THEORETICAL FRAMEWORK
The theoretical underpinning of this study is based on Bandura's Social Learning Theory,
(1977), which emphasizes the role of observation and modeling in learning behavior. According
to social learning theory, human learning and behavior are influenced by a combination of
cognitive and contextual influences. (Bandura, 1977, as cited in McLeod, 2016). In the context
of financial decision-making, the Social Learning Theory suggests that students' budgeting
strategies and financial behaviors are influenced by the observations and experiences of others,
including peers, family members, and social media influences. Students learn how to manage
their finances based on the behaviors they observe and the outcomes they witness in others.
The impact of budgeting strategies on the financial decision-making of the grade 11 ABM
students can be understood through the lens of the Social Learning Theory. Students may adopt
budgeting strategies based on the models they observe and the reinforcement they receive for
certain financial behaviors. As stated by Encio et al., (2022) Students can efficiently manage
their financial resources if they have a positive attitude toward borrowing, saving, financing, and
compromising. Positive outcomes, such as financial stability and security, can reinforce these
budgeting strategies, while negative outcomes, such as debt and financial stress, can lead to a
reevaluation of their approach.
In addition, this study can also be anchored on Locke and Latham's, (1990) Goal Setting
Theory, which asserts that setting specific, challenging goals leads to higher performance. In the
context of budgeting strategies and financial decision-making among students, this theory
implies that establishing clear financial goals can motivate students to develop strategies, exert
effort, and persist in achieving those goals. Pimpong & Laryea, (2016) stated that setting a goal
is effective on any task where the person has control over his or her performance. Specifically,
students who set specific financial goals related to budgeting, such as saving a certain amount
each month or limiting expenses in specific categories, are more likely to make informed
financial decisions. These goals should be challenging yet attainable, as overly easy goals may
lack motivation while excessively difficult goals may lead to discouragement.
Moreover, setting financial goals directs students' attention to their financial behaviors,
encouraging a more conscientious approach to budgeting and spending. Pimpong and Laryea,
(2016) also noted that budgets should be set at a level that will be difficult for them to meet;
reaching a high standard target fosters efficiency, which in turn inspires a desire to do more.
This increased attention, coupled with clear financial goals, can enhance students' persistence
in their budgeting efforts, even in the face of challenges or temptations to overspend. Ultimately,
setting financial goals encourages students to develop and implement budgeting strategies,
such as tracking expenses, creating a budget plan, seeking financial advice, and making
necessary adjustments, which can lead to better financial outcomes and decision-making.
Bandura, (1977) Social Learning Theory.
McLeod, (2016) Simply Psychology, Social Learning Theory
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Encio et al., (2022) Financial Attitude Towards Budgeting, Saving, Borrowing, and Investing
Among Students of a Private Higher Education Institution
https://repository.cpu.edu.ph/handle/20.500.12852/2704
Locke & Latham's, (1990) Goal Setting Theory
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Dsetting%20theory%20is%20an,well%20as%20bolster%20employee%20engagement.
Pimpong & Laryea, (2016) Budgeting and its impact on financial performance: The case of
non-bank financial institutions in Ghana
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+ON+FINANCIAL+PERFORMANCE%3A+THE+CASE++OF+NON-BANK+FINANCIAL+INSTIT
UTIONS+IN+GHANA&btnG=#d=gs_qabs&t=1713628849654&u=%23p%3DEeFZ0XvOFIQJ
