Financial Knowledge and Saving Behaviors in Rural Areas of Thailand: A Descriptive Survey

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Proceeding Book of the 3rd International Conference on Multidisciplinary Research, Volume 03, No. 2, 2020, ISBN: 978-623-7655-12-1

‘‘Opportunities and Challenges for Sustainable Learning, Research and Community Service in Covid-19 Pandemic Constraints’

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Financial Knowledge and Saving Behaviors in Rural Areas of Thailand: A Descriptive Survey

Exkarach Deenang¹, Poramet Sanubon²

1, 2 The Research and Development Institute (RDI) of Udon Thani Rajabhat University Thailand

*Corresponding Author: Exkarach Deenang, e-mail: [email protected]

Abstract

This paper aimed to identify: 1) the participant’s ability or disability to implement and utilize what they had learned, and 2) the participants’ financial behavioral changes and attitude changes towards managing money. Using the convenience sampling method, thirty attendees of the managing-money training project were selected to participate in Focus Group Discussions (FGDs). The interview questions were based on the OECD/INFE questionnaire of adult financial literacy. From the FGDs, it was found that most participants mainly relied on agricultural business, labor work, or private micro or small businesses. The FGDs also revealed that the participants had a general understanding of the basic financial knowledge, the implementation of income and expense tracking, budgeting as well as savings.

Doing a family account was reported to be a new activity among the participants’ families. Children’s behaviors on expenses and irregular income streams were also found to be the major causes of their financial pressure. Developing the ability to balance income and expenses can be one solution for them to live without debt. However, some of the participants said that they did not have financial goals and would rather live for today than plan for tomorrow.

Keywords: finance, saving-behaviors, money-management

1. Introduction

Financial literacy is the ability to process economic information and make informed decisions about financial planning, wealth accumulation, debt, and pensions (Lusardi &

Mitchell, 2014). The lack of financial literacy and economic understanding substantially contributes to poverty and over-indebtedness. It also impedes people to exploit economic chances and any possibilities.

Financial literacy has been recognized as an important policy objective in many countries (OECD/INFE, 2015), which reveals the need for the development of financial education. The Fiscal Policy Office (FPO) of Thailand in cooperation with the Government Saving Bank (GSB) and the Saving Banks Foundation for international cooperation (SBFIC) had established a training project to improve the socio-economic living conditions in the rural areas, especially in the north-east region of the Kingdom of Thailand (Isaan). The target groups are grassroots people, poorer households, and micro or small enterprises in the provinces of Nongbua Lampoo and Nong Khai.

From February to April 2019, the training project attendees in the two pilot provinces were in the progress of practicing the implementation of a module series related to financial management. In July, the Research and Development Institute (RDI) of Udon Thani Rajabhat University investigated the follow-up progress to evaluate the overall usefulness and the practical relevance of the training project.

Thus, this paper aimed to identify 1) the attendees’ ability or disability to implement and utilize what had been learned, and 2) the changes in the attendees’ financial behaviors and the change of attitude towards managing money.

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2 There are three domains in financial literacy, namely financial knowledge, financial behaviors, and financial attitude (Atkinson & Messy, 2012). Similarly, OECD/INFE (2016) defined financial literacy as the three interrelated aspects (financial knowledge, financial behaviors, and attitudes) toward longer-term financial planning, or as the combination of awareness, knowledge, skills, attitude, and behaviors necessary to make financial decisions and achieve individual financial wellbeing ultimately.

Survey data on financial literacy can provide information on the levels of financial literacy of various groups within a country, thereby indicating which groups have the greatest needs for financial education. Ideally, the survey should be carried out repeatedly to identify whether policies have led to an improvement and to find out what more needs to be done (Morgan & Trinh, 2019). The use of a standardized survey instrument also makes it possible to make cross-country comparisons of key measures of financial literacy and related variables.

2. Method

Using the convenience sampling method, thirty attendees of the “Strengthening of Financial Capability in the Kingdom of Thailand” training project from Nongbualamphu and Nong Khai province were selected as the participants of the focus group discussions. The interview questions were based on the OECD/INFE questionnaire of adult financial literacy (OECD 2015) to capture the changing of the participants’ financial behaviors, attitudes, and knowledge. The content analysis was used to determine all the presence of certain words, themes, or concepts within some given qualitative data. All of the data collection processes were carried out in July 2019.

3. Results and Discussions

A. Key findings from the First Focus Group Discussion in the Province of Nongbualamphu Thailand

The focus group discussion carried out in the province of Nongbualamphu revealed that the participants had a high level of financial knowledge, reflecting a better understanding of the basic financial information as well as the participants’ ability to apply the knowledge into their daily life.

The new routine activities among families related to the training they had participated in were expense tracking, categorizing the monthly expenses, budgeting and savings plans for short-term purposes, and paying the debt.

Regarding the awareness of setting priorities in the expenses, all participants showed that they were aware of the importance of paying bills, such as for a mortgage or loan credit, to avoid financial problems. For the people with a limited budget, the ability to set priorities in using the budget will help them find ways to minimize unnecessary spending and pay for what they need, which will eventually allow them to have some money for savings. However, some participants simply preferred tracking the income and expenses in a writing form. Family budgeting or analyzing the cash flows seemed to be too complicated or in-depth for them.

The irregular income stream, large financial decisions, and emergencies were reported to be the main causes of the participants’ financial pressure. Talking to the family members was often done to decrease the pressure and make a financial decision collectively. More than half of the participants stated that financial pressure did not affect them because they had no time to think or worry about it.

All of the target group participants stated that they were aware of the risks associated with indebtedness; however, they sometimes had no choice other than borrowing some money from other sources (such as from relatives or friends) or taking credit, which are the common solutions among those living in rural areas. Most participants claimed that they had repayment plans and confidence in their ability to repay their loans.

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3 More than half of the participants stated the doing family incomes and expenses account help them stop wasting money. Some of the participants claimed that they did not list the spending on liquor and cigarettes in their expense record. However, they included the spending on lottery and cosmetics in it because they believed that these two things are some kind of entertainment for the Thais. Thus, it might take time for them to lower the frequency of buying these items. Some of the participants also claimed that they had some money left for savings after taking half of the amount of money aimed for lotteries.

B. Key findings from the Second Focus Group Discussion in the Province of Nong Khai Thailand.

Similar to the key findings in the province of Nongbualamphu, most of the participants in the province of Nong Khai mainly relied on agricultural businesses for a living. Less than half of the participants were business owners while the rest were laborers. It was also revealed that they had a high level of knowledge and skills in dealing with irregular income streams, relying on agricultural products.

The entry participants said that tracking incomes and expenses is an important activity to do in life because it can provide them with all the necessary information directly related to the family expense. More than half of the participants said that they had successfully applied the knowledge to stop overspending and balanced the budget by keeping track of the income and expenses.

In terms of the financial pressure, most participants felt it due to common causes, such as a large amount of debt, insufficient amount of income, the expense of raising children, marriage, and a spouse’s different way on how to manage the budgets. The expense behavior of their children was also reported to be one major factor of financial pressure among the families, yet most of the participants preferred to avoid discussing it to prevent conflicts.

In this focus group discussion, the participants showed that they had the ability to plan financial goals, including the extent of indebtedness. To achieve the goals, most of the participants believed that it is important to keep track of income and expenses and set plans in advance. However, some others agreed that they preferred living for today to planning for tomorrow.

C.The Findings from the Survey

From the survey, it was known that most of the bank customers in rural areas in Thailand were invited to attend the training in financial skills. It resulted in the implementation of what had been learned from the training and a better expense behavior. However, sending or transferring those skills to a family member is a spectacular factor. It was also found that the participants mainly rely on agricultural businesses and labor work, which sometimes were affected by poor agricultural products or the demands of the workers. The lack of income and emergency cases, such as illness, can lead to financial problems.

The survey also indicated the level of the participants’ financial knowledge and their need for financial education. It was found that they had a good understanding and knowledge of finance, yet it is still necessary to further improve their financial knowledge.

4. Conclusions

Based on the findings, it can be concluded that the participants were satisfied with the personal training and training project. They also had a general understanding of the basic financial knowledge of income and expense tracking, family budgeting, and savings. In addition, they believed that doing expense tracking and budgeting can improve their livelihood.

Doing income and expense account, verifying and categorizing the monthly expenses were new activities for the participants’ families. When it came to taking an important financial decision, they did it with their family. Lack of income, emergencies such as illness, and

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4 children expense behaviors were also among the common problems for the majority of the participants. In urgent situations, they often borrowed money from other sources or took credit from banks. More than half of the participants were found to be current borrowers or have loaned credit either from banks, friends, or family.

Most of the participants also had the ability to plan for their financial goals and the extent of paying for indebtedness. They also saved for short-term purposes, such as for emergencies and paying the debt. However, saving for the long-term goals and lifecycle events, such as retirement and education, were found to be less common among them.

Survey data revealed that they need further knowledge on some key financial aspects, but the actual factor and the situation of each individual can be a challenge to success in personal money management. A further study on this topic is thus required, especially on financial behaviors, the relationships of income or the affected factor with the savings behavior, and the lack and factors to improve the financial behaviors.

References

Atkinson, A. & Messy, F. (2012). Measuring Financial Literacy: Results of the OECD/International Network on Financial Education (INFE) Pilot Study – OECD Working Papers on Finance, Insurance and Private Pensions, No. 15. OECD Publishing.

Retrieved from http://dx.doi.org/10.1787/5k9csfs90fr4-en. Accessed on 4 October 2020.

Lusardi, A., & Mitchell, O. S. (2014). The economic importance of financial literacy: Theory and evidence. Journal of Economic Literature, 52(1), 5–44.

Morgan, P., & Trinh, L. (2019). Determinants and Impacts of Financial Literacy in Cambodia and Vietnam. Journal of Risk and Financial Management, 12(1), 1-24.

OECD/INFE. (2015). National Strategies for Financial Education: OECD/INFE Policy Handbook. Retrieved from http://www.oecd.org/daf/fin/financial-education/National- StrategiesFinancial-Education-Policy-Handbook.pdf

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