that is very useful to find out something,
to solve problems or to develop knowledge. This type of research is
quantitative research. Quantitative research is research by obtaining data in
the form of numbers or quantitative data that is numbered. The approach used in
this study is an associative approach. Associative is research that asks cause
and effect between two or more variables.
3.2. Location and Time of Research
This research was
conducted in the city of Tomohon with the object of research namely the people
of the city of Tomohon. This research was conducted from March to October 2022.
3.3. Population and Sample
1)
Population
In research, population is used to refer to all
elements/elements of a field that are the object of study or the whole
(universum) of the research subject. Based on the complexity of the population
object, it is possible to divide the population into homogeneous populations
(all the individuals that are members of the population have relatively similar
characteristics and have different characteristics). there is a difference in
the results of different quantity checks). census) and heterogeneous
populations (all individual members of a population have relative individual
characteristics that distinguish individual members of a population from each
other). Thus, population can be understood as the entire population used in the
study. The population of this study included public or financial managers
residing in the city of Tomohon.
2)
Sample
The sample is part of the population. The sample is
part of the number and characteristics possessed by the population. The
sampling technique used in this study is purposive sampling with predetermined
criteria, namely people with a minimum income of IDR 3,000,000, - up to IDR
5,000,000 per month. In this study, the sample taken was 140 respondents. Based
on the sampling technique, it means that the number of the research population
is not known for sure in the location of the research area.
3.4. Data Collection Methods and Analysis
Methods
There are two data
collection methods used in this study, namely questionnaire and interview
methods. The analytical method used is descriptive structural statistics.
4. RESULTS AND DISCUSSIONS
4.1. Tomohon City Profile
Quoted on the official
website of the Tomohon City Government, tomohonkota.go.id, Tomohon has long
been written about a number of historical documents. One of them is found in
the ethnographic work of Reverend N. Graafland, who announced on January 14, 1864,
aboard the Queen Elisabeth that he had written about a country called Tomohon
that he had visited. circa 1850. The growth of civilization and the dynamics of
development and social stability over the years made Tomohon one of the
capitals of the Minahasa Regency's subdistricts.
In the first decades of
the 2000s, communities in several areas of Minahasa County were inspired and
aspired to trend both internally and externally to strategic area expansions.
area. The wind of reform and the establishment of policies of regional autonomy
has accelerated the process of taking into account the popular aspiration for
the division of the region in question. Through a lengthy and carefully
considered legal process in the context of promoting national development for
the welfare of the wider community, the Minahasa Regional Government and the
Regional Representative Council of the Minahasa Regional Area proposed
community aspirations for the establishment of the South Minahasa Area, Tomohon
City, and North Minahasa District; supported by the North Sulawesi provincial
government. The establishment of South Minahasa District and Tomohon City were determined
by the central government by the enactment of Law No. 10 in 2003 and the
establishment of North Minahasa District under Law No. 33 of 2003. Tomohon City
is one of the regions from North Sulawesi, it can be reached by land transport
from the capital of North Sulawesi province, Manado, at a distance of +25 km.
If from Sam Ratulangi International Airport +34 km. The location of the Tomohon
City area surrounded by the Minahasa Government Area; specifically, to the
north, it is bordered by the minor districts of Pineleng and Tombulu (Minhasa
district. It borders Sonder and Remboken sub-districts (Minahasa district) to
the south, Tombariri district (Minahasa district) to the west and Tondano
district (Minahasa district) to the east.) and Airmadidi Division (Northern
Minahasa Government), while the districts/cities adjacent to Tomohon City are
South Minahasa District (west), Manado City (north), Minahasa District (east)
and Southeast Minahasa District (south). Tomohon city is located in the
mountains with coordinates 1°15′ north latitude and 124°50′ east
longitude, covers an area of 147.21 km² and is located at an altitude of about
900-1100 meters above sea level. There are three mountains: Mount Lokon
(1,579.6 m), Mount Tampusu (1,474 m) and Mount Mahawu (1,331 m). Several rivers
such as the Ranowangko River, Sapa River, Sinambey River and 32 streams are scattered.
In addition, there are two lakes, Linow lake and Pangolom bian lake. According
to data from Tomohon City Central Bureau of Statistics in 2021, Tomohon city's
population in 2020 is 100,587 people, population density is 683 people/km.
4.2. Result and Discussion
Based on the output
coefficients, the t-count value is 1,751 t-table 1.656 and the significance
value is 0.082 0.05 and =0.088 is positive, meaning that financial literacy has
a positive effect. This means that if someone has better financial knowledge,
they will have good behavioral intentions and vice versa. This study is
consistent with research conducted by Brian P. Kennedy which found that
financial literacy does not predict intention to use credit cards. However, a
positive correlation was found between attitudes towards credit cards and the
amount of credit card debt. Based on the t-test results, the t-count value is
4.215 t-table 0.1656 and the significance value is 0.000 0.05 and = 0.330 is
positive, which means that financial literacy has a positive effect. and
significantly to financial management. That is, the higher the financial
knowledge and ability to perform financial aspects, one of which is the basic
financial knowledge including income, expenses, assets, liabilities and risks.
Financial behavior and effective financial management will be wiser. On the
contrary, it can be said that the lower a person's basic financial literacy
level, the worse and less effective financial management behavior will be.
Based on the research
findings, investment companies or financial planning organizations should take
advantage of the development of technology to convey information related to
financial knowledge or personal financial planning to be accepted by the
community, people can easily grasp financial information easily so that they
can manage their finances properly, appropriately. consistent with good
financial management.
Based on the results of
the research that has been done, there are several limitations to the study,
most notably that the independent variables studied were limited to financial
knowledge only. Future researchers should use other variables such as income,
hours worked, position or level of study.
5. CONCLUSIONS AND RECOMMENDATIONS
5.1. Conclusion
Based on the results of
the data analysis and discussion described in the previous chapter on the
influence of financial literacy and financial attitudes on public financial
management behavior, it can be concluded that. Based on the results of the
t-test, it can be concluded that. financial literacy has a significant and
positive impact on people's financial management behavior, so with high
financial literacy, one can practice financial and management savvy behavior
Financially efficient.
5.2. Recommendations
There are several
suggestions that need to be considered in this research, including the
following:
1)
This research is
expected to be used as a material for public consideration in financial
management. It is hoped that if people have high financial literacy, good
financial attitudes, and good intentions, they will create wise and effective
financial management behavior.
2)
For further
researchers, it is recommended to correct or re-check each questionnaire
statement item that reflects each variable so that it is more in line with what
will be studied.
3) Further research is expected to expand the population and number of samples in the study in order to better understand the financial behavior of the community as a whole.
CONFLICT OF INTERESTS
None.
ACKNOWLEDGMENTS
On this occasion, the research team would like to thank those who have created opportunities and helped the research team to carry out the research: Prof.Ir.Ellen J. Kumaat, MSc, DEA, Rector of Sam Ratulangi University Manado, Prof.Ir.Jeffry Kindangen, MSc, Community President, Institute of Research and Service, Sam Ratulangi University, Manado, Prof. Dr. Ir. Grevo S. Gerung., MSc, Dean of the Faculty of Economics and Business, Sam Ratulangi University of Manado. We are fully aware that this research progress report still needs suggestions for improvement, so any contributions to improve this report are welcome.
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