Professional Documents
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The National Endowment for Financial Education defines financial literacy as "the ability to read, analyze,
manage, and communicate about the personal financial conditions that affect material well-being. It includes the ability
to discern financial choices, discuss money and financial issues without (or despite) discomfort, plan for the future, and
respond competently to life events that affect every day financial decisions, including events in the general economy"
(Incharge Education Foundation, 2017). To put it simply, it is the ability to use knowledge and skills to manage one's
financial resources effectively for lifetime financial security" (Mandell, 2009). Meanwhile, Hastings, et al. (2013) refers to
financial literacy as: 1. knowledge of financial products (e.g., a stock vs. a bond, fixed vs. adjustable rate mortgage); 2.
knowledge of financial concepts (e.g., inflation, compounding, diversification, credit scores); 3. having the mathematical
skills or numeracy necessary for effective financial decision making; and 4. being engaged in certain activities such as
financial planning. Public and private institutions alike have recognized the need for financial literacy to be incorporated
in the school curriculum. Financial education and advocacy programs of the public and private sectors have been
identified as key areas in building an improved financial system in the Philippines (Go, 2017). Republic Act 10922,
otherwise known as the "Economic and Financial Literacy Act," mandates DepEd to "ensure that economic and financial
education becomes an integral part of formal learning."
The Council for Economic Education, the leading organization in the United States that focuses on the economic
and financial education of students from Kindergarten through high school developed six standards gearing toward
deepening students' understanding of personal finance through an economic perspective. The standards and key
concepts are summarized in the table below.
One's level of financial literacy affects one's quality of life significantly. It determines one's ability to provide
basic needs, attitude toward money and investment, as well as one's contribution to the community. Financial literacy
enables people to understand and apply knowledge and skills to achieve a lifestyle that is financially balanced,
sustainable, ethical, and responsible. Increased personal financial literacy affects one's financial behavior. These changes
in behavior pay dividends to society as well. People who work, spend, save, borrow, invest, and manage risk wisely are
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less likely to require a government rescue. Financial literacy does not totally eliminate the need for a social safety net
because even the most prudent individual can encounter financial difficulties. But taking responsibility for one's financial
life cultivates proper decision-making skills and discipline. Most of the responsibility for managing financial matters rests
with the individual. That responsibility is easier for adults to bear when they have learned the basics of personal finance
in their youth.
In his article "State of Financial Education in the Philippines," Go (2017), indicated several findings of researches
with regards to the state of financial literacy in the country including the following:
• World Bank study in 2014 estimated 20 million Filipinos saved money but only half had bank accounts.
• Asian Development Bank (ADB) study in 2015 revealed that PH does not have a national strategy for financial
education and literacy.
• In 2016, Bangko Sentral ng Pilipinas (BSP) released the national strategy for financial inclusion, stating that while
institutions strive to broaden financial services, financial literacy should also complement such initiatives.
• As per Standard & Poor's (S&P) Ratings services survey last year, only 25% of Filipinos are financially literate. This
means that about 75 million Filipinos have no idea about inflation, risk diversification, insurance, compound interest,
and bank savings.
• Ten years after discovery of the stock market, still less than one percent of PH population is invested in it.
• More than 80 percent of the working middle class have no formal financial plan.
Because of these findings, public and private sectors alike have recognized the need to strengthen financial
education in the country. Last November 27-28, 2018, more than 1,000 leaders, decision-makers, influencers, and
representatives from public and private institutions, civic society, and the academe gathered for the first ever Financial
Education Stakeholders Expo organized by BSP. The Expo is designed to build an organized ne-work of players that share
the vision of a financially literate citizenry and cohesively implement a variety of initiatives to achieve this vision. This is
in line with the BSP advocacy for financial education and supports the BSP mandates of maintaining price stability,
financial stability, and efficient payments system. It is the BSP's conviction that a financially educated Filipino is an
empowered Filipino who is able to make wise financial decisions that positively impact personal financial circumstances,
and, consequently, contribute to inclusive and sustained economic development. The Expo supports Republic Act No.
10922 which designates second week of November as Economic and Financial Literacy Week. It is also aligned with the
objectives of the Philippine National Strategy for Financial Inclusion, particularly the pillar on Financial Education and
Consumer Protection.
One's attitude about money is heavily influenced by the parents' attitude and behavior about money. The
attitudes you formed early in life probably affect how you save, spend, and invest today. Do you behave similarly or
differently from your parents (About handling money?
There are six major characteristic types in how people view money (Incharge, 2017).
Frugal: Frugal People seek financial security by living below their means and saving money. They rarely buy luxurious
items; they save money instead. They save money because they believe that money will offer protection from
unprecedented events and expenses.
Pleasure: Pleasure seekers use money to bring pleasure to themselves and to others. they are more likely to spend than
to save. They often live beyond their means and spend more than they earn. If they are not careful and do riot change,
they may fall into deep debt.
Status: Some people use money to express their social status. They like to purchase and "show off" their branded items.
Indifference: Some people place very little importance on having money and would rather grow their own food and craft
their own clothes. It is as if having too much money makes them nervous and uncomfortable.
Powerful: Powerful people use money to express power or control over others.
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Self-worth: People who spend money for self-worth value how much they accumulate and tend to judge others based
on the amount of money they have. Which characteristic closely resembles your attitude about money? Explain your
answer.
Spending Patterns
Are you prudent or have you been accused of spending money lavishly? Or are you somewhere in between?
Individuals have different spending patterns. Before one can come up with a financial improvement plan, one needs to
analyze his/her spending habits. There are two common spending patterns: habitual spending and impulsive spending.
Habitual spending occurs when one spends out of a habit, when one buys the same item daily, weekly, or monthly. Daily
items may include water, rice, and cup of coffee. Week items may be grocery items. Monthly items are the electricity
and Internet bills. Impulsive spending occurs when one mindlessly purchases items that he or she does not need. Many
people are often enticed by monthly sales of the malls with the attitude that they may lose the items the following day.
Fixed expenses remain the same year-round. Car payment is an example. Variable expenses occur regularly but
the amount you pay varies. Electric and gas bills are examples of these.
Which expenses are fixed and which are variable? Indicate the monthly total. Put a check mark on the corresponding
type.
Financial discipline starts with an ability to recognize whether expenses are needs or wants, and followed by
ability to prioritize needs over wants. Needs are essential to our survival. Wants are things that you would like to hove
but you can live without, such as new clothes or a new cell phone model. You want them but do not necessarily need
them. Too many wants can ruin a budget.
Use the table below to list down all the expenses that belong to the needs and those that belong to the wants.
Needs Wants
ENHANCE
Here are practical steps you can undertake to enhance your financial literacy.
Setting financial goals is the first step to managing one's financial life. Goals may be short, medium, and long-
term. Short-term goals can be measured in weeks and can provide instant gratification and feedback. "I will ride on the
LRT instead of taxi" and "I will bring lunch every day" are examples of short-term goals. Medium-term goals should be
accomplished within one to six months. These goals provide opportunity for reflection and feedback and require
discipline and consistency. Long-term financial goals can take years to achieve. These include saving money for a down
payment on a home, a child's college education, and retirement. They may also include paying off a car, student loans,
or credit card debt.
Time and effort are necessary to build a sustainable spending plan. Three easy steps are proposed below when
developing your personal spending plan:
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Importance of Saving
Because no one can predict the future with certainty, we need to save money for anything that might happen.
Here are some reasons why saving is important:
• Emergency Bolster - You should save money to avoid going to debt just to pay emergency situations, like
unexpected medical expenses and damages caused by calamities or accidents.
• Retirement - You will need savings/investments to take the place of income you will no longer receive when
you retire.
• Future Events - You need to save for future events like weddings, birthdays, anniversaries, and travels so as
not to sacrifice your fixed expenses.
• Instability of Social Security - Pensions from social security should only serve as supplementary and not the
primary source of income after retirement.
1. commit to a month;
3. find a savings role model who is successful with his/her money, through tried and true savings;
Please proceed to the Google Classroom for the Written Task, E-Portfolio
Output or Quiz.