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FACTORS INFLUENCING STUDENTS' SPENDING
HABITS IN MALAYSIA

TEW CHOON POH

MASTER OF SCIENCE (FINANCE)

UNIVERSITI UTARA MALAYSIA
APRIL 2016
 FACTORS INFLUENCING STUDENTS' SPENDING HABITS
IN MALAYSIA

BY
TEW CHOON POH

Thesis Submitted to

Othman Yeop Abdullah Graduate School of Business,

Universiti Utara Malaysia,
In Partial Fulfillment of the Requirement for the Master of Science (Finance)
 PERMISSION TO USE

In presenting this dissertationlproject paper in partial fulfilment of the requirements .

for a Post Graduate degree from the Universiti Utara Malaysia ("UUM"). I agree that
the Library of this university may take it freely available for inspection. I further agree
that permission for copying this dissertation/project paper in any manner, in whole or
in part, for scholarly purposes may be granted by my supervisor(s) or in their absence,
by the Dean of Othman Yeop Abdullah Graduate School of Business where I did my
dissertationlproject paper. It is understood that any copying or publication or use of
this dissertationlproject paper parts of it for financial gain shall not be allowed without
my written permission. It is also understood that due recognition shall be given to me
and to UUM in any scholarly use which may be made of any material in my
dissertatiodproject paper.

Request for permission to copy or to make other use of materials in this

dissertatiodproject paper in whole or in part should be addressed to:

Dean of Othman Yeop Abdullah Graduate School of Business

Universiti Utara Malaysia
06010 UUM Sintok
Kedah Darul Aman
 FACTORS INFLUENCING STUDENTS' SPENDING HABITS IN
MALAYSIA

ABSTRACT

The spending habits of students nowadays has become a major concern in our
society in view of the increase in bankruptcy cases and social problems among
younger generation in Malaysia which are often associated with their financial
instability due to poor individual financial management. This study aims to know
the factors influencing the spending habits of students and to fill the knowledge
gap on their spending. In this study, dependent variable is spending habits, and
four independent variables have been determined, namely product usage and
purchasing power, social status, promotional approaches and prestige. The
respondents of t h ~ research
s are college students currently studying at the colleges
located in Klang Valley, Malaysia, The method used is a Quantitative Approach
by survey through questionnaires which are adapted for this study in addition to
questionnaires adopted from previous researchers of which the Cronbach Alpha
Coefficient value is greater than 0.70. A total of 384 samples of the questionnaires
have been collected manually and via e-mail from the college students, age 17-22.
The significance of data has been determined using Descriptive Statistics,
Normality Test, Frequency Test, Validity Test, Factor Analysis, Reliability Test
and Multiple Regression Analysis. This study has concluded that prestige factor,
promotional approaches and social status are factors which influence the spending
habits of the students, whereas the product usage and purchasing power do not
have significant influenced the students' spending habits, but there is an indirect
factor influencing the spending habits because it is correlated to prestige factor and
promotional approaches. Nevertheless the results of this research only reflect the
finding from limited students in Klang Valley, further efforts to conduct the
research on a national basis would be beneficial, which should include students in
rural areas, small town and other cities to reflect the demographic composition of
Malaysia.

Key words: college student, spending habits, financial literacy, product usage,
purchasing power, social status, promotional approaches and prestige.
FAKTOR-FAKTOR YANG MEMPENGARUHI TABIAT PERBELANJAAN
PELAJAR-PELAJAR DI MALAYSIA

ABSTRAK

Tabiat perbelanjaan di kalangan pelajar pada masa kini telah menjadi perhatian
utama dalam masyarakat kita berikutan peningkatan kes kebankrapan dan masalah
sosial di kalangan generasi muda di Malaysia yang sering dikaitkan dengan
ketidakstabilan kewangan mereka disebabkan pengurusan kewangan individu
yang lemah. Kajian ini bertujuan untuk mengetahui faktor yang mempengaruhi
tabiat perbelanjaan dl kalangan pelajar dan untuk mengisi jurang pengetahuan
mengenai perbelanjaan mereka. Dalam kajian ini, pembolehubah bersandar adalah
tabiat berbelanja, dan empat pembolehubah bebas telah ditentukan, iaitu
penggunaan produk dan kuasa beli, status sosial, pendekatan promosi d m prestij.
Responden kajian ini terdiri daripada pelajar-pelajar kolej di sekitar Lembah Klang,
Malaysia. Kaedah yang digunakan ialah Pendekatan Kuantitatif melalui proses
soal selidik berdasarkan soalan-soalan yang telah disesuaikan untuk kajian ini dan
tennasuk juga soalan soal selidik yang digunapakai oleh penyelidik sebelum ini
dengan nilai Cronbach Alpha melebihi 0.70. Sebanyak 384 set borang soal selidik
telah drkumpul secara manual dan melalui e-me1 daripada pelajar kolej, berumur
di antara 17-22. Kepentingan data telah ditentukan dengan menggunakan Statistik
Deskriptif, Ujian Kenormalan, Ujian Frekuensi, Ujian Kesahan, Analisis Faktor,
Ujian Kebolehpercayaan dan Analisis Regresi Pelbagai. Kajian ini merumuskan
bahawa prestij, pendekatan promosi d m status sosial adalah faktor-faktor yang
mempengaruhi tabiat perbelanjaan pelajar. Namun begitu, kajian ini merumuskan
bahawa penggunaan produk dan kuasa beli bukanlah factor yang mempengaruhi
tabiat perbelanjaan pelajar, sebaliknya ia mempengaruhi tabiat pelajar secara tidak
langsung kerana ia ada berkaitan dengan prestij dan pendekatan promosi. Walau
bagaimanapun hasil kajian ini hanya memberi garnbaran maklumbalas daripada
pelajar kolej yang terhad di Lembah Klang, usaha selanjutnya untuk menjalankan
penyelidikan di peringkat nasional akan dapat memberi manfaat, yang mana harus
termasuk pelajar-pelajar di kawasan luar bandar, bandar kecil dan bandar-bandar
lain untuk mencerrninkan komposisi demograf~Malaysia.

Kata kunci: pelajar kolej, tabiat perbelanjaan, literasi kewangan, penggunaan

produk, kuasa pembelian, status sosial, pendekatan promosi dan prestige.
 Acknowledgement

After an intensive period of seven months, today is the day: writing this note of
thanks is the finishing touch on my dissertation. I would like to take this
opportunity to thank a number of people who have supported and helped me so
much throughout this period.

I would first like to express my sincere gratitude and deep appreciation to my

wonderful supervisor, Dr. Norshafizah Binti Hanafi. I have been amazingly
fortunate to have the supervisor who gave me the freedom to explore on my own,
and at the same time the guidance to recover when my steps faltered. She definitely
provided me with the tools that I needed to choose the right direction and
successfully complete my dissertation.

Not forgetting my beloved husband, Ch'ng Kim Chua, who has been always there
to listen, supports, encourage and give practical advice throughout this endeavour.
Warmest love to my mother and children, Loh Soo Lan, Jing Yi, Wei Song and
Miko for their constant source of love, concern, strength and support me to
complete this dissertation.

Last but not least, special thanks to all the respondents and friends who devoted
their time in taking part in this dissertation. It would not have been completed
without all of you.

Thank you very much, everyone!

 TABLE OF CONTENTS

Page

Certification of Thesis Work

Permission to Use
Abstract
Abstrak
Acknowledgement vi

Table of Content vii

List of Tables ix
List of Figures xi
List of Abbreviation xii

CHAPTER INTRODUCTION
ONE
1.1 Background of the Study
1.2 Problem Statement
1.3 Research Questions
1.4 Research Objectives
1.5 Significance of the Study
1.6 Scope and Limitations of the Study
1.7 Organization of the Thesis

CHAPTER LITERATURE REVIEW

TWO
2.0 Introduction
2.1 Theoretical Underpinning
2.2 Spending Habits
2.3 Product Usage and Purchasing Power
2.4 Social Status
2.5 Promotional Approaches
2.6 Prestige
2.7 Research Model and Hypothesis
2.8 Chapter Summary
CHAPTER RESEARCH METHODOLOGY
THREE
3 .O Introduction
3.1 Research Framework
3.2 Hypothesis/Propositions Development
3.3 Research Design
3.4 Operational Definition
3.5 Measurement of Variables/Instrumentation
3.6 Data Collection
3.7 Sampling
3.8 Data Collection Procedures
3.9 Techniques of Data Analysis
3.10 Pilot Test
3.1 1 Chapter Summary

CHAPTER RESULTS AND FlNDINGS

FOUR

Introduction
Descriptive Statistics
Normality Test
Descriptive Statistics for Demographic Profile
Validity Test
Factor Analysis
Reliability Test
Checking Relationship between Variables
Hypothesis Tests
Chapter Summary

CHAPTER RESEARCH METHODOLOGY

FIVE
5.0 Introduction
5.1 Findings on Product Usage and Purchasing
Power
5.2 Findings on Social Status
5.3 Findings on Promotional Approaches
5.4 Findings on Prestige
5.5 Theoretical and Practical Contribution of the
Study
5.6 Recommendations for Future Research
5.7 Conclusion

REFERENCES

APPENDICES
LIST OF TABLES Page

Table 1.1 Financial Challenges faced by undergraduates. 6

Table 1.2 2010 Malaysia Population Distribution By Age Group

Table 1.3 2010 Malaysia Population Distribution By State

Table 3.1 Reliability Test - Cronbach's Alpha

Table 3.2 Survey Questionnaire Design

Table 3.3 Descriptive Statistics Test for Components

Table 3.4 Descriptive Statistics - Skewness and Kurtosis

Table 3.5 KMO and Bartlett's Test - Overall

Table 3.6 Communalities

Table 3.7 Total Variance Explained-Initial Eigenvalues

Table 3.8 Rotated Component Matrix

Table 3.9 Reliability Test for Components

Table 4.1 Descriptive Statistics Test for Components

Table 4.2 Descriptive Statistics - Skewness and Kurtosis

Table 4.3 Test of Normality - Shapiro-Wilk

Table 4.4 Frequency Table - Age

Table 4.5 Frequency Table - Gender

Table 4.6 Frequency Table - Marital Status

Table 4.7 Frequency Table - Race

Table 4.8 Frequency Table - State

Table 4.9 Frequency Table - Major field of study

 Page

Table 4.10 Frequency Test - What is Your Parents' Highest 62

Education Attained?

Table 4.1 1 Frequency Test - Parents' Monthly Income Zone

Table 4.12 Frequency Test - Allocation of Money For Emergency

Table 4.13 Frequency Test - Do You Consistently Spend More

Than You Have?

Table 4.14 KMO and Bartlett's Test - Overall

Table 4.15 Communalities

Table 4.1 6 Total Variance Explained-Initial Eigenvalues

Table 4.17 Rotated Component Matrix

Table 4.18 Reliability Tests for Components

Table 4.19 The Correlation results for all variable relationships

Table 4.20 Component Correlation Matrix

Table 4.2 1 Product Usage and Purchasing Power - Total Statistics

Table 4.22 Social Status - Total Statistics

Table 4.23 Promotional Approaches - Total Statistics

Table 4.24 Prestige Factor- Total Statistics

LIST OF FIGURES Page

Figure 3.1 Theoretical Framework 28

Figure 3.2 45
Strength of Association Guideline
50
Figure 3.3 Scree Plot - Eigenvalues
69
Figure 4.1 Scree Plot - Eigenvalues
LIST OF ABBREVIATION

CCIR Central Credit Reference Information System

DV Dependent Variables

IBM SPSS Statistical Package for Social Science version 22

IV Independent Variables
KMO Kaiser-Meyer-Olkin

MVM Muslim Volunteer Malaysia Association

PA Promotional approaches

PF Prestige factor

PU Product usage and purchasing power

PTPTN National Higher Fund Corporation

SD Standard Deviation

SE Standard Error

SH Spending habits

SS Social Status
 CHAPTER ONE

INTRODUCTION

1.1 Background of The Study

Spending habits cannot be separated from the daily life of the people due to the

rapid change of the competitive global business environment. It resulted the

decision-making has become complicated and more complex. This

phenomenon impacts the students’ life as they exposed to advertising

campaigns, internet provider and electronic purchasing facility.

According to social learning theory, spending habits defined as a learned habits

that influence by parents and other influential individuals. Therefore,

predominantly, one that is passed from generation to generation. In the United

States, Spending by the students have been identified as an important

component of total consumer spending. Wong & Smith (2002) stated that the

students are one of the most important markets for many businesses based on

the size and characteristic of the market. Ring (1997) concluded that the full

time students spent $23 billion on essential items such as books, tuition ,food

and rent, whereas another $7 billion was spent on nonessential items such as

accessories, fashion and entertainment.

Spending habits has never been stable. It changed over the time, especially

among college students. In the ages past, clothes, printing and stationery, books

1
and other similar nature of items for study were bought by the students.

However, this generation has been grown at the age of modern technology and

educational availability. Their basic necessities have increased, for instance,

laptops and other gadgets are needed for assignments, smartphone is needed for

communication and to certain extent, vehicles needed as transportation.

Research conducted by Samantha (2014) concluded the main source of income

of students are from parents which consist of 45%, and balance is from job

(40%) and loan (15%). The research results shown that they spent 60%-70% of

their money in bars, fashion, electronic, live music and media. The focus on

college students because there is a change from childhood into adulthood that

makes their life full of challenging. Many of them are experiencing being on

their own for the first time and need to make their own decision. In addition,

these group of people will soon to dominate the consumer market and the

awareness of spending smart is one of the important way to get out of debt and

build wealth.

Hayhoe et al. (1999) concluded that early exposure to financial management is

crucial for the young adults because they will encounter various obligations in

the near future such as financial commitments. In addition, Hovanesian (1999)

hypothesizes that young adult is conscious of money, but the issue is they do

not have the knowledge about it. This resulted they tends to over spend. Wang

and Xiao (2009) hypothesizes that females tended to spend more money on

clothes, while men spent more money on entertainment. In addition, Norvilitis

et al. (2006) states that age, personality traits, and financial knowledge is a vital

2
factors influencing spending habits. Woman are more likely to report having a

budget than men, but women more frequently accumulate higher amount of

debts (Micomonaco, 2003). Hotpascaman (2008) concluded behaviour, social

status and family lifestyle were the factors influencing spending habits. Other

than that, Enrico et al. (2014) states that college students’ spending habits

driven by purchasing power, product usage, social status and satisfaction. On

the other hand, Chris (2015) concluded that youth spending habits driven by

technology and altruism, not advertisement.

In view of the different thoughts from various researchers, it is essential to

study the factors influencing the spending habits among students in managing

their money which soon to dominate the consumer market. The awareness of

spending is essential in order to plan for emergencies and retirement, and more

importantly to minimise the risk of bankruptcy and social problems resulted

from overspending such as commit crimes, corruption, alcohol, drugs and

commit suicide. Gordon (1987) looked into the eyes of the young generation

crowd and said to them, “You are the ninja generation. No income, No assets,

No job, but too much debt”. Besides, Mohamad Fazli (2014) mentioned that

for the period from 2005 to 2012, total bankruptcy declared were 129, 640, and

68,299 (53%) were those below 45. In addition, Tang (2016) stressed that 76%

of Malaysian students don’t have enough money to feed themselves based on

the survey conducted by Muslim Volunteer Malaysia Association (MVM). As

a result, a study to understand the factors influencing the spending habits

among college students is vital in order to help in managing their spending in

3
 the most effective manner and minimise the risk of future financial instability

on matching income and expenditures.

1.2 Problem Statement

The major concern in Malaysia today is on the financial illiteracy in the young

and affluent which will lead to the risk of bankruptcy and social problems.

They are failing to observe the basic rules in sound financial management.

Their debt level have increased significantly over the past decade which

resulted a societal implications as they are not flexible to accept any job and

may affect by the decisions about family, marriage, and home purchase

(Boushey, 2005). According to Goetz et al. (2007), the problem of high debt

levels among college students is due to the low financial literacy and poor

financial management. A research study conducted by Visa USA Inc., (2007)

concluded that annual spending by the young adults estimated to reach USD

2.45 trillion in 2015. Besides, Hovanesian (1999) commented that the young

adults very likely to spend their cash as quickly as they acquire it.

In the context of Malaysia, 50% of credit card holders who had been declared

bankrupt were those below 30 (Bank Negara Report, 2010). The Corporate

Affairs and Communication Head of Credit Counselling and Debt Management

Agency (AKPK), Mr. Devinder Singh said that 15% of the 39,600 people

enrolled in the debt management programme are those below the age of 30.

Fomca Chief Executive Officer, Datuk Paul Selvaraj informed that many of the

young adults were trapped in debt because they lived beyond their means. In

addition, Mohamad Fazli (2014) mentioned that for the period from 2005 to

4
2012, total bankruptcy declared were 129, 640, and 68,299 (53%) were those

below 45. The implication is their names would be blacklisted in the Central

Credit Reference Information System (CCRIS) database once declared

bankrupt and their life would be very tough. As a result, it will attribute to

social problems such as commit crimes, alcohol, drugs and commit suicide.

The financial problems faced by the young adults become critical. The

Sundaily posted on 5th November 2014 reported that the National Higher Fund

Corporation (“PTPTN”) was set up in 1997. As at 30th September 2014,

PTPTN had approved education loans to 2.1 million of applicants which is

amounting to RM 48.36 billion. However, 54% of the borrowers are failed to

make repayments. PTPTN chairman Datuk Shamsul Anuar Nasarah said that at

the initial stage, the details of 173,985 debtors with loan of RM 1.23 billion

will be listed with CCRIS. The subsequence stage will involve the listing of

details of the rest of the errant borrowers. Besides, Tang (2016) stressed that

the survey on 25,632 students from six public universities (UIAM, UiTM,

UKM, UM, UUM and UTHM) by Muslim Volunteer Malaysia Association

(MVM) have been conducted and the survey found that 97% of the

undergraduates asked for financial assistance and 96% of them are under

economic strain. This survey also found that 73% of the undergraduates had no

money to buy meals and 56% of them had only RM5 a day for meals. In

addition, 43% survive on instant noodles while 41% eat only rice with fried

egg and soup. (Appendix 2). This survey results came as a surprise. Higher

Education Ministry Secretary-General Datuk Seri Zaini Ujang said that three

possible reasons behind the undergraduates to be so broke that they do not have

5
enough money to feed themselves, namely bad spending habits, low financial

literacy and Malaysia’s strained economy.

Table 1.1
Financial challenges faced by undergraduates
Undergraduates % / Total

sample

Need assistance 24,914 97%

Felt burdened by the economic situation 24,720 96%

Had no Money to buy meals 18,765 73%

Only had RM5 a day for meals 14,458 56%

Only had rice, fried egg and soup for meals 11,120 43%

Only had instant noodles for meals 10,439 41%

Source: Muslim Volunteer Malaysia (MVM), image via Yeong Ji

Hou/Malaysiakini.

Besides, EPF Chief Executive Officer, Shahril Ridza Ridzuan (FMT Report,

2015) said nearly 80% of the Malaysians who are at the age of 55 in 2015 do

not have enough savings in their account to live above the poverty line which is

set at RM 830 per month. He informed that this group of people would not

have enough in total EPF savings to enable them to live on RM 800 a month

for the next 20 years.

In view of the various problems mentioned above, a study on the factors that

influence the spending habits of students is important in order to help the

6
 students to have a better understanding on spending habits that triggered it. A

sound financial literacy training may require in order to minimise the risk for

future financial instability on matching of earnings and spending, and at the

same time to reduce the bankruptcy cases and social problems. In addition, this

study also aims to assist the society, especially the educational policy makers

to have better understanding of the effective channel to cultivate spending

habits so that the students can start savings for emergency and plan for

retirement.

1.3 Research Questions

Based on the problem statement as discussed above, there are five research

questions that arise in relation with the scope of this study.

1. Is there any relationship between product usage and purchasing

power and spending habits of the students in Malaysia?

2. Is there any relationship between social status and spending habits of

the students in Malaysia?

3. Is there any relationship between promotional approaches and

spending habits of the students in Malaysia?

4. Is there any relationship between prestige factor and spending habits

of the students in Malaysia?

7
 5. Is there any relationship between all the above independent variables

and spending habits of the students in Malaysia?

1.4 Research Objectives

The objectives of this study summarised as below:

1. To identify the relationship between the product usage and purchasing

power and the spending habits of the students in Malaysia.

2. To identify the relationship between the social status and the spending

habits of the students in Malaysia.

3. To identify the relationship between the promotional approaches and

the spending habits of the students in Malaysia.

4. To identify the relationship between the prestige factors and the

spending habits of the students in Malaysia.

5. To identify the relationship between all the above independent variables

and the spending habits of the students in Malaysia.

1.5 Significant of The Study

8
 This research results would provide a clear understanding of factors

influencing the spending habits among students in Malaysia. By knowing these

factors, hopefully the students will be more aware about the spending habits

that triggered it in view that they are soon to dominate the consumer market

and aims to minimise the risk of future financial instability on matching

income and expenditures. This is essential in order to minimise the risk of

bankruptcy and social problems such as commit crimes, corruption, alcohol,

drugs and commit suicide. Besides, it also aims to create awareness to students

that they need to start savings for emergencies and plan for retirement.

On the other hand, this research results shall be beneficial to the educational

policy makers in Malaysia in planning a workable economic and financial

education programs towards achieving the awareness of financial literacy

among students by providing effective financial management education.

According to Danes et al. (1999), the rationale behind is education setting at

this level can better prepare youths to encounter the complex marketplace in

the future , cautious of their actions and minimise the risk for future financial

instability, especially on the matching of earnings and spending. Furthermore,

it will provides companies with valuable information about the spending habits

and motivators to purchase. Thus, it allows companies to market their products

in a more effective manner as the students will be a lucrative and profitable

target segment in the near future.

1.6 Scope and Limitations of The Study

9
1.6.1 Scope of The Study

This research focuses on the college students. Baker (1999) stated that this

group of population will be the largest cohort in the nation’s history and by

number alone, promise to reshape the country in every aspect of life. Wong &

Smith (2002) concluded that the college students are one of the most crucial

segments for many businesses based on the size and characteristics of the

competitive global market. In addition, there is a change from childhood into

adulthood that makes their life full of challenging in which many of them are

experiencing being on their own for the first time and need to make their own

decision.

In this study, the researcher identified the relationship between factors that

influencing student’s spending habits, namely product usage and purchasing

power, social status and prestige factor. The focus is on the Malaysian college

students’ age 17-22. Table 1.2 shows that this group of people represents 5.19

million (18%) of the total population of RM 28.33 million in Malaysia. At the

same time, this study results will also benefit the age group, ranging the age of

0 to 14 years old which represents 8.67 million (31%) of Malaysian population

because they will soon become the young adults and will face the same

problems that encountered by the college students today (Appendix 3). As a

result, this study aims to assist 49% of Malaysian population in which they will

soon dominate the consumer market and at the same time to minimise the risk

of bankruptcy and social problems.

10
Table 1.2:
2010 Malaysia Population distribution by age group
Age Group ‘Million Percentage

0-4 3.04 10.7

5-9 2.79 9.8

10-14 2.84 10.0

15-19 2.64 9.3

20-24 2.55 9.0

25-29 2.37 8.4

30-34 2.11 7.4

35-39 1.92 6.8

40-44 1.82 6.4

45-49 1.63 5.8

50-54 1.40 4.9

55-59 1.13 4.0

60-64 0.76 2.7

65-69 0.54 1.9

70-74 0.37 1.3

75-79 0.22 0.8

80-84 0.12 0.4

11
 85-89 0.05 0.2

90-94 0.02 0.1

95+ 0.01 0.0

Total 28.33 100.0

Source : Department of Statistics Malaysia, official Portal

The area of the research selected is Klang Valley. This is because Klang Valley

is located in Kuala Lumpur and adjoining cities and towns in the state of

Selangor. In term of the population distribution by state, Selangor was the most

populous state in Malaysia which represent 19% (5.46 million) and Wilayah

Persekutuan Kuala Lumpur represent 6% (1.67 million) of total Malaysia

population of 28.33 million. Therefore, total population in Selangor and

Wilayah Persekutuan Kuala Lumpur presents 25% (7.13 million) of total

Malaysian population. This is shown in Table 1.3. As a result, the selection of

college students who are currently studying in university at Klang Valley is

appropriate to represent the general students’ population in Malaysia

(Appendix 3).

12
Table 1.3 :
2010 Malaysia Population distribution by state
State ‘million Percentage

Selangor 5.46 19.3

Johor 3.35 11.8

Sabah 3.21 11.3

Sarawak 2.47 8.7

Perak 2.35 8.3

Kedah 1.95 6.9

W. P. Kuala Lumpur 1.67 5.9

Pulau Pinang 1.56 5.5

Kelantan 1.54 5.4

Pahang 1.50 5.3

Terengganu 1.04 3.7

Negeri Sembilan 1.02 3.6

Melaka 0.82 2.9

Perlis 0.23 0.8

W.P. Labuan 0.09 0.3

W.P. Putrajaya 0.07 0.3

13
 Total 28.33 100.0

Source : Department of Statistics Malaysia, official Portal

1.6.2 Limitations of The Study

The main limitation of this study is it merely covers the college students in

Klang Valley. Thus, it may not be able to represent the college students or

young adults in other areas, especially rural areas. Secondly, most of the

studies related to spending habits among students are done in overseas

countries such as USA, Canada, Australia, Iran and Indonesia. However, there

is little investigation on young adults spending habits in Malaysia that resulted

little resources to compare with. Thirdly, time taken is too short. It resulted

lack of availability of ample information and the coverage of university is

limited. In this study, the researcher only managed to concentrate on students

who are studying at Tunku Abdul Rahman University College and Taylor’s

University, The concentration of these two universities resulted majority of the

respondents are Chinese in which it may influence the responses to the survey

questions. Lastly, the assistance to respond to the questionnaires sincerity is

also the obstacles of this study.

1.7 Organization of The Thesis

14
This research paper has been organised into five chapters. The first chapter is

Introduction which aims to explain the overview of the research. It consist of

the background of the study, the problem statement, research questions,

research objectives, significance of the study, scope and limitations of the

study and organization of the thesis. The second chapter is literature review,

i.e. report on the previous reviews of literature and theories related to this

research. The third chapter explains on the methodology, techniques and tools

of analysis used for this research which includes research framework,

hypotheses/Propositions Development, Research Design, Operational

Definition, Measurement of variables / instrumentation, Data Collection,

Sampling, Data Collection Procedures and Techniques of Data Analysis. The

forth chapter covers the analyses of data and findings of the research which

represents complete results and analysis of the study in form of figures, table or

text so that the key information is highlighted. The last chapter is conclusion

and recommendation which summarise the key findings and the significance of

the findings and the theoretical, practical and policy implications will be

highlighted. Besides, recommendations for future research will also be

included.

15
 CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter demonstrate a critical review of literature and theories which are

related to this study. Specifically, it focuses on factors influencing college

students’ spending habits, namely product usage and purchasing power, social

status, promotional approaches and prestige. Besides, Relative Income Theory

of Consumption, Permanent Income Theory, Life Cycle Theory of

Consumption and Social Learning Theory applied in the research as a base to

guide the development of research framework.

2.1 Theoretical Underpinning

2.2.1 Relative Income Theory of Consumption

16
Relative Income theory developed by Duesenberry James (1949). It states that

the key factor affecting an individual’s attitude to consumption and saving is

dictated more by his income and the abstract standard of living. The percentage

of income consumed is depends on the percentile position within the income

distribution. This hypothesis stated that the present consumption is influenced

by present levels of absolute and relative income and also by levels of

consumption attained in the previous period. Thus, the total consumption ratio

is depend on the level of present income relative to past peak income. As a

result, it is difficult for a family to reduce a level of consumption once attained.

2.2.2 Permanent Income Theory of Consumption

Permanent Income Theory of Consumption developed by Milton Friedman

(1957). This theory attempting to describe how people spread their

consumption over their lifetimes. An individual’s consumption is determined

by their current income and their expected future income. The hypothesis states

that changes in permanent income will drive the changes in a consumer’s

consumption pattern which consist of physical assets (property and shares) and

human assets (qualification and working experience).

2.2.3 Life-cycle theory of Consumption

Life-cycle theory was formulated by Albert Bandura (1977). It encompasses

concepts of traditional learning theory and the operant conditioning which is

developed by B.F. Skinner in 1947 and classical conditioning which is

17
developed by John Watson in 1913. Classical conditioning theory believed on

the importance of learning from environment (nurture) instead of biology

(nature), whereas Operant Conditioning theory emphasizes that the behaviour

is controlled positive and negative consequences resulted from reinforcement

and punishment. Bandura added mediating processes occur between stimuli

and responses. Thus, this theory indicates the levels of income and

consumption over time is learned from the environment through the process of

observational learning.

This theory hypothesizes that it is logic and rational that people will be

overspent at the beginning and ends of their lives. Students are fall into the

prior category in which their cash outflow is greater than cash inflow generally.

This theory believed that people will be able to smooth their consumption

accordance to income over their lifetime. Wilkinson (2008) states that any

change in wealth should produce an identical effect on consumption, regardless

the source of the wealth change. This means that rational humans will

constantly calculate their level of income in order to smooth their spending

habits. Warneyrd (1999) explained that the deficit spending in the early and

late stages of life is balanced by a steady salary and pay increase during their

middle stage of life. A degree of self-control and proper planning in spending

is not difficult for most people to achieve, but it involves complex calculation.

Based on this life-cycle model, it is rationale for college students to overspend

and this deficit spending will be adjusted against the future periods of earning

and saving. Therefore, failure to make adjustment on the deficit spending

pattern may be attributed to a lack of financial education and apply for those

18
unrealistic people, especially in term of perception of the job market. Soman

and Cheema (2002) commented that people is not able to value their future

incomes correctly and they are lack of the cognitive capability to solve the

intertemporal optimization required by the life-cycle hypothesis.

According to Kaitlin (2013), this theory may make sense theoretically and

provides a good model off of which to base financial behaviour, but people are

not always economically rational actors, thus, it is not uphold in everyday life.

As a result, understanding socio-economic practices, moral judgements and the

everyday understandings and attributions of the people involved is essential in

understanding the spending decisions. This will assist to avoid any debt and

wasteful spending which lead to financial soundness, financial prudence could

enlighten the future among the youth and generate wealth (Pillai et al., 2010).

2.2.4 Social Learning Theory

Social learning theory developed by Albert Bandura (1977). According to this

theory, spending habits can be viewed as a learned behaviour often transmitted

by parents and other influential individuals, and is, therefore, predominantly,

one that is passed from one generation to next generation. Spending habits and

their patterns have been conceived as existing along a continuum running

between two poles. One pole represents a preoccupation with the acquisition

and hoarding of money; the other pole represents the obsessive or compulsive

spending habits. (Lois et al., 1998). Following the model of Consumer

Socialization developed by Moschis & Churchill (1978), the variables affected

19
 individual are the structure and the social development. The main agents that

influence and ultimately determine the consumer behaviour are parents, peers

and mass media (Moschis, 1987). Logically, the effect of such agents will be

different depending on the stage of the individual life cycle (John, 1999) and it

will be different for different individual.

2.2 Spending Habits

According to Pillai et al. (2010), the attitude of young adults toward spending

plays an essential role in sustainability perspectives of their finance. It also acts

as a significant variable in financial prudence. Under Relative income theory of

consumption, spending attained in previous period. Life cycle theory of

consumption and permanent income theory of consumption emphasize on the

expected future income and the education of financial matters, whereas Social

learning theory hypothesizes parents and other influential individual. Building

up the above theories, factors to consider in this research as an independent

variables are product usage and purchasing power, social status, promotional

approaches and prestige.

2.3 Product Usage and Purchasing Power

Product usage and purchasing power play an important role in spending habits

of college students. The duration, frequency and amount of products being

used show the product usage (Karwowsk et al., 2011), whereas people who

have bigger purchasing power may tends to spend more , especially on

expensive products ( Enrico et al., 2014).

20
Agustia (2012) claimed that fulfilling desire and purchasing power are the key

factors that influencing the spending habits of college students. Pinto et al.

(2005) found that family structure played an important role, especially

education from parents about proper spending habits. Education on product

usage and purchasing power will cultivate a healthy spending habits. The

finding of the research conducted by Norvilitis et al. (2006) was more financial

knowledge will lead to less likely they are to be in debt. Besides, in a study by

Schreiber as cited in Karki (2000), price consciousness, quality consciousness,

original, unusual decision, planned decision and non-conformist decision are

the criteria that must be taken into consideration when studying consumer

spending habits. Hotpascaman (2008) mentioned that usage of product

influences spending habits in view that different people have their different

perspective about the lifespan of the goods. For example, certain people tend to

buy another smartphone while their smartphone still can be used. Agustia

(2012) concluded that purchasing power is affecting spending habits because

being given more money to the college students by parents makes them

nowadays more consumptive. In addition, Enrico et al. (2014) stated that

college students’ spending habits driven by product usage and purchasing

power. They found that when people buy a product they tend to buy another

product at the same time and majority of the respondents replied that their

buying decision is based on financial power and purchasing power. It shows

that fulfilling desire is the most dominant factor that influences the spending

habits. In view of the above findings from the previous researchers, there is a

21
 need for the researcher to identify the relationship between product usage and

purchasing power and college students’ spending habits.

2.4 Social Status

Social status is determined by income and other factors such as qualification,

education, wealth, occupation and reference group. According to Sunny (2011),

spending habits deeply affected by social status, especially influence by

reference groups, family, role and status. Pierre (1958) argued that a person

spending pattern was affected by income, age, and gender and class position.

The class position is influence by the influencing group such as family,

colleague and friends, whereas Moore et al. (2002) identified three main key

factors affecting spending habits, namely parents, peers and mass media.

Besides, Wilson, et.al (2005) and Borden et al. (2008) have the same findings

where college students’ spending habits driven by social status and satisfaction.

Apart from that, Asifo (2010) mentioned that the identification of social class

is vital to the marketers because marketing activities could be tailored

according to different social classes. Besides, Enrico et al. (2014) argued that

an individual who have higher status will buy the goods with higher price even

though the price of goods decrease. This phenomena happen because high

social status people tend to show their prestige which is different from others

22
 (Hotpascaman, 2008). Besides. Hawkins et.al (1998), as cited by Rajennd

(2014) stated that the social status is a part of inherited individual

characteristics that are moulded from the social interaction experience as

consumers’ progress through the family lifestyle. In this situation, people have

higher social status has more purchasing power and strong consumptive

behaviour. In view of the above findings from the previous researchers, there is

a need for the researcher to identify the relationship between social status and

college students’ spending habits.

2.5 Promotional Approaches

According to Rajennd et al. (2014), decision-making has become more

complex due to the rapid change of the competitive global business

environment and consumers are being exposed to advertising campaigns,

promotional approaches and direct mailing that feed abundant information.

Millman (1986) argued that positive effect induced by unexpected price drops

might increase spending by expanding the consideration of other goods. Karen

et al. (2010) conducted a study to investigate the effects of promotional saving

on both planned and unplanned spending, and how does it varies according to

income level. The results of the research showed that the promotional on

unplanned grocery items would attract customers to spend more and this

increased with the higher income level. Apart from that, Ajay et al. (2010) also

examined sweepstakes reward structures that maximize consumers’ valuation.

The results of the said research showed that by having sweepstakes, consumers

are tend to spend more in order to increase the probability of winning grand

prize. Besides, Alireza et al. (2011) concluded there is a positive relationship

23
 between spending habits among college students and promotional approach.

They acknowledged that the unexpected price discount result in higher

expression of willingness to pay for unrelated products. In view of the above

findings from the previous researchers, there is a need for the researcher to

identify the relationship between promotional approaches and college students’

spending habits.

2.6 Prestige

According to Chris (2015), millennial spending habits driven by technology

and altruism. Brands served as a way of building trust and loyalty with this

extremely essential and influential demographic. Daniels (2007) stated that

college students are independent, non-traditional and sophisticated, brand and

fashion conscious. The research conducted by Cude et al. (2006) concluded

that peer pressure and the thrill of an expensive purchase as a “status symbol”

were influenced the spending habits. Apart from that, Leclerc (2012) explored

the key factor contributing to spending habits in college students was social

pressures. According to Leclerc (2012), students who are exposed to a culture

where it is acceptable to overspend may have greater risk on over spending.

Enrico et al. (2014) concluded that prestige become one of the key factor

creating spending habits where college students become more consumptive in

order to maintain the prestige. In addition, Rajennd et al. (2014) concluded that

lifestyle of the Malaysian college students have a positive relationship with the

24
 spending habits and demonstrate how they think, live, act and behave. A report

shows an overall shift in the spending habits of young, especially college

students, which may be attributed to extra spending money among the young.

They spend most of their money in luxurious and branded products,

entertainment and dining. They like to go to high end café and restaurants such

as Starbuck and Friday. Furthermore, the committed shoppers segment is

primary female, younger in age, with high school education and with a diverse

income level. In view of the above findings from the previous researchers,

there is a need for the researcher to identify the relationship between prestige

factor and college students’ spending habits.

2.7 Research Model and Hypothesis

The literature review discussed above has provided an overview of the

theoretical framework that guides this research. In this study, spending habits

serving as dependent variable and four factors, namely product usage and

purchasing power, social status, promotional approaches and prestige factor

serving as independent variables. Therefore, hypothesis were developed to

identify the relationships between spending habits and all the above four

factors.

2.8 Chapter Summary

Chapter two in overall explained the theories and findings from the previous

researches related to factors influencing spending habits. It served as a base to

guide the development of this research framework. Relative Income Theory of

25
Consumption states that an individual’s attitude to consumption and savings is

dictated more by his income and the standard of living. Life Cycle Theory of

Consumption hypothesizes that it is logic and rational that student will be

overspent and believed that they will be able to smooth their consumption

accordance to their future income over their lifetime. Permanent Income

Theory of Consumption attempting to describe an individual’s consumption is

determined by their current income and also their expected future income,

whereas Social Learning Theory viewed as a learned behaviour often

transmitted by the influential individuals, especially parents, friends and peers.

Besides, there are various factors influencing spending habits of college

students which was conducted by the previous researchers. Enrico et al. (2014)

denotes that the factors that influenced the spending habits driven by product

usage, purchasing power and prestige. Asifo (2010) mentioned that social class

is essential to the marketers because marketing activities could be tailored

according to different social classes. In addition, Rajennd et al. (2014)

concluded that lifestyle of the Malaysian college students have a positive

relationship with the spending habits and demonstrate how they think, live, act

ad behave. Besides, Alireza et al. (2011) concluded there is a positive

relationship between spending habits among college students and promotional

approach.

At the end of this chapter, hypothesis were developed to study the relationships

between spending habits and four independent variables, namely product usage

and purchasing power , social status, promotional approaches and prestige

26
 factor in order to understand the factors affecting students’ spending habits in

Malaysia.

CHAPTER THREE

RESEARCH METHODOLOGY

3.0 Introduction

This chapter described the research methodology. The purpose is to maximise

valid answers to a research questions. This chapter covers research framework,

hypothesis or propositions development, research design, operational definition,

measurement of variables/instrumentation, data collection, sampling, data

collection procedures and techniques of data analysis. At the end of this chapter,

pilot test has been conducted as a pre-exercise in order to orientate and provide

insight into the phenomenon.

27
3.1 Research Framework

Burns and Grove (2003) define a research framework as “A blueprint for

conducting a study with maximum control over factors that may interfere with the

validity of the findings”. The dependent variable is spending habits, which is the

variable of primary interest. The important relationships that are theorised to exist

among the variables have been incorporated in this research framework, in which

is to be explained by the four independent variables, namely product usage and

purchasing power, social status, promotional approaches and prestige factor. The

theorised relationships are shown in the following schematic diagram, figure 3.1:

Independent Variables (IV) Dependent Variable (DV)

Product usage and purchasing power

Social status

Spending Habits

Promotional Approaches

Prestige

28
 Figure 3.1
Theoretical Framework

3.2 Hypothesis / Propositions Development

A Scientific Hypothesis has been used in this research. It refer to a trial solution or

“educated guess” to a problem as a hypothesis because it provides a suggested

solution based on the evidence. According to Sekaran (2001), there are eight

hallmarks that need to be considered, namely purposiveness, rigour, testability,

replicability, accuracy, objectivity, generalisability and parsimony. The reason for

using this method is it involving simply collecting and analysing data would

produce test results that can be applied to solve the problem (Sekaran, 2001). In

this survey, the researcher have formulated the following testable statements.

3.2.1 Product Usage and Purchasing Power

Nowadays, parents are more generous to their children in term of monetary needs.

College students will have more money that they basically needs. Being given

more money makes the college students nowadays more consumptive (Agustia,

2012). Karwowsk (2011) said different people will have their own perspective

about how long the goods can be used. Certain people will buy a latest model of

smartphone while the existing smartphone still can be used (Hotpascaman, 2008).

According to Enrico et al. (2014), people who have bigger purchasing power may

tends to spend. Enrico et al. (2014) and Agustia (2012) concluded that purchasing

power is affecting spending habits because being given more money to the college

29
students by parents makes them nowadays more consumptive. Thus, the

hypothesis below is contracted.

H1: There is a significant relationship between product usage and purchasing

power and spending habits of students’ in Malaysia.

3.2.2 Social Status

Normally, people have higher status will have more purchasing power. Sunny

(2011) argued that spending habits deeply affected by social status, especially

influence by reference groups, family, role and status. Enrico et al. (2014)

concluded that an individual who have higher status still will buy the goods with

higher price even though the price of goods decrease. Hawkins (1998) said social

status is part of inherited individual characteristics that are moulded and formed

from the social interaction experience. Besides, Wilson et al. (2005) and Borden

et al. (2008) also concluded social status is affecting the spending habits.

Therefore, the hypothesis below is contracted.

H2: There is a significant relationship between social status and spending habits

of students’ in Malaysia.

30
3.2.3 Promotional Approaches

Janakiraman et al. (2006) argued that positive affect induced by unexpected price

drops might increase the spending of other products. Arkes et al. (1994)

acknowledged that the unexpected price discounts expressed in an increased of

their willingness to pay for unrelated products. Karen (2010) also concluded the

promotional on unplanned items would attract consumers to spend more,

especially for those who are fall into the higher income category. Ajay et al. (2010)

informed that an individual tends to spend more in order to increase the

probability of winning grand prize. Apart from that, Alireza et al. (2011) indicated

that promotional approaches is affecting the spending habits. In addition, Rajennd

et al. (2014) argued that college students’ are exposed to advertising campaign

and promotional approaches which will influence their spending habits. Thus, the

hypothesis below is contracted.

H3: There is a significant relationship between promotional approaches and

spending habits of students’ in Malaysia.

3.2.4 Prestige

A person’s emotional state, mood and self-feelings can be recognised as a person

affective state (Youn, 2000). Hotpascaman (2008) argued that rich people tend to

show their prestige which different with another status. Chris (2015) concluded

that the young adults’ spending habits driven by technology and altruism. They

31
 will spend without consider the income. Leclerc (2012) argued that students are

exposed to social pressure and there is a risk of over spending in order to maintain

their prestige status. Besides, Enrico et al. (2014) and Rajennd et al. (2014) also

concluded that the lifestyle of the college students have a positive relationship

with the spending habits. As a result, the hypothesis below is contracted.

H4: There is a significant relationship between prestige and spending habits of

students’ in Malaysia.

3.3 Research Design

The combination of quantitative and qualitative approach have been used in this

research. The primary data collection method used in this research is a

quantitative approach by spreading questionnaires which is in the form of closed-

ended questions and open questions. (Sekaran, 2001). The rationale for choosing

spreading questionnaire is to avoid embarrassment of participants. All the

questions that related to the independent variables are in closed-ended questions

which provide exact information needed, high validity and easy to compare and

analyse. This method is useful for exploration as well as confirmation and to

prevent interview bias (Sekaran, 2001). Only two open questions have been asked

in the demographic profile which is a well-placed questions. The secondary data

collection method used is a qualitative approach in which the data was gathered

32
 from text books, journals, government publications, online business magazine and

articles.

The research guide comprised of five major sections measuring respondents’

demographic and factors influence the spending habits, namely product usage and

purchasing power, social status, promotional approaches and prestige factor. Upon

completion of the questionnaire surveys, the independent and dependent variables

were then be analysed using Statistical Package for Social Science version 22

(“IBM SPSS”).

3.4 Operational Definition

1. Arnett (2000), as cited by Todd (2011) defines college student or young

adult, is generally a person in the age range of 18 to 25 who receive a higher

learning education. Thus, these group of people are categorised as part of

Generation Y. There do not have precise dates when the generation starts

and ends, the researchers use birth years ranging from the early 1980s to

early 2000s (Time magazine, 2013).

2. Kotler (2000) stated that spending habits studies how individuals select, buy,

use and dispose of the goods or services in order to satisfy their needs and

desires. It is the act of disbursing money in response to an action and the

satisfaction of needs and wants.

33
3. Vitt et al (2000) defines financial literacy as the ability to interpret, analyse,

and manage the personal financial matters in order to thrive in the complex

financial world. It affect material well-being, develop independent

judgments and take reasonable actions as and when require.

4. Aiguier et al. (2010) interprets product usage is the lifespan of the goods

used.

5. Enrico et al. (2014) describes purchasing power as the money that

individual have to buy goods with. He explained that people will have

bigger purchasing power when they have bigger amount of money.

6. Pujiastuti (2007) defines social status as position give to people in society.

According to Asifo (2010), social status is determined by income and other

factors such as qualification, education, wealth and occupation.

7. Youn and Faber (2000) interprets promotional approach as the marketing

cues or strategy that are placed and controlled by the marketer in attempt to

lure people into purchase behaviour in order to generate sales and create

brand loyalty.

8. Daniel (2001) defines prestige as image effects resulted from personalities,

i.e. widespread respect and admiration felt for someone on the basis of a

perception of their achievement or quality.

34
3.5 Measurement of Variables/Instrumentation

This study used the quantitative approach and we have identified five dimensions

and its elements. The survey instrument was a self-administrated questionnaire,

developed through adaptation and adoption. According to Sebastian (2007),

adopting individual questions from established questionnaires is an effective and

efficient measuring instrument in view that the questionnaires had a good stability,

sensitivity, reliability and validity. However, a modification or adaptation of

different items might be necessary in order to improve the credibility of the

research findings (Saunders et al., 2003). Data was collected by means of survey

format, i.e. spreading questionnaires and in form of open and closed-ended

questions that comprised of five sections, namely demographic profile, product

usage and purchasing power, social status, promotional approaches and prestige.

A total of 34 Questions have been asked. 14 questions (question 1 to question 14)

have been asked in demographic profile section and 20 questions (question 15 to

question 34) have been asked based on the formulated testable statements.

In the demographic profile section, 2 open questions and 12 closed-end questions

have been asked, whereas in the formulated testable statements section, all the

closed-end questions have been asked. Question 1 to 14, 23, 24, 29, 30, 31, 33 and

34 was based on adaptation for the study. Question no. 15 to 22, 30 and 32

adopted from Enrico et al. (2014), whereas question no. 25 to 28 were adopted

from Alreza et al. (2011). The reliability of the scale was assessed using Cronbach

Alpha Coefficient before adoption of the questionnaire from the previous

35
researchers. According to Field and Miles (2010), the data is reliable if the

Cronbach’s Alpha value is bigger than 0.70, otherwise the data is not reliable.

Research questionnaire have been derived based on the content validity used

previous studies. All the components shown in Table 3.1 are bigger than 0.70,

therefore the adoption of the data from the previous researchers are valid. (Field &

Miles, 2010).

Table 3.1
Reliability Test – Cronbach’s Alpha
Sections Components Cronbach’s Alpha No. of items

1 Demographic profile. N/A 14

2 Product usage and 0.824 5

purchasing power.
3 Social status 0.745 5

4 Promotional approaches 0.802 5

5 Prestige 0.720 5

Source : Adoption of the questionnires from the previous researchers, namely

Aldo Enrico, Ritchie Aron, Weriyen Oktavia (2014) and Alreza Karbasivar and
Hasti Yarahmadi (2011)).

3.5.1 Demographic Profile

36
 A total of fourteen questions have been asked in this section. An analysis of the

demographic profile indicated that our sample comprised of college students

age 17-22 years old with various useful information for better understanding of

the study and also future research. 12 questions are closed-end questions and 2

questions are open question (question 9 and 10).

1. Age.

2. Gender.

3. Marital status.

4. Race.

5. Which state are you come from?

6. Which is the major field of study.

7. What is your father’s highest education attained?

8. What is your mother’s highest education attained?

9. Your father’s primary occupation.

10. Your mother’s primary occupation.

11. Which income zone is your parents’ monthly income included?

12. Amount (RM) and percentage (%) of monthly income that being spent?

13. Do you allocate money for emergency?

14. Do you consistently spend more than you earn/have?

3.5.2 Product Usage and Purchasing Power

37
 A total of five questions have been asked to describe the spending habits of

college students driven by product usage and purchasing power. All the

questions are closed-end questionnaires, namely:

1. Buying decision influence by advertising.

2. Buying decision based on financial power.

3. Buying product using own money or saving.

4. Buying product without using it.

5. Buying product for collection.

3.5.3 Social Status

A total of five straightforward questions have been asked to describe the

spending habits of college students driven by social status. All the questions

are closed-end questionnaires, namely:

1. I will buy product that usually used by mid-high level person.

2. I will buy product that have good reputation.

3. Feeling inferior if do not have good product.

4. I always spend more than I can afford due to social status.

5. Parents’ asked to buy only branded product.

3.5.4 Promotional Approaches

38
 A total of five questions will be asked to describe the spending habits of

college students driven by promotional approaches. All the questions are

closed-end questionnaires, namely:

1. I will buy product if I can get free product.

2. Free product can be reason to induce me for impulse buying.

3. I will buy product with discount price.

4. I tend to buy impulse if I see discount is offered.

5. I always spend more than I can afford due to promotion given.

3.5.5 Prestige

A total of five questions will be asked to describe the spending habits of

college students driven by prestige. All the questions are closed-end

questionnaires, namely:

1. I will buy expensive product to show prestige.

2. Feeling arrogant in buying product that have good reputation.

3. Family always remind to buy good and quality product.

4. The most important thing for me is the image of store in buying goods.

5. I always spend more than I can afford due to peer pressure.

3.6 Data Collection

39
3.6.1 Primary Data Collection

Targeted population in this research is the college students, age between 17 to

22 years old. A total of 384 set of survey questionnaires have been distributed

in Klang Valley to reflect the target population. The researcher focuses on this

group of population because it represents 40.9% of total population of youth

adults in Malaysia, ranging age 15 to 39 years old (Department of Statistics

Malaysia, 2015). Thus, the range of age is valid and is be able to represent the

young adults in Malaysia. Moreover, this sample was chosen from the college

students that currently studying in the university, namely Tunku Abdul

Rahman University College and Taylor’s University which is located in Klang

Valley. The researcher selected Klang Valley because it is located in Kuala

Lumpur and adjoining cities and towns in the state of Selangor. In term of

population, Selangor was the most populous state, represent 19% (5.46 million)

and Wilayah Persekutuan Kuala Lumpur represent 6% (1.67 million) of

Malaysia population. In total, it represent 7.13 million, i.e. 25% of total

Malaysia population of 28.33 million which is appropriate to represent the

general students’ population in Malaysia.

3.6.2 Secondary Data Collection

Data for literature review and problem statement were gathered from secondary

data. It comprised from text books, statistic bulletins, government publications,

journals, online business magazine, online articles and online newspaper.

According to Sekaran (2001), data gathered through such existing sources can

40
 be obtained and do not have to be collected by the researcher. In this study, the

statistic information derived from the bulletins published by Bank Negara

Malaysia and archive materials data derived from the Department of Statistics

Malaysia and the Economic Planning unit. In addition, other types of

information obtained from the test books, journals and newspaper.

3.7 Sampling

According to Sekaran (2001), sampling is the process of selecting a sufficient

number of elements from the targeted population in order to generalise the

properties or characteristics to the population elements based on the understanding

of the properties or characteristics of the sample subject. In this study, the targeted

population are the Malaysian college students’, age between 17-22 years old. A

total of 384 samples of survey questionnaires have been distributed in Klang

Valley to reflect the target population. The determination of the number of survey

questionnaires are based on the sample size defined by Sekaran (2001) in which

Krejcie and Morgan (1970) have simplified the sample decision by providing a

table that ensures a good model. This table provides generalised scientific

guidelines for sample decisions. Based on this table, if the population is 1,000,000

and above, the sample size shall be 384. As a result, the researcher used 384

samples in view of the targeted population of 7.13 million.

Convenience Random Sampling was chosen in view that this is the best way of

collecting information from members of the population who are conveniently

available to provide it, In addition, the data can be collected quickly and

41
 efficiently (Sekaran, 2001). In this study, the selected respondents are those

currently studying in the Tunku Abdul Rahman University College and Taylor’s

University that can provide data representative of the population from which it is

drawn.

3.8 Data Collection Procedures

3.8.1 Questionnaire Design

Survey Questionnaire used in order to derive the opinions of the respondent in a

structural manner. It will be designed using English language. The questions will

be formulated based on the adaptation for this study and adoption from the

previous researchers of which the Cronbach Alpha Coefficient value is bigger

than 0.70 (Field & Miles, 2010). Table 3.2 shown that the questionnaire will be

divided into five sections, namely demographic profile, product usage and

purchasing power, social status , promotional approaches and prestige. A total of

384 questions have been asked. Category scale and dichotomous scale have been

used to gather all demographic variables in section one. The category scale uses

multiple items to elicit a single question (Sekaran, 2001) and applied for age,

gender, marital status, state, major field of study, parents’ education attained and

income and percentage of money spend by the college students, whereas

dichotomous scale is used to elicit a yes or no answer on the allocation of money

for emergency and consistently spend more than they have. At the same time, the

researcher also applied the category scales prepared by Zikmund (2000) for the

rest of the sections which is section two to section five. The frequency scale have

42
been used, namely never, rarely, sometimes, often and always. Numbers have

been assigned to the different categories in order to examine how strongly

subjects agree or disagree with statements on a five-point scale (Sekaran, 2001).

The mid-point in this study is “sometimes” which is a passing level. The

responses over a number of items tapping a particular variable are then totalled for

every respondent.

Table 3.2
Survey Questionnaires Design
Section Factors No. of Questions

items

1 Demographic Profile. 14 1 – 14

2 Product Usage and Purchasing Power. 5 15 – 19

3 Social Status 5 20 – 24

4 Promotional Approaches 5 25 – 29

5 Prestige factor 5 30 – 34

3.8.2 Questionnaire Distribution

The method of questionnaire distribution is by personally administered

questionnaires’ method and electronic questionnaires method. 95% of the

questionnaires is collected by the researcher personally and 5% is collected

through the reply from e-mail. Personally administered questionnaires allowed the

researcher to establish rapport and provide clarifications sought by the targeted

43
 respondents on the spot as well as collected the questionnaires immediately after

they are completed (Sekaran, 2001). At the same time, the researcher also used the

electronic questionnaire in order to obtain the data from the respondents who are

not able to answer on the spot (Sekaran, 2001). In this study, a total of 384

samples of survey questionnaires were completed and collected within a period of

two weeks.

3.9 Techniques of Data Analysis

Statistical Package for Social Science version 22 (“IBM SPSS”) software used to

analyse the data. The researcher performed a range of analyses from the basic

crosstabs and frequency analyses, to the more advanced procedures that include

factor analysis and multiple regression analysis.

Firstly, descriptive statistic tests is generated from IBM SPSS and used to explore

the data collected and data error check. Standard Deviation (“SD”) and Standard

Error (“SE”) is used to provide additional insight on how far the individual

responses to a question vary from the mean. SD indicates the shape of the

distribution and how close the individual data values are from the mean value. Z-

scores will be inspected in order to study the tenability of SD. According to

Sheridan J Coakes and Clara Ong (2011), Z-scores greater than +3 and less than -

3 are considered to be outliers. At the same time, SE will be observed in order to

study how close our sample mean is to the true mean of the overall population.

Thus, it will be able to provide a more complete picture. (Sekaran, 2001).

44
Secondly, Normality test is conducted as a prerequisite for inferential statistical

techniques which served as data screening and transformation. “Skewness and

Kurtosis” method applied to access the normality distribution (Sheridan J Coakes

and Clara Ong, 2011). A symmetrical distribution has a skewness of zero. A

positive skew is an asymmetrical distribution with a long tail to the right, whereas

negative skew is an asymmetrical distribution with a long tail to the left. A

Gaussian distribution has a kurtosis of zero. A positive kurtosis denotes a

distribution more peaked than a Gaussian and a negative kurtosis indicates a

flatter distribution. According to George & Mallery (2010), the values for

asymmetry and kurtosis between -2 and +2 are considered acceptable in order to

prove normal univariate distribution (Sheridan J Coakes and Clara Ong, 2011).

Thirdly, Frequency Test will be conducted in order to understand the demographic

characteristics of the respondents. Fourthly, the Validity Test used to test whether

the variables are valid or not. Kaiser-Meyer-Olkin (“KMO”) have been conducted

to test the validity. According to Warnaars & Pradel (2007), the validity test is

valid if the KMO is equal or more than 0.50 and the percentage of cumulative in

Rotation Sums of Squared Loadings must be greater than 0.60.

Fifty, factor analysis used to study the correlation between the variables and

factors. In this study, the researcher applied Varimax Rotation which was

developed by Kaiser (1958). The rationale behind is to reduce the number of

complex variables and to gain a cleaner interpretation. The following guidelines

have been used to interpret the strength of association (Deborah, 2009).

45
 Positive Negative
Coefficient Coefficient

Small 0.1 to 0.3 -0.1 to -0.3

Medium 0.3 to 0.5 -0.3 to -0.5

Large 0.5 to 1.0 -0.5 to -1.0

Figure 3.2
Strength of Association Guideline (Deborah J. Rumsey, 2009)

Lastly, Reliability Test is conducted in order to test the degree in which a

measurement is free of random or unstable errors. Cronbach’s Alpha Coefficient

have been used for reliability test in order to access internal consistency within the

scaled questionnaire items. If the Cronbach’s Alpha value is bigger than 0.70, it

indicates the data is reliable, otherwise the data is unreliable (Field & Miles,

2010).

3.10 Pilot Test

Pilot test has been conducted as a pre-exercise in order to orientate and provide an

insight into the phenomenon. It aims to rectify the errors at little costs (Sekaran,

2001). Thirty participants have been selected who met the selection criteria in

order to enhance the quality of the research.

3.10.1 Descriptive Statistics

Table 3.3
Descriptive Statistics Test for components
Statistic Std. Deviation Std. Error Z-scores

Valid N 30 0.681 – 1.475 0.124 – 0.270 Ranging -3 to +3

46
Table 3.3 provides Descriptive Statistics Test for components. Standard Deviation

is ranging from 0.681 to 1.475 level indicates that the shape of the distribution and

the variation between the individual data values and the mean value is normal. Z-

scores results shown that the data is within the internal limits of z-scores

(Sheridan J Coakes and Clara Ong, 2011). In addition, Standard Errors is ranging

from 0.124 to 0.270 level which provides a valuable descriptive measure

(Appendix 4).

3.10.2 Normality Test

Table 3.4
Descriptive Statistics – Skewness and Kurtosis
N Skewness Kurtosis

Statistic Std. Error Std. Error

Valid N 30 0.427 0.833

Table 3.4 shown that Skewness and Kurtosis value are considered acceptable and

proved normal univariate distribution. The details test results also indicates that

the test results is acceptable in view that kurtosis between -2 to +2 levels

(Appendix 5). This is in line with the statement made by George & Mallery (2010)

in which the values for asymmetry and kurtosis between -2 and +2 are considered

acceptable.

3.10.3 Validity Test

47
As examination of the correlation matric which is shown in Appendix 6 indicates

that a considerable number of correlation which is exceeded 0.3. As such, the

matrix is suitable for factor analysis.

Table 3.5
KMO and Bartlett’s Test - Overall
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of Sampling Adequacy.
.684

Bartlett's Test of Sphericity Approx. Chi-Square 622.022

Df 190
Sig. .000

According to Warnaars & Pradel, 2007, the validity test is valid if the Kaiser-

Meyer-Olkin (“KMO”) is equal or more than 0.50. Table 3.5 shows that the

Bartlett test of sphericity is significant and the KMO measure of sampling

adequacy is 0.684 which is greater than 0.5.

Table 3.6
Communalities
Item Initial Extraction Result

48
 15 1.000 0.787 Valid
16 1.000 0.856 Valid
17 1.000 0.767 Valid
18 1.000 0.789 Valid
19 1.000 0.819 Valid
20 1.000 0.755 Valid
21 1.000 0.868 Valid
22 1.000 0.749 Valid
23 1.000 0.862 Valid
24 1.000 0.646 Valid
25 1.000 0.734 Valid
26 1.000 0.840 Valid
27 1.000 0.695 Valid
28 1.000 0.860 Valid
29 1.000 0.899 Valid
30 1.000 0.912 Valid
31 1.000 0.767 Valid
32 1.000 0.524 Valid
33 1.000 0.767 Valid
34 1.000 0.898 Valid

Table 3.6 shows the Validity test result for each of the variables. The test result

indicates that all the variables are passing the validity test and ready to test the

reliability.

3.10.4 Factor Analysis

49
Table 3.7
Total Variance Explained-Initial Eigenvalues

Component Total % of Variance Cumulative %

1 11.054 55.271 55.271
2 2.188 10.942 66.213
3 1.453 7.264 73.478
4 1.099 5.496 78.973

The factor matrix is a matrix of loadings or correlations between the variables and

factors. Table 3.7 shows the factors and their associated eigenvalues. The result

indicates that four factors to be extracted because they have eigenvalues greater

than 1 which represent 78.973% of the total variance explained (Appendix 7).

According to Warnaars & Pradel (2007), the percentage of cumulative in Rotation

Sums of Squared Loadings must be greater than 60% in order to pass the validity

test. Since the percentage of cumulative of Rotation Sums of Squared Loadings is

78.973% which is greater than 60%, the researcher confirmed that the variable is

passing the validity test. The test results shown that component 1 had an

eigenvalue of 11.054, whereas component 2, 3 and 4 had an eigenvalue of 2.188,

1.453 and 1.099 respectively. It can be confirmed by Scree Plot which is shown in

Figure 3.3, i.e. there are four predominant factors that influencing spending habits

of college students.

50
Figure 3.3
Scree Plot – Eigenvalues

Table 3.8
Rotated Component Matrix
Component
Item 1 2 3 4

51
 29 0.874
22 0.823
23 0.509
34 0.746
31 0.758
30 0.665
15 0.312
17 0.341
18 0.718
24 0.647
19 0.703
25 0.327
33 0.514
28 0.857
27 0.801
21 0.585
20 0.516
26 0.607
32 0.453
16 0.922

Table 3.8 explains the rotated component matrix. The researcher used it as a base

to conduct reliability test. First component, primarily a measure of prestige factor

comprises eight items, namely 29, 22, 34, 31, 30, 33, 21 and 32. Second

component, primarily a measure of social status, comprises five items, namely 23,

18, 24, 19 and 20. Four items in the third component which primarily measure

promotional approaches are 17, 28, 27 and 26. The last component which

primarily measure product usage and purchasing power comprises three items

which is 15, 25 and 16.

3.10.5 Reliability Test

52
Table 3.9
Reliability Tests For Components
Components Cronbach’s N of
Alpha Items

Component 1 – Prestige Factor 0.938 8

Component 2 - Social Status 0.888 5

Component 3 - Promotional Approaches 0.807 3

Component 4 – Product Usage and Purchasing 0.667 3

Power
Overall 0.955 19

Table 3.9 shows that the Cronbach’s Alpha value is greater than 0.70 (Field &

Miles, 2010) for component 1 (0.938), 2 (0.888) and 3 (0.807) which indicates

that the data is reliable. One of the item in component 3, namely “Buying product

using own money or saving” has been deleted in order to improve Cronbach’s

Alpha from 0.592 to 0.807. Even though the Cronbach’s Alpha for component 4 is

0.667, but the data is still considered to be acceptable because it is greater than

0.60 (Yong et al., 2007).

Based on the above pilot test results, the researcher concluded that all the

variables had a good stability, sensitivity, reliability and validity. Therefore, a

total of 384 samples of questionnaires will be distributed to the rest of the targeted

respondents.

53
3.11 Chapter Summary

In overall, this chapter explained in details about the method used in this study,

from research framework and design, development of hypothesis, data collection,

independent and dependent variables used and type of analysis conducted to

analyse the data collection. One dependent variable (spending habits) and four

independent variables (product usage and purchasing power, social status,

promotional approaches and prestige) have been determined in the theoretical

framework. Data collected by means of Likert-type survey questionnaire format

and the questions formulated based on the adaptation for the study and the

adoption from the previous researchers. The sample size is 384 and the survey

questionnaires were distributed to the college students in Klang Valley, age

between 17 to 22 years old.

Statistical Package for Social Science version 22 software has been used to

analyse the data. Techniques of data analysis starts with Descriptive Statistic,

followed by Normality Test and Frequency Test in order to access the data error

and demographic analysis. Subsequently, Validity Test will be conducted in order

to test the validity of the variables using Kaiser-Meyer-Olkin (“KMO”) method.

Afterwards, the factor analysis had been conducted to study the correlation

between the variables and to identify factors that influences students’ spending

habits. Lastly, reliability of the scale was assessed using Cronbach Alpha

Coefficient in order to test the reliability of the data and the benchmark used is

0.70 (Field & Miles, 2010).

54
At the end of this chapter, pilot test have been commanded to rectify the errors at

little costs. Thirty participants have been selected. In the Descriptive Statistic Test,

Standard Deviation is ranging from 0.681 to 1.475 level and Standard Errors is

ranging from 0.124 to 0.270 level which provides a valuable descriptive measure,

The Normality test results is acceptable in view that kurtosis result is between -2

to +2 levels. (George & Mallery, 2010). The KMO shown is 0.684 which is more

than 0.50 and the percentage of cumulative in Rotation Sums of Squared Loadings

is 78.973% which is greater than 60%. The pilot test results shown that there are

four predominant factors had a statistically significant relationship with students’

spending habits, namely:

1. Component 1 – Prestige Factor.

2. Component 2 – Social Status.

3. Component 3 – Promotional Approaches.

4. Component 4 – Product Usage and Purchasing Power.

Lastly, all the data is reliable because the Cronbach’s Alpha value is bigger than

0.60. (Yong et al., 2007) and the researcher concluded all the variables had a good

stability, sensitivity, reliability and validity.

55
 CHAPTER FOUR

RESULTS AND FINDINGS

4.0 Introduction

This chapter presents the analysis of the findings of the study. The beginning of

this chapter explains the findings using Descriptive Statistic, Normality Test and

Frequency Test for data errors check and demographic analysis. Second part of

this study is to conduct Validity Test and Factor Analysis in order to test the

validity of the variables and at the same time to identify the factors influencing

spending habits among students in Malaysia. Lastly, Reliability Test will be

conducted in order to test the degree to which a measurement is free of random or

unstable errors.

4.1 Descriptive Statistics

Table 4.1
Descriptive Statistics Test for components

Statistic Std. deviation Std. Error

Valid N 384 0.832-1.254 0.042-0.064

Table 4.1 provides an insight view on how close the sample mean is to be true

mean of the overall population. The results shown that the Standard deviation is

ranging from 0.832 to 1.254 level, whereas Standard Error is ranging from 0.042

56
 to 0.064 level which provides a valuable descriptive measure (Appendix 8).

Besides, Z-scores results shown that the data is within the internal limits of z-

scores (Sheridan et al., 2011).

4.2 Normality Test

Normality test results summarised in Table 4.2 which indicates that the test results

is acceptable in view that kurtosis fall between -2 and +2 levels. (George &

Mallery, 2010). The test result is shown in Appendix 9.

Table 4.2
Descriptive Statistics – Skewness and Kurtosis
N Skewness Kurtosis

Statistic Std. Error Std. Error

Valid N 384 0.125 0.248

Besides, the Kolmogorov-Smirnov Goodness test (Chakravart et al., 1967) used to

test the normality of the variables. Shapiro-wilks test is normally use to test the

results for the samples size up to 2,000. In this study, this method is used and

Table 4.3 indicates that the data results is acceptable because p-value is less than

5%, denotes the data significantly deviate from a normal distribution.

Table 4.3
Test of Normality – Shapiro-Wilk
Statistic Sig.

Valid N 384 .000

57
4.3 Descriptive Statistics for Demographic Profile

Frequency Test used to explore the demographic characteristics of the respondents.

1. Age

Table 4.4
Frequency Table - Age
Frequency Percent

17 1 0.3

18 42 10.9

19 220 57.3

20 54 14.1

21 62 16.1

22 5 1.3

Total 384 100.0

The aims of this question is to ensure the correct age group have been obtained.

Table 4.4 shows that a high proportion of the students are at the age of 19 years

old (57%), followed by 21 years old (16%), 20 years old (14%), and 18 years old

(11%). The balance of 1% is from the age of 17 and 22. Thus, the age group of the

sample is valid and in line with the scope of the study.

58
2. Gender

Table 4.5
Frequency Table - Gender
Frequency Percent

Female 239 62.2

Male 145 37.8

Total 384 100.0

According to Robb and Sharpe (2009), female students possessed less financial

knowledge and carry more debt. Thus, the intention of this question is to describe

the identities and gender which may influence the survey answers. Table 4.5

indicates that 62% of the respondents are female and 38% are male. Therefore, the

sample collected is valid.

3. Marital Status

Table 4.6
Frequency Table – Marital status
Frequency Percent

Single 384 100.0

Married 0 0.0

Total 384 100.0

59
Table 4.6 shows that 100% of the respondents are single. The rationale behind is

the marital status may influence the response to the survey question. Therefore,

the sample collected is valid and in line with the scope of the study.

4. Race

Table 4.7
Frequency Table – Race
Frequency Percent

Malay 9 2.3

Chinese 329 85.7

Indian 44 11.5

Others 2 0.5

Total 384 100.0

The aims for this question is to understand the respondent’s ethnicity which may

influence the responses to survey questions. Table 4.7 indicates that 86% of the

respondents are Chinese, followed by Indian (12%) and Malay (2%). As such, the

sample collected is valid and in line with the scope of the study.

60
5. State

Table 4.8
Frequency Table – State
Frequency Percent

Wilayah Persekutuan 104 27.1

Selangor 97 25.3

Negeri Sembilan 32 8.3

Perak 19 4.9

Pulau Pinang 11 2.9

Perlis 13 3.4

Kedah 10 2.6

Melaka 11 2.9

Johor 35 9.1

Terengganu 5 1.3

Pahang 10 2.6

Kelantan 22 5.7

Sabah 11 2.9

Sarawak 3 0.8

Others 1 0.3

Total 384 100.0

61
The aims of this question is to reflect the demographic composition of Malaysia.

Table 4.8 indicates that 61% of the respondents are from Central region (Negeri

Sembilan, Selangor and Wilayah Persekutuan), 14% of the respondents are from

North region (Perak, Pulau Pinang, Kedah and Perlis), 12% of the respondents are

from South region (Melaka and Johor), 9% of the respondents are from East

region (Terengganu, Pahang and Kelantan) and 4% are the respondents are from

East Malaysia (Sabah and Sarawak). Therefore, Central region denotes the major

of the demographic composition which is in line with the scope of this study.

6. Major field of study

Table 4.9
Frequency Table – Major field of study
Frequency Percent

Accounting 326 84.9

Business 43 11.2

Engineering 15 3.9

Total 384 100.0

This question is aimed to understand the field of the study in view that different

field may influence the survey answers. Table 4.9 indicates that 85% of the

respondents are major in Accounting, followed by Business (11%) and

Engineering (4%). Thus, the sample collected is valid and in line with the scope of

the study.

62
7. Parents’ highest education attained

Table 4.10
Frequency Table – What is your parents’ highest education attained?
Frequency Percent Frequency Percent
(Father) (Mother)
No schooling 19 4.9 20 5.2

Primary 66 17.2 64 16.7

Lower Secondary-PMR 84 21.9 78 20.3

Secondary – SPM 117 30.5 126 32.8

STPM / Pre-University 22 5.7 27 7.0

Diploma / Vocational / 36 9.4 36 9.4

Technical
Degree 33 8.6 32 8.3

Master / PHD 7 1.8 1 0.3

Total 384 100.0 384 100.0

The aim of this question is to understand the highest education level attained by

the respondent parents in view that different educational level of parents may

influence the spending habits of the respondents as mentioned in Relative Income

Theory of Consumption. Table 4.10 shows that 58% (Father) and 60% (Mother)

of their parents are at secondary or high school level, 20% (Father) and 18%

63
(Mother) are at tertiary level, 17% (Father and Mother) are at primary school level,

and 5% (Father and mother) are illiterate. In summary, this indicates that majority

of their parents attained a low education level.

8. Parents’ occupation

Based on the survey results, 92% of the respondents do not answer the parent’s

occupation. The feedback from the respondents was they are not able to describe

the parents’ occupation in English and some of them refused to answer because

they treated this question as a confidential. Thus, the researcher is in the opinion

that inability to comprehend the subject matter in English is a key factor that lead

to no response in these two questions.

9. Monthly income zone of parents

Table 4.11
Frequency Table – Parents’ Monthly Income Zone
Frequency Percent

Below RM 1,000 14 3.6

Between RM 1,000 to RM 5,000 249 64.8

Between RM 5,000 to RM 10,000 73 19.0

Between RM 10,000 to RM 15,000 32 8.3

Above RM 15,000 16 4.2

Total 384 100.0

64
The aims of this question is to understand the parents’ income zone in view that

parental income can be used as an indicator of a student’s lifestyle, social class,

and the opportunities that are available to them. According to Robb and Sharpe

(2009), students who reported coming from high-income families always

participating in risky financial behaviour. Table 4.11 shows that 65% of the

monthly income of the respondent parents are in the ranging of RM 1,000 to RM

5,000, 19% derived from the monthly income between RM 5,000 to RM 10,000,

12% derived from the monthly salary above RM 10,000 and 4% represents

monthly salary below RM 1,000. This data collection is linked to the question on

the highest education attained in which low education leads to low income. Thus,

it shown a consistency of answering the survey questions.

10. Amount (RM) and percentage (%) of monthly income that being spent

Only eight respondents (2%) answered this question. Majority of the respondents

answered “don’t know” and some of the respondents replied they are not sure on

their spending allocation in view that their parents will top up if they face

financial difficulties. This indicates that they are not aware about the bad spending

habits which may trigger the risk of future financial instability on matching

income and expenditures. The researcher is in the opinion that this is not a

difficult question because 85% of the respondents are major in Accounting who

supposed to be sensitive in figure and good in financial budgeting.

65
11. Allocation of money for emergency

Table 4.12
Frequency Table – Allocation of Money for Emergency
Frequency Percent

Yes 282 73.4

No 102 26.6

Total 384 100.0

The aims of this question is to understand the financial habits of the college

students. Table 4.12 shows that 73% of the respondents will allocate money for

emergency and the balance of 27% replied that they will not allocate money for

emergency.

12. Excessive spending

Table 4.13
Frequency Table – Do You Consistently Spend More That You Have ?
Frequency Percent

Yes 75 19.5

No 309 80.5

Total 384 100.0

66
 The aims of this question is to understand the level of financial education on the

matching the income and expenditure. Table 4.13 shows that 81% of the

respondents will not spend more that they have and the balance of 20% replied

that they will consistently spend more than they have. This question is link to the

question on the money allocation for emergency. This indicates that majority of

the respondents are careful about their financial consequences of their financial

decision. This may due to majority of the respondents (85%) are from accounting

field.

4.4 Validity Test

As examination of the correlation matric which is shown in Appendix 10,

indicates that a considerable number of correlation which is exceeded 0.3.

Therefore, the matric is suitable for factor analysis.

Table 4.14
KMO and Bartlett’s Test - Overall

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy.
.930

Bartlett's Test of Sphericity Approx. Chi-Square 4271.031

Df 190
Sig. .000

Kaiser-Meyer-Olkin (“KMO”) based on all the independent variables have been

conducted and shown in Table 4.14. The purpose is to test the validity of the

67
variables. The Bartlett’s test of sphericity is significant and the KMO is 0.930

which is greater than 0.50 (Warnaars and Pradel, 2007). Thus, all the variables are

valid.

Table 4.15
Communalities

Item Initial Extraction Result

15 1.000 0.644 Valid
16 1.000 0.824 Valid
17 1.000 0.592 Valid
18 1.000 0.465 Valid
19 1.000 0.514 Valid
20 1.000 0.639 Valid
21 1.000 0.593 Valid
22 1.000 0.534 Valid
23 1.000 0.656 Valid
24 1.000 0.511 Valid
25 1.000 0.599 Valid
26 1.000 0.687 Valid
27 1.000 0.721 Valid
28 1.000 0.685 Valid
29 1.000 0.598 Valid
30 1.000 0.774 Valid
31 1.000 0.676 Valid
32 1.000 0.504 Valid
33 1.000 0.623 Valid
34 1.000 0.748 Valid

Table 4.15 shows that the validity test for each of the items. The test result

indicates that all the variables are passing the validity test and ready for the

reliability test.

68
4.5 Factor Analysis

Table 4.16
Total Variance Explained-Initial Eigenvalues
Component Total % of Variance Cumulative %
1 8.885 44.425 44.425
2 1.614 8.069 52.494
3 1.081 5.407 57.900
4 1.008 5.041 62.941

The factor matrix is a matrix of loadings or correlations between the variables and

factors. Table 4.16 shows the factors and their associated eigenvalues. The results

indicates that four factors to be extracted because they have eigenvalues greater

than 1 which represent 62.941% of the total variance explained (Appendix 11).

According to Warnaars & Pradel (2007), the percentage of cumulative in Rotation

Sums of Squared Loadings must be greater than 60% in order to pass the validity

test. Since the percentage of cumulative of Rotation Sums of Squared Loadings is

62.941% which is greater than 60%, the researcher confirmed that the variable is

passing the validity test. The test results shown that component 1 had an

eigenvalue of 8.885, whereas component 2, 3 and 4 had an eigenvalue of 1.614,

1.081 and 1.008 respectively. It can be confirmed by Scree Plot which is shown in

69
Figure 4.1, i.e. there are four predominant factors that influencing spending habits

of students in Malaysia.

70
 Figure 4.1
Scree Plot – Eigenvalues

Table 4.17
Rotated Component Matrix
Component
Item 1 2 3 4
33 0.736
21 0.735
20 0.709
31 0.648
32 0.637
22 0.312
24 0.620
30 0.589
34 0.575
23 0.527
27 0.833
28 0.783
26 0.683
25 0.654
29 0.502
19 0.560
18 0.525
15 0.404
16 0.898

Table 4.17 shows rotated component matrix. Item no.17 has been deleted because

it has a negative loading of 0.753 (Appendix 12). First component, primarily a

measure of prestige factor comprises eight items, namely 33, 21, 20, 31, 32, 24,

71
 30 and 34. Second component, primarily a measure of promotional approaches,

comprises five items, namely 27, 28, 26, 25 and 29. Four items in the third

component which primarily measure social status are 22, 23, 19 and 18. The last

component which primarily measure product usage and purchasing power

comprises of two items which are 15 and 16. The researcher conducted a final

step before the interpretation of the test results, i.e. to determine Cronbach’s alpha

coefficient of internal consistency to ensure that all the four components produce

a reliable scale.

4.6 Reliability Test

Table 4.18
Reliability Tests For Components
Components Cronbach’s N of Items
Alpha

Component 1 – Prestige Factor 0.900 8

Component 2 – Promotional Approaches 0.833 5

Component 3 – Social Status 0.779 4

Component 4 – Product Usage and Purchasing 0.438 2

Power
Overall 0.934 19

Table 4.18 shows that the overall Cronbach’s Alpha value is 0.934. Prestige factor

has the highest Cronbach’s Alpha of 0.900, followed by promotional approaches

and social status which is 0.833 and 0.779 respectively. Therefore, the data is

reliable because the Cronbach’s Alpha is greater than 0.70 (Field & Miles, 2010).

However, product usage and purchasing power has to be rejected because the

72
 Cronbach’s Alpha is 0.438 which is not acceptable because it is less than 0.50

(Nunnally, 1978).

4.7 Checking Relationship between Variables

Table 4.19
The Correlation results for all variable relationships
Statistical
Variable F-value Significant R Square Test Result

PF – SH 19.471 0.000 0.293 Medium Positive

PA – SH 16.287 0.000 0.177 Medium Positive

SS – SH 21.034 0.000 0.182 Medium Positive

Total 10.947 0.000 0.337 Medium Positive

The researcher conducted Multiple Regression Analysis in order to confirm the

fitness of the model, served as an extension of bivariate Pearson product-moment

correlation. Standard Regression model applied in order to examine the

relationship between the whole set of predictors and the dependent variable

(Appendix 13).

73
Table 4.19 shows that prestige factor (“PF”) is significantly correlated with

spending habits (“SH”). The result explains 29.3% of the variability of the

spending habits and indicative of a medium effect size, according to Cohen’s

(1998) classification. The F-value is 19.471 with p-value of 0.000, which is less

than the chosen 5% level of significance. Thus, this confirmed the fitness of the

model and indicates that there is a statistically significant relationship between

prestige factor and the spending habits.

A significant correlation was also found between promotional approaches (“PA”)

and spending habits (“SH”) which is shown in Table 4.19. The result shows 17.7%

of the variability of the spending habits and indicative of a medium effect size,

according to Cohen’s (1998) classification. The F-value is 16.287 with p-value of

0.000, which is less than the chosen 5% level of significance. Thus, this

confirmed the fitness of the model and indicates that there is a statistically

significant relationship between promotional approaches and the spending habits.

Apart from that, Table 4.19 shows a significant correlation between social status

(“SS”) and spending habits (“SH”). The result explains 18.2% of the variability of

the spending habits and indicative of a medium effect size, according to Cohen’s

(1998) classification. The F-value is 21.034 with p-value of 0.000, which is less

than the chosen 5% level of significance. Thus, this confirmed the fitness of the

model and indicates that there is a statistically significant relationship between

social status and the spending habits.

74
Besides, the result shown in Table 4.19 also indicates that there is a significant

correlation between all the above independent variables, namely prestige factor,

promotional approaches and social status and spending habits (“SH”). The result

explains 33.7% of the variability of the spending habits and indicative of a

medium effect size, according to Cohen’s (1998) classification. The F-value is

10.947 with p-value of 0.000, which is less than the chosen 5% level of

significance. Thus, this confirmed the fitness of the model and indicates that there

is a statistically significant relationship between all the above independent

variables and the spending habits.

Table 4.20
Component Correlation Matrix

Component PF PA SS PU

PF 1.000 .510 -.347 .233

PA .510 1.000 -.174 .210

SS -.347 -.174 1.000 -.134

PU .233 .210 -.134 1.000

Extraction Method: Principal Component Analysis.

Rotation Method: Oblimin with Kaiser Normalization.

Table 4.20 indicates the correlation between the four independent variables. The

result shows that there is a positive relationship between prestige factor (“PF”)

and promotional approaches (“PA”) and appear to be large related in view that the

strength of association is 0.510 which is greater than 0.5 (Deborah, 2009).

75
Prestige factor (“PF”) also has a positive relationship with product usage and

purchasing power (“PU”) and appear to be small related because the correlation

is 0.233 which is in the range of 0.1 to 0.3 (Deborah, 2009). However, the result

shows that there is a negative relationship between prestige factor (“PF”) and

social status (“SS”) and appear to be medium related because the correlation is -

0.347 which is in the range of -0.3 to -0.5 (Deborah, 2009).

Promotional approaches (“PA”) indicates a positive relationship with product

usage and purchasing power (“PU”) and appear to be small related because the

correlation is 0.210 which is in the range of 0.1 to 0.3 (Deborah, 2009). However,

there is a negative relationship between promotional approaches (“PA”) and social

status (“SS”) and appear to be small related because the correlation is -0.174

which is in the range of -0.1 to -0.3 (Deborah, 2009). Lastly, the result shows that

there is a negative relationship between social status (“SS”) and product usage and

purchasing power (“PU”) and appear to be small related because the correlation is

-0.134 which is in the range of -0.1 to -0.3 (Deborah, 2009).

In summary, there is a positive correlation between prestige factor, promotional

approaches and product usage and purchasing power, but all these components

have a negative correlation with social status.

76
4.8 Hypothesis Tests

1. Hypothesis 1: Product Usage and Purchasing Power

Table 4.21
Product Usage and Purchasing Power : Total Statisticsx

Factor Loading

Buying decision based on financial power (16). 0.898

Buying decision influence by advertising (15). 0.404

Variance 5.041%
Reliability 0.438

The variance of initial Eigenvalues indicates that this is the forth factor has 5.041%

of 62.941% (Appendix 11). This shows that product usage and purchasing power

is also become one of the factor that influences the spending habits of college

students. Table 4.21 shows an examination of the factor loading and the result

77
indicates that all the items have a significant relationship and appear to be large

related for item no. 16 and medium related for item no. 15 (Deborah, 2009). The

findings of Inter-item correlation matrix (Appendix 17) shown that there is small

correlation between the items. However, the Cronbach’s alpha for the overall

scale is equal to 0.438, which is not acceptable because it is less than 0.5

(Nunnally, 1978). Based on the above findings, the researcher concluded that

there is no statistically significant relationship between product usage and

purchasing power and spending habits of students’ in Malaysia because the data is

not reliable. Therefore, Hypothesis 1 (H1) is rejected.

2. Hypothesis 2: Social Status

Table 4.22
Social status : Total Statisticsx

Factor Loading

Buying product for collection - Different colour and shape

0.560
with same function (19).

I always spend more than I can afford due to social status

0.527
(23).

Buying product without using it (18). 0.525

Feeling inferior if do not have good product (22) 0.312

Variance 5.407%
Reliability 0.779

The variance of initial Eigenvalues indicates that this is the third factor has 5.407%

of 62.941% (Appendix 11). This explains that social status is also one of key

78
factor that influences the spending habits of college students. Table 4.22 shows an

examination of the factor loading and the results indicates that all the items have a

significant relationship in which item no. 19, 23 and 18 appear to be large related

in view that the strength of association is greater than 0.5 (Deborah, 2009),

whereas item 22 appear to be medium related because the strength of association

is between 0.3 to 0.5 (Deborah, 2009). The findings of Inter-item correlation

matrix (Appendix 16) shown that there is middle to large correlation between the

items. Besides, the Cronbach’s alpha for the overall scale is equal to 0.779, which

is highly reliable. Based on the above findings, the researcher concluded that there

is a significant relationship between social status and spending habits of students’

in Malaysia. Therefore, Hypothesis 2 (H2) is accepted.

3. Hypothesis 3: Promotional Approaches

Table 4.23
Promotional Approaches : Total Statisticsx

Factor
Loading

I will buy product with discount price (27). 0.833

I tend to buy impulse if I see discount is offered (28). 0.783

Free product can be reason to induce me for impulse buying

0.683
(26).

I will buy product if I can get free product (25). 0.654

79
I always spend more than I can afford due to promotion
0.502
given (29).

Variance 8.069%
Reliability 0.833

The variance of initial Eigenvalues indicates that this is the second factor has

8.069% of 62.941% (Appendix 11). This shows that promotional approaches

plays a big role in creating the spending habits of college students. Table 4.23

shows an examination of the factor loading and the result indicates that all the

items have a significant relationship and appear to be large related in view that the

strength of association is greater than 0.5 (Deborah, 2009). The findings of Inter-

item correlation matrix (Appendix 15) shown that there is middle to large

correlation between the items. Besides, the Cronbach’s alpha for the overall scale

is equal to 0.833, which is highly reliable. Based on the above findings, the

researcher concluded that there is a significant relationship between promotional

approaches and spending habits of students’ in Malaysia. Therefore, Hypothesis 3

(H3) is accepted.

4. Hypothesis 4: Prestige Factor

Table 4.24
Prestige Factor : Item – Total Statisticsx

Factor Loading

The most important thing for me is the image of store in 0.736

buying goods (33).
0.735
I will buy product that have good reputation (21).

80
 I will buy product that usually used by mid-high level 0.709
Person (20).

Feeling arrogant in buying product that have good 0.648

reputation (31).

Family always remind to buy good and quality product 0.637

(32).
0.620
Parents' asked to buy only branded product (24).
0.589
I will buy expensive product to show prestige (30).

I always spend more than I can afford due to peer pressure 0.575
(34).
44.425%
Variance
0.900
Reliability

The variance of initial Eigenvalues indicates that this is the first factor has 44.425%

of 62.941% (Appendix 11). This shows that prestige factor is the most dominant

factor that influences the spending habits of college students. Table 4.24 shows an

examination of the factor loading and the result indicates that all the items have a

significant relationship and appear to be large related in view that the strength of

association is greater than 0.5 (Deborah, 2009). The findings of Inter-item

correlation matrix (Appendix 14) shown that there is middle to large correlation

between the items. Besides, the Cronbach’s alpha for the overall scale is equal to

0.900, which is highly reliable. Based on the above findings, the researcher

concluded that there is a statistically significant relationship between prestige

factor and spending habits of students’ in Malaysia. Therefore, Hypothesis 4 (H4)

is accepted.

4.9 Chapter Summary

81
Based on the research that the researcher have conducted to 384 respondents, the

researcher concluded that three of the independent variables, namely prestige,

promotional approaches and social status had influenced the spending habits

among students in Malaysia. However, product usage and purchasing power had

not influenced the students’ spending habits in Malaysia, but this component has a

correlation with prestige and promotional approaches. Thus, it is indirectly

influences the students’ spending habits.

Descriptive Statistics test shown that Standard Deviation is ranging from 0.832 to

1.254 level and Standard Error is ranging from 0.042 to 0.064 level which

provides a valuable descriptive measure. The Normality test results is acceptable

in view that kurtosis is between -2 to +2 levels. (George & Mallery, 2010).and

Shapiro-wilks test indicates that the data results is acceptable in view that p-value

is less than 5%, denotes the data significantly deviate from a normal distribution.

In addition, the demographic characteristics of the respondents have been

identified.

Kaiser-Meyer-Olkin (“KMO”) have been conducted to test the validity. The

survey results shown the value of 0.930 which is greater than 0.50 (Warnaars and

Pradel, 2007). Factor analysis have been conducted and four key components

have been identified. It was hypothesised that the dominant factor that influences

the spending habits of college is prestige factor (component 1) and followed by

promotional approaches (component 2), social status (component 3) and product

usage and purchasing power (component 4).

82
The overall Cronbach’s Alpha value derived from Reliability Test is 0,934. In

term of the respective components, prestige factor carried the highest value, i.e.

0.900, followed by promotional approaches (0.833) and social status (0.779). It

means that all the data for these three components are reliable because the

Cronbach’s alpha is greater than 0.70 (Field & Miles, 2010). However, the

Cronbach’s alpha for product usage and purchasing power is 0.438 which is less

than the acceptable level of 0.500 (Nunnally, 1978). The results extracted from

Multiple Regression Analysis confirmed the fitness of the model and indicates

that there is a statistically significant relationship between prestige factor,

promotional approaches and social status and the spending habits.

Components correlation matrix concluded that there is a positive correlation

between prestige factor, promotional approaches and product usage and

purchasing power, but all these components had a negative correlation with social

status. Besides, corrected item-total correlation matrix and inter-item correlation

matrix for each of the component have been analysed and shown that it is related

with each other. Based on the above findings, the researcher accepted the

following hypothesis, namely prestige factor (H4), promotional approaches (H3)

and social status (H2). Product usage and purchasing power (H1) is rejected

because the Cronbach’s Alpha is less than the acceptable level of 0.500 (Nunnally,

1978).

83
 CHAPTER FIVE

CONCLUSION AND RECOMMENDATION

5.0 Introduction

This chapter describes the findings derived from Kiser-Meyer-Olkin (“KMO”),

factor analysis, Reliability Test and multiple regression analysis which have been

discussed in the previous chapter. Apart from that, theoretical and practical

contribution of the study will be discussed. At the end of this chapter,

recommendations for further improvement and conclusion of this study have been

drawn.

84
5.1 Findings on Product Usage and Purchasing Power

Product usage and purchasing power is one of the factor that influences the

spending habits of college students in view that the variance of initial Eigenvalues

is 5.041% of 62.941%. However, the Cronbach’s Alpha is 0.438 which is less

than the acceptable level of 0.50 (Nunnally, 1978). Therefore, the measurement is

not reliable and the researcher concluded that there is no statistically significant

relationship between product usage and purchasing power and spending habits of

college students in Malaysia. Therefore, hypothesis 1 (H1) is rejected.

However, this factor has a correlation with the other key components. It was

hypothesised in the component matrix that there is a small positive correlation

with prestige factor (0.233) and promotional approaches (0.210). As a result, even

though this hypothesis is rejected but it influences the college students spending

habits indirectly. The test result of this study has the differences with the result

conducted by previous researchers. Pinto (2005) states that education on product

usage and purchasing power will cultivate a healthy spending habits.

Hotpascaman (2008) argued that the usage of product influence spending habits in

view that every people have their own perspective about how long the goods can

be used. Karwowsk (2011) states frequency and amount of product used show the

life span of the product. Besides, Agustia (2012) concluded that fulfilling desire

and purchasing power are the factors that influencing the spending habits of

college students and Enrico et al. (2014) concluded that students who have bigger

purchasing power may tends to spend more. Even though there is a differences

85
 between the survey results and the findings from the previous researchers, the

researcher concluded that product usage and purchasing power hypothesis is

rejected but acknowledge that it is related with prestige factor and promotional

approaches. Thus, it is indirectly influences students’ spending habits in Malaysia.

5.2 Findings on Social Status

Social status is also one of the key factor that influences the spending habits of

college students in view that the variance of initial Eigenvalues is 5.407% of

62.941%. . The Cronbach’s Alpha is 0.779 which is greater than 0.70 (Field &

Miles, 2010). It was hypothesised in the component matrix that there is a medium

negative correlation with prestige factor (-0.347) and also small negative

correlation with promotional approaches (-0.174) and product usage and

purchasing power (-0.134). It indicates that social status stand independently and

did not affect by prestige factor, promotional approaches or product usage and

purchasing power. In order to show social status, the college students always

spend more than they can afford and will buy product without using it. They feel

inferior if do not have good product and will buy product for collection purposes.

This is clearly shown in the inter-item correlation matrix (Appendix 16). As a

result, they become more consumptive. The test result of this study has the

similarity with the result conducted by the previous researchers. Wilson (2005)

and Bordon (2008) hypothesized that spending habits driven by social status and

satisfaction. Asifo (2010) states that social status is a key factor that influences

students’ spending habits and marketing activities could tailored according to the

different social class. Sunny (2011) argues that spending habits affected by social

86
 status, especially influence by reference group such as family, role and status.

This indicates that their lifestyle is affected by their surroundings, especially

friends where they will spend more in order to maintain the social status. Enrico et

al. (2014) concluded that people will buy products with higher price even though

the price of goods decrease in order to show higher social status. Besides,

Hawkins (1998) concluded that social status is part of inherited individual

characteristics that are moulded and formed from the social interaction experience.

Based on the above study and the research findings from the previous researchers,

the researcher confirmed that there is a statistically significant relationship

between social status and spending habits among college students in Malaysia.

Therefore, Hypothesis 2 (H2) is accepted.

5.3 Findings on Promotional Approaches

Promotional approaches plays a big role in creating the spending habits of college

students in view that the variance of initial Eigenvalues is 8.069% of 62.941%. .

The Cronbach’s Alpha is 0.833 which is greater than 0.70 (Field & Miles, 2010).

It was hypothesised in the component matrix that there is a large (0.510) positive

correlation with prestige factor and small (0.210) correlation with product usage

and purchasing power. However, promotional approaches had a negative (-0.174)

correlation with social status. It indicates that social status did not affect

promotional approaches. The results of this study explains that the college

students will become more consumptive when there is promotion. This is clearly

87
 shown in the inter-item correlation matrix (Appendix 15). They tend to buy

impulse when there is price discount or free product. In addition, they always

spend more than they can afford due to promotion given. As a result, they become

more consumptive. The test result of this study has the similarity with the result

conducted by the previous researchers. Millman (1986) states that when there is

unexpected price drops, the spending on unrelated goods will be increased. Karen

(2010) concluded that promotional on unplanned grocery items would attract

consumers to spend more. Ajay (2010) states that the consumers will spend more

when there is a sweepstakes award because there is a probability of winning grand

prize. Rejennd et al. (2014) hypothesized that under the competitive global

business environment, the students are exposed to advertising campaigns and

promotional approaches. Besides, Alirena (2011) concluded that there is a positive

relationship between spending habits and promotional approaches among college

students. Based on the above study and the research findings from the previous

researchers, the researcher confirmed that there is a statistically significant

relationship between promotional approaches and spending habits among college

students in Malaysia. As a result, Hypothesis 3 (H3) is accepted.

5.4 Findings on Prestige

Prestige factor is the most dominant factor that influence the spending habits of

college students in view that the variance of initial Eigenvalues is 44.425% of

62.941%. . The Cronbach’s Alpha is 0.900 which is greater than 0.70 (Field &

Miles, 2010). It was hypothesised in the component matrix that there is a large

(0.510) positive correlation with promotional approaches and small (0.233)

88
correlation with product usage and purchasing power. However, prestige factor

had a negative (-0.347) correlation with social status. It indicates that social status

did not affect prestige factor. The results shown that in order to maintain the

prestige, the college students become more consumptive when there is promotion

or when they want to fulfil their desire. This is clearly shown in the inter-item

correlation matrix (Appendix 14). They are willing to buy expensive product to

show prestige because they feels arrogant to have a product that have good

reputation and usually used by mid-high level person. In addition, they always

spend more than they can afford due to peer pressure. Besides, they are influenced

by the parents who asked them to buy good and quality product, especially

branded product. As a result, they become more consumptive. The test result of

this study has the similarity with the result conducted by the previous researchers.

Goode (1978) argues that individuals who enjoy relatively high prestige have a

greater freedom of action which could lead to social change and exert influence

on others. In order to meet their need for self-esteem, they are willing to spend

most of their money in luxurious and branded products. They also tend to spend

on entertainment and dining such as Starbucks and Coffee Bean which is

expensive (Rajennd et al., 2014) in order to show “status symbol” (Cude, 2006).

They buy products not for what they can do, but also for what they mean. Leclerc

(2012) stated that students exposed to social pressure and Enrico et al. (2014)

concluded that students will over-spend in order to maintain prestige, whereas

Daniel (2007) said students influences by brand and fashion. Based on the above

study and the research findings from the previous researchers, the researcher

confirmed that there is a statistically significant relationship between prestige

89
 factor and spending habits of college students in Malaysia. Thus, Hypothesis 4

(H4) is accepted.

5.5 Theoretical and Practical Contribution of the Study

Based on the research that the researcher have conducted to 384 respondents, the

researcher concluded that the most dominant factor that influences the spending

habits of students is prestige factor, followed by promotional approaches and

social status. Even though product usage and purchasing power hypothesis is

rejected, but the researcher acknowledge that it serves as an indirect factor that

influences the spending habits among students in view that this component is

related to prestige factor and promotional approaches.

This study have made some unique contributions to the literature. It contributes to

the understanding of students’ spending habits which helped in throwing light on

factors that influence spending habits of students in Malaysia. By knowing these

factors, hopefully the college students will be more aware about the spending

habits that triggered it and to suppress their consumptive behaviour in view that

they are soon to dominate the consumer market. They need to limit their spending,

think about the long-term consequences and need to realize the value of delayed

gratification (Consumer Federation of America, 1999). Better understanding of

spending habits may minimise the risk of future financial instability on matching

income and expenditures. Financial stability may assist to minimize the risk of

bankruptcy and social problems such as commit crimes, alcohol, corruption, drugs

90
and commit suicide. At the same time, it aims to cultivate savings for emergencies

and to have a proper plan for retirement.

This study also helps the parents in educate their children in the more effective

manner. It is important for parent to establish the financial habits with their

children. According to Dr. Soyeon Shim (The Telegraph, 2009), a student is deep

in debt or has a lot of savings are inherited their sense from their parents. He

reveals that parents have the greatest influence on student’s financial habits, above

work experience and financial education in secondary or high school. Parents who

intentionally teach their children about financial management may exert a greater

influence on children’s financial knowledge and the behaviour of the parents will

also influence their financial attitudes.

Apart from that, this study will provide valuable data for university administrators

in enrolment management and student affairs, high school counsellors and

economic educators in planning and developing financial and economic education

programs to help the student’s manage their spending. Students need to receive

more financial education now so they can be better financial consumer in today’s

increasingly complex marketplace. Schreiner et al. (2002) suggested that financial

classes with shorter hours to be more effective than classes with longer hours,

whereas Lyons (2004) found that short and easily accessible methods may be

more appropriate in reaching students. Therefore, it is essential for financial

experts and educators to consider how to package financial content appropriately,

particularly for introductory on personal finance.

91
 In addition, this study also will help the brand owners whose target market is

students should strive to maintain their brand image and ambience in consistence

with current trends and icons, which reflect the younger generation. Furthermore,

the findings of this study provide valuable insights to the marketers in identifying

and taking steps to improve their products and services.

5.6 Recommendations for Future Research

Similar to other research, this study had limitations as mentioned in the previous

chapter. One possible limitation concerns the scope of the study which merely

covers the college students in Klang Valley. Therefore, it may not be able to

represent the college students in other areas, especially rural areas. Besides four

independent variables that had been discussed, there are other factors that may

affect the students’ spending habits such as gender, family background, financial

literacy and influence of parents and peers. In addition, this study was a cross-

sectional study with data taken at one point in time and all the generalizations

drawn should be limited to the populations sampled.

In view of the limitations described above, several promising directions for future

research has been identified. Firstly, the results of this research only reflect the

response from limited college students in Klang Valley. Therefore, further

measures for this research to be conducted on a national basis would be beneficial,

i.e. research to include rural areas, small towns and other cities to reflect the

demographic composition of Malaysia. Secondly, other factors that affecting the

spending habits may be considered in the future research, namely gender, family

92
 background, marital status, parental influences and peer influences. Thirdly, a

study to examine the differences in financial literacy (financial knowledge,

attitudes and behaviour) among students is another important area to attempt in

view that the ability to make important personal financial decisions will contribute

to the better financial behaviour and will affect the rest of their lives. Lastly, the

researcher need more time in order to study the research in the more effective

manner, especially in term of the geographic coverage and literature review.

5.7 Conclusion

This chapter summarize the overall study in this research paper and concluded

that based on the research conducted to 384 respondents, the most dominant factor

that statistically influences the students’ spending habits is prestige factor,

followed by promotional approaches and social status, whereas the product usage

and purchasing power do not have statistically influenced the students’ spending

habits, but the researcher acknowledged that there is an indirect factor influencing

the spending habits because it is correlated to prestige factor and promotional

approaches.

This study will assist to students to have a better understanding on spending habits

that triggered which may minimise the risk of future financial instability. It will

help to minimise the risk of bankruptcy and social issues as well as commence

savings now in order to have sufficient money for their retirement. This study also

helps the parents in educate their children in the more effective manner and

provide a valuable data for the administrators and educators in planning and

93
developing financial and economic education programs which will help the

students in managing their personal financial in the most effective manner. In

addition, this study will be very informative for the marketers in identifying and

takings steps to improve their products.

At the end of this chapter, an area of improvement to this study had been

recommended. Future measures for this research to be conducted on a national

basis which should include rural areas, small towns and other cities to reflect the

demographic composition of Malaysia and to increase the number of factors such

as gender, family background, marital status, financial literacy, parental and peer

influences that being used in conducting the research.

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