Fernando G. Ocier Jr.

BSEd 2C

Term Paper in Financial Literacy

I. INTRODUCTION

The cognitive of financial components and abilities such as budgeting, investing,

borrowing, taxation, and personal financial management is referred to as financial literacy.
Being financially illiterate refers to a lack of such abilities. Individuals that are financially
knowledgeable are more prepared for specific financial hurdles, which reduces the
likelihood of personal financial suffering. Due to common parts of life, such as student
loans, mortgages, credit cards, investments, and health insurance, financial literacy is
critical in today's culture. Being financially literate is a skill that brings forth an assortment
of benefits that can improve the standard of living for individuals through an increase in
financial stability. Individuals that are financially knowledgeable are more prepared for
specific financial hurdles, which reduces the likelihood of personal financial suffering. Due
to common parts of life, such as student loans, mortgages, credit cards, investments and
health insurance, financial literacy is critical in today's culture. Financial literacy is made up
of a number of financial components and abilities and enable a person to learn how to
manage money and debt effectively. Being financially educated is a skill that has a variety of
advantages, including increased financial stability, which can improve one's level of living.
The ability to make better financial decisions, effective money and debt management,
greater preparedness to achieve financial goals, reduction of expenses through better
regulation, less financial stress and anxiety, increased ethical decision-making when
selecting insurance, loans, investments, using a credit card, and effective creation of
structured budget are all advantages of being financially literate.

Financial literacy is important because understanding your finances seeps into every area
of your life, whether you think it’s going to or not. If you bury your head in the sand and
don’t understand what’s happening in your financial world, or you don’t ask the right
questions, you can be at a severe disadvantage to attain financial success. Financial literacy
is important because it’s pretty much one of the things that will encompass just about
every aspect of a person’s life. So even in families, even in marriages, lots of the hard times
that people will have are going to revolve around money. In the system that we live in,
everything revolves around money. We’re in a capitalist society, so it’s to everybody’s
benefit to know as much as they can about being wise about their money so that they can at
least give themselves some type of stability in the future. Finances inherently—whether or
not it’s incredibly short-term in just buying lunch for that day or long-term saving for
retirement—help you accomplish whatever your goals are. And financial literacy is
important because if you learn about it, it’s going to teach you how to be efficient with your
finances in such a way that you can accomplish more goals, and the goals that you do have,
faster.

There's a lot evidence that financial illiteracy is at an all-time high. For many people,
financial illiteracy has contributed considerably to a lower standard of living. Financial
illiteracy can lead to ineffective saving, spending and credit card usage, as well as poor
investment discussions. Financial uncertainty can lead to divorce, suicide, domestic
violence, and other crimes in family. The current economic crisis, as well as the increasing
complexity of our financial system, make it evident that improving our young people's
financial knowledge and abilities is important to our country's future success and financial
stability. Financial education, like reading and writing, has an impact on each student's well
being as the economic and social fabric of our communities. Our country is experiencing a
growing financial literacy crisis. Bankruptcies are on the rise, credit card debt is on the rise,
and savings are on the decline. According to the Federal Reserve, the average family filling
for bankruptcy owes more than one and a half times its annual income in high-interest,
short term debt. Financial literacy affects of people of all income levels, from low-income to
high-income, and even well-educated, high income adults may not know how to budget or
handle their money appropriate. The fast-paced, intellectual, and opinionated generation of
millennials, want to control all aspects of their lives. But when it comes to personal
finances, even the 20-somethings are pretty clueless about what they can do to manage
their money better. The significance of financial literacy in one’s life cannot be emphasized
enough. Young adults all over struggle to make important financial decisions such as
choosing a credit card, retirement plans, taking out a loan. Although financial education has
been a part of the regular school curriculum since 2014, it remains neglected. To try and
identify the root cause of this problem, we dug deeper into this issue and analyzed how
Financial Illiteracy is an epidemic affecting the young adults of this generation. Schools
have made substantial progress as 64% of the students said they had access to Financial
education in 2019, as opposed to a meagre 29% in 2015. However, 86% of the students
said they acquired their financial understanding outside of school – through their parents
or on their own through the internet. While 42% said they would want their parents to
discuss money management with them, 82% of the students indicated that they would
prefer to learn financial management in school. Financial Management is a vast field of
study, but most students feel the need to understand subjects that would aid them in a real-
life financial crisis. Therefore, tax, budgeting, and debt management topped the list of the
most sought after financial subjects. Financial planning is complex. To follow it is difficult
as it is, but teaching someone how to strategize their spending and become more
financially aware, requires fundamental knowledge and technical skill. Perhaps practical
demonstrations of money problems could make students better equipped at handling real-
life financial catastrophes. Good financial education leads to better financial capability. The
future of a nation depends on it’s smart and informed spenders. Seeing the current state of
affairs, we need a force of financially responsible individuals to lead the economy towards
growth. As a nation, it is important to educate the children about the consequences of
constantly living in debt or financing unaffordable ,homes, or overspending. The root cause
of this issue is the disparity between the money we have and the money we can spend, risk
financially all knowledgeable individuals’ financial help. Now that the root cause has been
identified, we can work on imparting the necessary education to youngsters so that they
build themselves a better and more responsible world.

II. DISCUSSION
A. Demographic profiles of the respondent.

Table I: Age

Age Range Frequency Percentage

18 - 30 3 30%
31- 40 2 20%
40-Above 1 10%

From what I assessed in the interviews within my neighborhood is that the ones that
established their brand or businesses are on the age 40 and above. While the ones that
were still employed by a company and establishments range in the ages below that age line.

Table 2: Civil Status

Civil Status Frequency Percentage

Single 4 40%
Married 6 60%

Based on the result of my conducted interview that 6 respondents were already having
a family and do provide everything within their household. On the other hand, 4
respondents were still single and could have the independence to base on their own
choices in budgeting and can be assured that they are living on their own.

Table 3: Family Heads

 Family Head Frequency Percentage
No 4 40%
Yes 6 60%

Here the result shows that 6 of them were already family heads and do budgeting
their finances within their family. And 4 of them were still earning are earning on their own
and doesn’t need to be mindful of other people since they are providing their own needs
just by themselves.

Table 4: Breadwinner or Family Head

Breadwinner or Family Frequency Percentage

Head
Yes 8 80%
No 2 20%

The results have shown that even some of them were not still establishing a family of
their own most of them were a breadwinner already like 8 of the respondents were now
working in supporting the needs of their families. While 2 of them responded that they
were not a breadwinner by choice due to their reasons and decisions in living
independently.

Table 5: Monthly Salaries Income and Incomes

Income or Salary Frequency Percentage

5,000 – 10,000 2 20%
11,000 – 20,000 1 10%
21,000 – 30,000 2 20%
31,000 – 40,000 3 30%
41,000 – 50,000 2 20%

Based on my findings I assessed that some of the respondents were earning enough
and being stable in their finances. However, as they stated that it didn't afflict that financial
struggles and budgeting. They may not be limited within the monetary resources but then
they are still accountable for making sure that their expenses did play a part beyond their
plans. Also, the educational background can assure the salary amount you can gather since
most of the companies or professional jobs did require the completion of a degree it can
affect the actual amount of your earnings. Some of the respondents even tell that once in
their life they attempted to have a part-time job since they are still studying back then only
the low or below the minimum expected amount of salary are the ones your more likely to
have. It also stated that some respondents were not just earning from their jobs but also
with the businesses they did have. The businesses may be started from the time new
normal due to the current pandemic. And they see those as a sideline and extra income to
still meet the ends of their families.

B. Results
According to the feedback of my respondents, all of them follow a very similar scheme in
budgeting from their work errands on transportation fares, or gasoline consumption if they
did have a vehicle, their meals beyond their daily consumptions in their work. Most of them
responded that they did have a bigger budget allotted for transport since even some have
been commuting or owning a vehicle, they still put the bigger budget on that since the price
hike on gasoline was increased most of the time. Besides, some may choose to have packed
their food to have fewer expenses in opting to go on a fast-food chain, food delivery, or
restaurants. Some of my respondents that were earning from their businesses also have
stated their budgeting in paying attention to equipment materials needed for their
production and actual products distributed or services conducted. Also, they have to
release a salary for the helpers and workers in their businesses. Besides the materials and
quality control, they see spending much on these necessities investment. And all of them
responded that in their households the budget for food accommodates a larger part since
it's always a necessity within a family. Besides, the current pandemic did also highlighted
the common priorities of people.

The emphasis on the budget on the household bills was pointed out by all of my
respondents as well since it was already known amongst all of us that electricity, water bill,
and other necessities that do need a payment were allocating their budgets as well. Since
their salaries were monthly given the bill deadline was somehow monthly as well. So they
need to come upon putting enough budget in reimbursing through their bills so that they
are sure it won't cut their urgencies in their household as much as they can. The allocation
can also equate to the renovations needed in their homes and the expansion of their spaces.
Some may not own a house so they have to pay for their rentals may be paid every month.
Three of my respondents were also putting a bigger budget on the educational expenses
since most of them were breadwinners who were more likely to take part in earning and
put that budget on greater use and that is the education. It may be for the tuition,
miscellaneous fees, uniforms, school projects, and other scholastic errands that may fill the
budget. They did point out the practice of practicality whereas they will overlook the
spending on luxury or unnecessary expenses so they can save much more for the essentials
on their day-to-day basis of living.  These people are more drawn into spending their
 earnings for greater use. And will assess their spending in a way that they monitor where
their expenses are on the practical matter.
Earning more money is the target of common people. However, it doesn't limit you to not
just earning but also making money. And three of my respondents started their businesses
in the time of pandemic since the needs of their families are needed to be met. Besides,
these times were limiting people to earn and work as they are expected. The prices of
necessities were increasing and so as their needs are needed to be convened. Financial
literacy is not just how you spend your money but as well as how you make money to make
the ends meet. By doing so a financially literate individual can assure that the spending can
fall within the right places and be consumed in the conventional needs of anyone.

III. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

To sum it up the goal of financial literacy is to help people better understand basic
finances in order for them to manage their money better. There is an abundance of
information out there to help educate you on your financial standing and a lot of topics
to cover such as saving, investing, debt, budgeting, etc. Focusing on learning more about
even some of these areas is going to help you achieve economic and financial stability
over time.

 Financial goals are best met when integrated into a structured plan that is easy for you
to stick to — or that's automated and done for you. Set aside a portion of each paycheck
and put it in your savings account. Make it the same amount every time you get paid.
And if you can use direct deposit, consider having a set amount of money automatically
taken out of your paycheck or checking account and deposited into your savings
account on a regular basis. If your savings are automated, you don't have anything to
forget about. And if the money is moved to your savings and you don't see it, you won't
be as tempted to spend it. You need to make specific financial goals for you and your
family. You don’t want to risk missing out on important objectives because you’re too
busy paying attention to/concentrating on the low-hanging fruit — your day-to-day
expenses.

I would recommend that personal finance is a reality for every person, from high school
students, first year college students, to working adults. Understanding how personal
finance works is important to financial literacy and for both individuals and families.
For this reason, teaching financial literacy is vital to the growth of the individual and the
sustainability to working and high functioning adults. To understand this importance, it
is crucial that students and adults first know what financial literacy is and why it is
important to teach it. Having a keen understanding of financial literacy can set up a path
for success for families and for future leaders in organizations. Financial literacy is
important for current money habits and also future preparation. The lack of financial
literacy skills can lead to poor spending choices, increased debt, and a generational
wealth gap. Learning to be financial literate has immediate results and also long term
returns on investment. Today’s students live in a world that has the benefits of
technology, instant access to information, and the ability to communicate and advocate
through different platforms. For students to be productive and engaging citizens,
financial literacy will help with future decisions and set the foundation for personal
responsibility and business skills