THE DETERMINANTS INFLUENCING PERSONAL FINANCIAL BEHAVIOR THROUGH PERSONAL FINANCIAL STRATEGY

Abstract

Bankruptcy problems among the individuals in Malaysia is still a continuous concern regardless of its decreasing trend. Malaysian Department of Insolvency (MdI) reveals that most of the loan defaulters were consist of the early adulthood group. These individuals portray how do they make financial decisions in terms of budgeting, savings and expenditure. This study aims to understand the patterns of the savings and expenditure habit of the early adulthood in financial institutions. It is found that the early adulthood shows a good conduct of financial behavior, however there are not properly planned and organized in terms of savings. Apart from that, the objective of this study also is to investigate the significant determinants of financial management, financial attitude and normative influencer towards personal financial behavior by exploring the relationship exist between variables through multiple regression analysis. A survey approach using convenient sampling has been adopted to conduct the study and it was distributed among the employees of financial institution in selected branch of Employees Provident Fund (EPF), Inland Revenue Board of Malaysia (IRBM), CIMB Bank and Hong Leong Bank. Imperatively, Cronbach’s alpha and Exploratory Factor Analysis were tested to improve the reliability of the survey. This study is differed from the previous studies as it adopts Statistical Analysis Software (SAS) for each analysis to gain a meaningful result. To further improve on the previous literatures, this study intends to propose a personal financial strategy which is the Balanced Money Formula on managing personal finance concerning to the allocation of monthly income towards budgeting, savings and expenditure in an optimal manner among early adulthoods. Thus, this particular study uses a real-time data that can be used as references for future research and a new theory on exploring and understanding new financial management methods may be achieved.