CHAPTER IV

Results and Discussions

In this chapter, it will present the results of the research study, its conclusions

together with the recommendations that are being developed by the researchers.

A. Impact of Financial instability on individuals

 Finances can affect our mental health. It affects our mental and emotional state

of mind. Having financial problem can be extremely stressful. You can also get

anxiety when you struggling with Financial instability.

 The effect of living a financially instability in psychological well-being is you might

be unhappy or depressed especially when it comes to a family. The couple may

be arguing or fight because of being lack of money there is a possibility that they

will be emotional especially when they also have a child/children there’s a big

impact that their child may have depression.

 Sometimes they have a bad thinking because of Financial problem. Because of

their desire to get out or get up in life, there are now thinking of doing something

bad to fill their needs. This can have a huge impact because of many possible

negative things that happen to other people.

 It affects the way people think, in the way that they think to do something bad or

negative.

 They think to quit studying and do such thing that can affect their lives.
 As a person it is difficult for me to make money especially in my studies because

the fees are so high that sometimes it affects my life dreams, sometimes I

wonder if I do not Have the money How can I finish school.

Financial instability is the subjective, unpleasant feeling that one is unable to meet

financial demands, afford the necessities of life, and have sufficient funds to make

ends meet (e.g., have to reduce standard of living). It is the perception of the

financial situation that is implicated in the negative outcomes. The most consistent

finding of the research is that financial stress is associated with lowered self-esteem,

an increasingly pessimistic outlook on life, and reduced mental health, particularly an

increase in depression and hostility. There is also a link between financial stress and

suicide and alcohol consumption, likely as a result of the increased level of

depression. Financial stress is also associated with declining physical health such as

an increase in headaches, stomachaches, and insomnia. Again, it is likely that

people with a great deal of financial stress experience high levels of depression and

it is depression that is most directly associated with worsening physical health. As

financial stress increases, so does the likelihood of marital discord and breakup. As

the financial pressure mounts, couples may become preoccupied with financial

issues, leading to anger, frustration, blame, and increasing arguments - particularly

over money. As individuals become more depressed, they withdraw more from their

spouse and offer less emotional support (e.g., expressing care and concern). As the

cycle progresses, marital partners tend to engage in undermining behaviour such as

criticizing and insulting the other, further reducing the satisfaction with the

relationship. These effects tend to be strongest for people with unstable

relationships prior to the experience of financial stress. Some research suggests that

couples who have strong relationships prior to the financial stress are less likely to

experience a breakup as a result. Parents (especially fathers) who are experiencing

financial stress are less responsive to their children’s needs, less nurturing, less

consistent in their parenting, and more inconsistent in the discipline of their children.

There is also an increased potential for child abuse if financial stress is combined

with parenting stress and aggression between marital partners. Such parental

behaviours may increase the children’s risk of socioemotional problems (e.g., low

self-esteem, depression, impulsive behaviour), health problems, poor academic

performance, deviant behaviour, drug and alcohol use, withdrawal from social

relationships, and reduced aspirations and expectations. Children may become

depressed, adopt the pessimistic outlook of the parents who are undergoing

financial strain, and lose their sense of personal mastery. This can result in children

and adolescents setting lower expectations for their own careers. Financial pressure

is also related to increased conflict between parents and adolescents, particularly

over the purchase of clothes, games, and lifestyle options. It is important to note that

many of these effects on children are indirect. Children appear to exhibit these

problems to the extent that their parents are depressed and become less nurturing in

their parenting. This means that children will not be at risk for these negative

outcomes if parents are able to maintain positive, nurturing parenting skills despite

financial stress. Many people believe that economic hardship is a private issue and

they withdraw from their social networks and volunteer activities, delaying the

opportunity to seek assistance and support, but this is not an effective strategy.
Leisure activities, like volunteer work and sports, are inexpensive ways to add

interest and meaning to life and they provide the possibility of gaining much needed

social support. Other key buffers from the negative effects of financial stress appear

to be having a strong sense of personal mastery (i.e., a belief that one can manage

stressful situations) and a strong and supportive spousal relationship, through which

a couple feels capable of problem solving together. This suggests that developing

problem solving and financial management skills (to increase one’s sense of

mastery) will help to mitigate the stress, increase one’s self-esteem, strengthen the

marital relationship, and buffer children from the negative outcomes of parents

experiencing financial stress. People may require assistance in learning how to

develop these skills. Many of the studies indicated that the effects of financial stress

are largely indirect and attributable to depression. If depression is the lynchpin, then

this suggests that preventing or limiting the depression will reduce or eliminate the

effects of the stress on families. There is some suggestive evidence that as the

financial pressure is lifted (perhaps, in the case of bankruptcy, through bankruptcy

protection), some of the negative effects of stress disappear, although more

research on this issue is necessary. Dealing with economic hardship and financial

stress effectively may open a door to outcomes that are positive. Economic hardship

may result in positive changes such as finding a new job or improving one's ability to

manage personal finances.

B. Impact of Financial restriction in financial instability on individuals

 We might engage in a variety of unhealthy lifestyle or behaviors. Like drinking

alcohol every day, poor health is the common effect of this.

 They might get a desire for more money. They will look for a lot of money and the

quality of their living maybe awful and pity.

 Because people nowadays they think that without money they cannot have a

good life.

 Because of their experience, they may not be able to get what they want or need

resulting in a dent collapse if they really want to buy that thing.

 Money can have a huge impact on having a good life for example there are

things to buy since you don’t have money you need to save to buy what you

need.

 When I have no money it is hard for me to eat and buy, what I need specially

when there are so many projects that need to be passed.

The ruling paradigm of today’s macroeconomics rests on two fundamental building

blocks: its behavioral underpinning and its system view. The behavioral

underpinning of neoclassical economics is methodological individualism with

optimization. This entails that an economy can be modeled as representative agents

optimizing some objective function reflecting their preferences and with given

constraints—such as profit for entrepreneurs, consumption for consumers, and a

welfare function for the government. Methodological individualism dictates that all

economic phenomena, whether observed on the level of firms, sectors, economies,

or globally, should be explained in terms of individual optimization. In the strong

version, this implies that the whole is not more than the parts. A weaker version

allows for interactions between agents to modify the economic system’s properties,

with a feedback loop to individual behavior. This allows for a separate, though still
micro-founded, role of system properties. Methodological individualism with

optimization has also won currency in other social sciences, a development known

as “economics imperialism” (Lazear 2000). The second foundation of neoclassical

economics is the notion of the economy as a system in equilibrium. The outcome of

individual optimization processes, and thus the solution of the model, is a stable

equilibrium (or several equilibria), which is a set of parameter values that

characterizes the economy as a system and from which it can only deviate due to

shocks from outside. There is no endogenous instability. Markets are conceived as

always in a state of, or tending towards, a stable equilibrium. In an economy

modeled as several markets (e.g., for labor, for goods, and for financial assets),

each market reaches equilibrium in such a way that this is consistent and

interconnected with equilibrium conditions in other markets.

C. Utilization of financial instability in order to cope up to resources.

 If anyone struggling on financial instability, we have to make sure that we don’t

lose hope. You could a/ways talk to someone than can help you.

 They need to be positive and be zealous in all things (like their jobs/work) in

order for them to have a better living and gain more money. To keep them

motivated we need/you need to think that there’s always a hope in all things.

 As a student you do not have to go to school with money every day because if

you really want to learn courage and determination is enough.

 I was just thinking that I had to go to school even though it was hard, I could

survive everyday no matter what.

  Talking to god of course, because he is the one we can talk to and also my

parents they are my inspiration so if I finish my study I can reciprocate their

sacrifices they made.

 They take strength in their experience which serves as an inspiration for them to

be more motivated to do what should be.

In these times of financial uncertainty, it might be difficult to find someone who isn’t

stressed. Stress is a normal reaction to current events and a certain amount of it can

motivate us to take action. But when stress becomes too great, it’s possible to become

impaired instead of prepared. The good news is that stress can be managed. This is a

time to think clearly and not overreact, and there are some healthy strategies you can

use to manage stress. Beware of negativity – it can be contagious! Instead of assuming

a worst-case scenario, it’s just as easy to assume that although these are tough times,

they will pass. If you are having difficulty reshaping your thinking, take a break from

reading and listening to news that promotes fear. Pay attention to what’s going on—but

don’t react to everything you hear. Don’t make rash decisions. Now more than ever

think about the consequences of your actions—whether they concern your finances or

your personal relationships. Anxiety contributes to poor decision making. Take time and

think through what you do. Take care of yourself. It’s important to get enough sleep, eat

a healthy diet, and get exercise. You want to avoid illness that could be provoked by

stress. In addition, exercise and relaxation techniques like deep breathing and

meditation will help you reduce stress and anxiety. Use your social support network.

Spend time with people you care about and who care about you. Choose people you

trust and share your feelings with them. Brainstorm and share information with others
about effective ways to cope. Focus on the present. Of course we all think about what

the future will bring, but preoccupation with the future right now is not constructive. Put

your energy into those things that are under your control. Be honest with people in your

life about your emotional needs. Good communication will keep your personal and work

relationships healthy. Protect your children from feeling your anxiety. Young children in

particular will have no understanding of the financial situation and may become

unnecessarily fearful. Reassure when appropriate, discuss news calmly and critically

with older children, and avoid keeping the news on during family time. Keep your skills

up to date. Learn new skills. These are both good ideas, even in times of little stress.

Financial literacy is a basic knowledge that people need in order to survive in a modern

society. People should know and understand credit card and mortgage interest,

insurance, and saving and investing for the future. Garman & Forgue (2000) defines

financial literacy as knowing the facts and vocabulary necessary to manage one’s

personal finances successfully. Having knowledge of personal financial management

and the marketplace is indicative of a greater ability to manage the family’s financial

resources (Godwin, 1994). People are more likely to achieve their financial goals with

appropriate knowledge. Lack of personal financial knowledge limits personal financial

management and may cause financial problems, resulting in lower financial well-being.

Recent surveys show many Americans lack basic financial knowledge. A 1994 Merrill

Lynch survey of financial literacy revealed that many Americans did not understand the

basic financial concepts and economic data. Less than one-fifth of all respondents

passed the test. A 1996 study by the Investor Protection Trust found that only 18% of

the investors surveyed were truly literate about financial topics on investing. Most did
not know basic financial terms nor were they familiar with the performances of different

investments. Only 38%t of surveyed investors knew that when interest rates go up the

prices of bonds usually go down (“The Facts on Saving and Investing”, 1998) Another

survey by the National Association of Securities Dealers Inc. on investors’ financial

literacy found that while 63% of Americans know the difference between a halfback and

a quarterback, only 14 % can tell the difference between a growth stock and an income

stock. While 78% of Americans can name a character on a television sitcom, only 12%

know the difference between a load and no-load fund (National Association of Securities

Dealers, 1997). A 1997 survey by John Hancock Mutual Life Insurance found that 50 %

of respondents thought money-market funds invest in stocks and bonds, that 40 % were

not aware that a balanced fund invests in both stocks and bonds, and that only a

quarter knew bond prices move inversely to interest rates (Glass, 1998). In 1997,

“Money” magazine and the Vanguard Group surveyed the investment knowledge of

1,555 mutual fund investors and found that the mean score on a 22-item test was 51%

(“Mutual Fund Literacy Test,” 1997). Only 20 % of investors could answer 70% of the

questions on the test. The 1996 Retirement Confidence Survey found that the majority

of American workers have a limited financial knowledge regarding issues important in

planning and saving for retirement. Only one-third of workers had a high degree of

financial knowledge, while 55% had a moderate level, and 11% had low knowledge

levels (“Mutual fund...”, 1997). Young adults were surveyed by the Jump$tart Coalition

for Personal Financial Literacy which administered a test on personal finance

knowledge to 1509 high school seniors across the country (Jump$tart, 1998). The

survey probed the high school seniors’ knowledge of credit use, saving and investing,
budgeting, taxes, insurance, inflation, and retirement issues. The average score on the

test was 57.3%, with only 10% of the seniors getting a C or better, indicating that young

adults graduate from high school with little personal finance knowledge. There was a

relationship between not knowing about personal finances and having financial

problems, such as being targets of investment fraud; being delinquent on credit cards;

and bankruptcy (Jump$tart, 1998). Survey results showed that states with high numbers

of adults declaring personal bankruptcy also had high numbers of 12th graders who

scored poorly when tested on personal finance subjects. Georgia, Alabama, Mississippi,

and Tennessee, where the annual rate of personal bankruptcy filings was the highest

per household, were among the seven states with the lowest mean score on tests

(Jump$tart, 1998). Chen and Volpe (1998) studied the financial knowledge level of

college students. They found that participants (n=924) got 53% of questions correct.

Students with a low knowledge level tended to have wrong opinions and made incorrect

decisions. NationsBank and the Consumer Federation of America supported a

telephone interview survey with a representative sample of 1,770 households

nationwide on their financial goals, financial strategy, and basic knowledge about

important financial matters. Among 1,533 savers, only 8% of respondents got at least

three- quarters of the 14-question test of knowledge correct. Sixty-one percent got fewer

than half of the questions correct, and the average score was only 42%. Those with

higher knowledge scores had higher saving levels than those with lower scores

(Princeton Survey Research Associates, 1997). Another survey by Princeton Survey

Research Associates in 1999 studied knowledge about consumer rights and regulations

and investment issues. Forty-two percent thought that loan payments could not be
deducted from the homeowner’s paycheck and 15% were not sure, while 43%

answered correctly. Based on four questions, 64% of espondents were described as

having some knowledge or little or no knowledge about investments. In summary,

financial knowledge equips people to manage their money and handle saving and

investing decisions. A low level of financial knowledge implies a need for financial

education. Financial illiteracy may result in being a victim of investment fraud,

mismanagement of credit, bankruptcy, and a lack of preparation for retirement.