Analyzing the ways in which Klang Valley’s students spend their money is highly important since it coincides with the period they start to handle their finances, and therefore, their spending practices have immense repercussions on their general welfare and future financial security. The primary purpose of this literature review is to get in-depth knowledge about what influences how much students from this age group spend. To begin with, the chapter looks at the underlying theories that provide a basis for studying consumer behaviour and spending patterns, such as the Theory of Planned Behavior, Life Cycle Hypothesis and Prospect Theory, among others, in order to examine psychological and economic causes of making decisions on purchasing. As a result, it offers a thorough review of variables including socio-economic background, financial literacy, peer influence, lifestyle preferences and attitudes towards money as well as student living habits, thereby identifying key drivers behind student expenditure habits. Moreover, the chapter presents some theoretical or conceptual frames that can enable examination and prognosis concerning university students’ purchases, incorporating various concepts and models so as to offer a total approach towards appreciating this phenomenon.
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2.1.1 Theory of Planned Behaviour
Sansom’s (2021) Theory of Planned Behavior posits that behavioural intention derives from three main factors: attitude toward behaviour, subjective norms, and perceived behavioural control. When it comes to student spending patterns, TPB explains how attitudes toward money spending among students, perceptions of family and peers’ pressure on the issue, as well as control over their resources affect their real spending(Mohd et al., 2020). For example, a student who likes unnecessary expenditures is likely to display more impulsive or even excessive buying habits when they believe that their friends do the same things and they feel that they have power over money. This is why TPB can be considered a helpful tool in understanding how cognitive and social forces impact the choices made by students in colleges regarding their expenses.
2.1.2 The Life Cycle Hypothesis
The Life Cycle Hypothesis (Pettinger, 2019) argues that people decide on their consumption and saving habits based on what they expect to earn throughout their lives. This idea can help explain how college students behave when it comes to spending money; in most cases, they do not have much income at present but are hopeful for more in the future as they go into the job market. The LCH suggests that young undergraduates may tend to spend a higher proportion of their incomes and run into debt because they anticipate that their earnings will shoot up with time. In other words, this action is informed by the belief that they will earn enough money later to save for retirement and redeem themselves from debts while still in college. Through its application, LCH can help understand why current students at universities make different choices about loans across institutions and during academic periods compared to those already employed after graduation.
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2.1.3 Maslow’s Hierarchy of Needs
Maslow (Swifterm, 2023) puts forward a theory known as Maslow’s Hierarchy of Needs, which suggests that human needs can be grouped into a range from low-level physiological needs to high-level self-actualization needs. With limited financial resources, this theory can help determine how university students prioritize their spending by fulfilling their basic needs before thinking about higher-level requirements(Moore et al., 2021). For instance, students may prefer paying for physiological and safety needs such as housing, food, and education bills over other social activities like belongingness or personal growth. Recognizing the student’s financial choice under Maslow’s hierarchy helps to explain why they allocate monies in certain areas differently based on individual circumstances or life stages
2.1.4 Prospect Theory
Prospect theory is based on gains and losses rather than outcomes. These risk-taking behaviours can be explained using the theory, as well as young people’s decision-making when it comes to spending. For some students, they may see expenses as something that can gain them something thereby evaluating them differently from expected losses. O
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