TERTIARY LEARNING MODULE

1st Semester A.Y. 2020-2021

I. MODULE TITLE: FINANCIAL LITERACY

LEARNING OUTCOMES
Define financial literacy
Distinguish among financial plan, budgeting, saving,
spending, and investing.
Present ways on how to avoid financial crises and scams.
II. LEARNING
Demonstrate understanding of insurance and taxes.
OBJECTIVE:
Describe a financially stable person
Determine ways on how to integrate financial literacy in the
curriculum
Draw relevant life lessons and significant values from
personal experiences on financial crises and scams

III. INSTRUCTOR: Mr. Nexon D. Relopez

IV. WEEK
COVERAGE:
V. COURSES: EDUC 109

In some. instances, teachers are confronted with issues and concerns on financial
debt, being victimized by fraud and other related scams, both personal and
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electronic ways. More so, some ‘teachers are drowned by emergent financial needs
and unexpected debt, especially in difficult times, sickness and inevitable
circumstances and calamities. Others do not prepare for their retirement that they
usually end up highly frustrated. This is the reason why financial literacy has been
a subject’ in many faculty development programs, seminars, and even becomes a
topic for researches, while many schools have integrated in the curriculum.

Financial Literacy

Financial literacy is a core life skill in an increasingly complex world: where people
need’ to take charge of their own finances, budget, financial choices, managing
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risks, saving, credit, and financial transactions.

Poor financial: decisions can have a long-lasting impact on individuals, their

families and the society caused by lack of financial literacy. Low levels of financial
literacy are associated with lower standards of. living, decreased psychological and
physical well-being and greater reliance on government support. however,’ when
put into correct practice, financial literacy can strengthen savings behavior,
eliminate maxed-out credit cards and enhance timely debt.

Financial literacy is the ability to make informed judgments and: make effective.
decisions regarding the use and management of money. Hence, teaching financial
literacy yields better financial management skills.

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The importance of starting financial literacy while still young. National surveys
show that young adults have the lowest levels of financial literacy as reflected. in
their’ inability to choose. the right financial products and lack of interest in.
undertaking sound financial planning. Therefore, financial education should. begin
as early as possible and be taught in schools. Akdag (2013) stressed that in the
recent financial crisis, financial literacy is very crucial and tends to be
advantageous if introduced in the very early years as preschool years. Financial
education is a long-term process and incorporating It into the curricula from an
early age allows children to acquire the knowledge and skills while building
responsible financial behavior throughout each stage of their education (OECD,
2005).

Likewise, financial literacy is the capability of a person to handle his/her assets,

especially cash more efficiently while understanding how money works in the real
world.

Financial Plan

Teachers need to have a deeper understanding and capacity to formulate their own
financial plan. It is wise to consider Starting to plan the moment they hand in their
first Salary, including the incentives, bonuses, and extra remunerations. that they
receive.
Kagan (2019) defines a financial plan as a comprehensive Statement of an V. MODULE CO
individual’s long-term objectives for security and well-being and detailed savings
and investing strategy for achieving the objectives. It. begins with a thorough
evaluation of the individual's current financial State and future expectations.

The following are steps in creating: a financial plan.

1. Calculating net worth. Net worth is the amount by which assets exceed
liabilities. In so doing, consider (1) assets that entail one’s cash, property,
investments, savings, jewelry, and wealth; and (2) liabilities that include
credit card debt, loans and mortgage. Formula: total assets Minus total
liabilities = current net worth.
2. Determining cash flow. A financial plan is knowing where Money goes every TCSF PROPERTY NO
month. Documenting it will help to see how much is needed every month for
necessities, and the amount for savings and investment.
3. Considering the priorities. The core of a financial -plan SO is the person’s
‘clearly defined goals that may. include: Retirement _ strategy. for
accumulating retirement Income; (2) Comprehensive — risk management
plan including a review of life and disability insurance, personal liability
coverage, property and casualty coverage, and Catastrophic coverage; (3)
Long-term investment plan based on specific investment: objectives and a
personal risk tolerance profile; and (4) Tax reduction strategy for minimizing
taxes on personal income allowed by the tax code.
(https://www.investopedia.com/terms/fffinancial_plan.asp)

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Five Financial Improvement Strategies
Financial literacy shapes’ the way people view and handle money.
The following are financial improvements suggested by Investopedia as ‘a journey to
financial literacy.
1. Identify your Starting point. Calculating the. net worth is the best way to
determine both current financial status and progress over time to avoid
financial trouble by spending too much on wants and nothing enough for the
needs.
2. Set your priorities. Making a list of rated needs and wants can help set
financial priorities. Needs are things one must have in order to survive (i.e.
food, shelter, clothing, healthcare and transportation); while wants are things
one would like to have but are not necessary for survival.
3. Document your spending. One of the best ways to figure out cash flow or
what comes in and what goes out is to create a budget or a personal
spending plan. A budget lists down all income and expenses to help meet
financial obligations.
4. Lay down your debt. Living with debt is costly ‘not just because of interest
and fees, but it can also prevent people from getting ahead with their
financial goals.
5. Secure your financial future. Retirement is an uncontrollable stage in a
worker's life, of which counterpart are losing the job, suffering from an
illness or injury, or be forced to care for a loved one that may lead to an V. MODULE CO
unplanned retirement. Therefore, knowing more about retirement options is
an. essential part of securing financial future.

Financial Goal Planning and Setting

Setting goals is a very important part of life, especially in financial planning. Before
investing the money, consider setting personal financial goals. Financial goals are
targets, usually driven by specific future financial needs, such as saving for a
comfortable retirement, sending children to college, or enabling a home purchase. ~
There are three key areas in setting investment goals for consideration.
A. Time horizon. It indicates the time when the money will be needed. To note,
the longer the time horizon, the riskier So (and potentially more lucrative) TCSF PROPERTY NO
investments can be made.
B. Risk tolerance. Investors’ may let go of the possibility of a large gain if they
knew there was. also, a possibility of a large loss (they are called risk averse);
while others are more willing. to take the chance of a large loss if there were
also a possibility of a large gain (they are called risk seekers). The time
horizon can affect risk tolerance.
C. Liquidity needs. Liquidity refers to how quickly an investment can be
converted into cash (or the equivalent of cash). The liquidity needs usually
affect the type of chosen investment to meet the goals.
D. Investment goals: Growth, income and _ stability. Once determined the
financial goals and -how time horizon, risk tolerance, and liquidity needs
affect them, it is time to think about how investments may help achieve
those goals. When considering’ any investment, think about what its offers in

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 terms. of three key investment goals: (1) Growth (also known as capital
appreciation) is an increase in the value of an investment; (2) Income, of
which some investments make periodic payments of interest or dividends
that represent investment income and can be spent or reinvested; and (3)
Stability or known as capital preservation or protection of principal.

An investment that focuses on stability concentrates less on increasing the value of

investment and more on trying to ensure that it never loses value and can be taken
when needed (https://www.flexscore.com/learningcenter/setting-financial-and-
investment-goals).

Budget and Budgeting

budget is an estimation of revenue and expenses. over a specified future ‘period of
time and is usually compiled and re-evaluated on a periodic basis. Budgets can be
made for a variety of individual or business needs. or just about anything else that
makes and spends money. Budgeting, on the other hand, is the process of creating
a plan to spend money. Creating this spending plan allows one to determine in
advance whether he/she will have enough money to do the things he/she needs or
likes to do. Thus, budgeting ensures to have enough money for the things needed
and those important ones and will keep one out of debt.

Seven Steps to Good Budgeting:

The following are seven steps that may help in attaining good V. MODULE CO
budgeting.

Step 1. Set realistic goals. Goals for the money will help make smart spending
choices upon. deciding on what important.
Step 2: Identify income -and expenses. Upon knowing how much is earned each
month and where it all goes, start tracking. the expenses by recording ‘every single
cent.
Step 3: Separate needs from wants. Set clear priorities and the, decisions become
easier to make by identifying a wisely those that are really needed or just wanted.
Step 4: Design your budget. Make sure to avoid spending more than what is earned.
Balance budget to a accommodate everything needed to be paid for. TCSF PROPERTY NO
Step 5: Put your plan into action. Match spending with income time. Decide ahead
of time what you will use each payday. Non-reliance to credit for the living expenses
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will protect one from debt.
Step 6: Plan for. seasonal expenses. Set money ‘aside to pay a for unplanned
expenses so to avoid going into debt.
Step 7: Look ahead. Having a stable budget. can. take or two so, ask for help if
things are not getting well.

Spending
lf budget goals serve as a financial wish list, a spending plan is a
way to make those wishes a reality. Turn them into an action plan. The
following are practical strategies in setting and prioritizing budget goals

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and Spending plan.

1. Start by listing your goals. Setting budget goals requires forecasting and
discussing future needs and dreams with the family.
2. Divide your goals according to how long it will. take to meet each goal
So, Classify your budget goals into three categories: short-term goals (less
than a year), medium-term goals (one to five years), and long-term goals
(more than five years). Short-term goals are usually the immediate needs.
and wants medium-term. goals are things that you and your family want to
achieve. during the next five years, and long-term goals extend well into the
future, such as planning for retirement.
3. Estimate the cost of each goal and find out how much it ests. Before
assigning priority to goals, it is important to determine the cost of each goal.
The greater the cost of a goal, the more alternative ‘goals must be sacrificed
in order to achieve it.
4. Project future cost. For short-term goals, inflation is not a big factor, but for
medium and long-term goals, it is a big factor. To calculate the future cost of
the goals, there is a need to determine the rate of inflation applied to each
goal.
5. Calculate how much ‘you need to set aside each period. Upon knowing the
future cost of the goals, next is to determine how much to put aside each V. MODULE CO
period to meet all the goals.
6. Prioritize your goals. Upon listing down all the goals and them estimated
amount needed for each goal, prioritize them: This serves as guide in
decision-making.
7. Create a schedule for meeting your goals. It is important to lay down-all the
goals according to priority with the corresponding amount of money needed,’
the time it will be needed, and the installments needed to meet the goals.

Investment and Investing

As teachers, when you have saved more money than what you, expect at a
time of need, consider investing this money to earn more interest than what your
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savings account is paying you. There are many ways you can invest your’ money
but consider four aspects:
1. How long will you invest the money? (Time Horizon)
2. How much money do you expect your investment to earn each year?
(Expectation of Return) How much of your investment are you willing to lose
in the short-term to earn more in the long-term? (Risk Tolerance)
3. What types of investment interest you? (Investment Type).

Savings
In order to get out of debt, it is important to set some money aside and put it
into a savings account on a regular basis. Savings will also help in buying things
that are needed or wanted without borrowing.

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 Emergency Savings Fund.’ Start as early, setting aside a little money for
emergency savings fund. If you receive a bonus from work, an income tax refund or.
earnings from additional or side jobs, use them as an emergency fund.
10 Reasons Why Save Money
With credit so easy to get, here are ten practical reasons why it is important
to save money that everyone, including teachers, must. know.
1. To become financially independent. Financial independence not having to
depend on receiving a certain pay but setting aside an amount to have
savings that can be relied on.
2. To save on everything you buy. With ‘savings, you can buy things when they
are on sale and can make better spending choices without. being
compromised. on credit card interest charges.
3. To buy a home or a car. Savings can be used in buying a home in full or
down payment, especially in times of promo deals, bids, and inevitable sale
and at a reasonable interest rate.
4. To prepare for-the future. Through savings, you ‘can be confident to face the
future without worrying on how you will survive.
5. To get out of debt. If you want to get out of debt, you must give money.
6. To augment annual expenses. To attain a good, stress-free financial life,
there is a need to save for annual expenses in advance.
7. To settle unforeseen expenses. Savings can respond to unforeseen expenses
in times of need.
8. To respond to emergencies. Emergencies may happen anytime, and these can V. MODULE CO
be expensive so, there is a need to get prepared rather than potentially
become another victim of an emergency.
9. To mitigate losing your job or getting hurt. Bad things can happen to anyone,
such as losing a job, business bankruptcy or crisis, being injured or
becoming too sick to work. Therefore, having savings is the key to resolve
such a dilemma.
10.To have a good life. Putting aside some money to spend when needed can
always bring about quality and worry-free life.

Common Financial Scams to Avoid: TCSF PROPERTY NO

Financial fraud can happen to anyone, including the teachers at any time.
While some forms of financial fraud, such as massive data breaches, are out of
one’s control, there are many ways to proactively get rid of financial scams and
identity theft.
Here are some of the most common financial. scams, along with ways to
identify them early and how to protect oneself from being victimized.
A. Phishing. Using this common tactic, scammers send an email that appears to
come from a financial institution, such as a bank and asks you to click on a
link to update your account information. If you receive any correspondence
that asks for your information, never click on the links or provide account
details. Instead, visit the company’s website, find official contact information,
and ‘call them to verify the request.

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B. Social Media Scams. Scammers are adept at using. Social media to gather
information about the traveling habits of potential victims. They also have
phishing tactics, including posts seeking charity donations with bogus links
that allow them to keep your money. Therefore, be conscious of the
information you post online, especially personal details and plans for a:
vacation that you would leave your house unoccupied
C. Phone Scams. Another prevalent tactic is scamming phone calls. The
scammers pose as a government agency, such as the Bureau of Internal
Revenue or local law enforcement agencies and use scare tactics to acquire
your personal information and account numbers. Never provide your account
information over the phone. Look for the agency's contact information and
call them to verify any request. To note, government agencies will never text
or call you to ask for money.
D. Stolen Credit Card Numbers. There are numerous ways that scammers can
obtain your credit ‘card. information, including hacking, phishing, and the
use of skimming devices, such as small card readers attached to unmanned
credit card readers (ie. ATMs gas pumps, and more). These small devices pull
data from your card when you swipe it. Before you use an ATM or swipe your
card, look for suspicious devices that may be attached to the card reader.
E. Identity Theft. Depending on the amount of information a scammer is able
to- obtain, identity theft may extend beyond unauthorized charges on a debit
or credit card. If scammers can obtain your Social Security number, date of
birth, and other personal information, they may be able to open new V. MODULE CO
accounts in your name without your knowledge. Be aware of an information
you share and with whom, and always shred sensitive information before
disposing it.

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