Fi

nanci
alLi
ter
acy
 WhatI
sFi
nanci
alLi
ter
acy
?

Financiallit
eracyist he abi
l
ityto understand and ef
fecti
velyuse vari
ous financialski
l
ls,
i
ncludingper sonalfinancialmanagement,budget i
ng,andi nvest
ing.Fi
nanciallit
eracyisthe
foundationofy ourrelati
onshi
pwi t
hmoney ,anditisalif
elongjourneyoflearni
ng.Theear l
ier
youst art
,thebetteroffy ouwil
lbe,becauseeducat i
onisthekeyt osuccesswheni tcomest o
money .

 Under
standi
ngFi
nanci
alLi
ter
acy

Understandi
ngwhatf inanciall
it
eracyi
shel psbuildself
-conf
idenceini ndivi
dual sandhel pswith
planningfort hefuture.Fort hemoder ni ndi
v i
dual,t
heci rcumstancesar oundt heneedt o
compr ehendandmast erfi
nancescontinuest ogr ow.Thet er
mf inancialliteracyr epr
esents
knowingar angeofskillsandconceptsthatcont r
ibutetoaper son’
sf i
nancialsuccess.Thi scan
i
ncludet opi
cssuchasdebi tandcredi
tcar ds,creditr
eports,coll
egef inancialaid,mor tgages
andmor e.Financi
alli
teracycomesf r
om hav ingt heskil
lsandabi li
tyt obudget ,invest,and
facil
i
tatepersonalf
inancialmanagementdeci si
ons.

 WhyI
sFi
nanci
alLi
ter
acyI
mpor
tant
?

Fi
nancial
l
ylit
erat
econsumer
snotonl ymanagemoneywit
hmoreconfidence,butal
sohavea
bet
terchanceofhandl
i
ngtheinev
itabl
eupsanddownsoft
hei
rfi
nanci
alli
vesbyunderst
andi
ng
howtopreventandmanagei
ssuesast heyar
ise.

Thatcanmeankeepingacloseey eontheirbankandcr editcardaccountssothey'

reawareof
potent
ialfr
audassoonaspossi
ble,orbei
ngabl etorecoverfr
om acost l
yunexpect
edcarrepai
r
qui
cklythankstoampl
ecashsavings.Ontheot herhand,fi
nanciall
iter
acycanhelpconsumers
savedi l
i
gentl
yforthi
ngsthatmat tertot hem,suchasav acat
ionort hei
rchil
d'scoll
ege
educati
on.

The lack off inanci

alli
teracy can l
ead to a numberofpi t
fall
s,such as accumulating
unsustainabl
edebtbur dens,eithert
hroughpoorspendingdeci
sionsoral ackofl ong-
term
preparati
on.Thisi ntur
ncanl eadtopoorcr edi
t,bankr
upt
cy,housingfor
eclosur
e,orot her
negati
v econsequences.

 WhatDoesI
tMeant
oBeFi
nanci
all
yLi
ter
ate?

Thegoaloffi
nanci
all i
teracyistoestabl
i
shaf eel
ingofcontr
oloveryourfi
nanceswhil
ealso
usi
ngmoneyasat oolt ofreel
ymakechoi cesthatbuil
dgreat
erli
fesati
sfact
ion.Whenyou'r
e
fi
nanci
all
yli
ter
ate,y ou understand how t o all
ocat
ey ourincome towardv ari
ous goal
s
simult
aneously— notj ustto ongoi ng expenses,butto savings,debtr epaymentand an
emergencyfundtoo.Youhav ethetoolstothoroughl
yresearchandev al
uateloans,cr
editcar
ds
andinvestmentoppor t
uniti
es.Eveni fyoudon' thav
eal otofdi sposabl
eincomet ohelpyou
reachallofyourf
inancialgoals,f
inanci
allit
eracywil
lhel
py ouknowhowt opr i
ori
ti
zethem and
makest ri
deswheny ou'
reablet o.

Being fi
nanci
all
yill
iterat
ecan l
ead t
o a numberofpi t
fall
s,such asbeing morelikelyto
accumulateunsustainabl
edebtbur
dens,ei
thert
hroughpoorspendingdecisi
onsoral ackof
l
ong-term pr
eparat
ion.Thisi
ntur
ncanleadtopoorcredi
t,bankr
uptcy
,housi
ngforecl
osure,and
othernegati
veconsequences.

 HowDoIBecomeFi
nanci
all
yLi
ter
ate?

Becoming financi
allyli
ter
at einvolveslearni
ng and pr actici
ng av ar
iet
yofskil
lsr el
ated t
o
budgeti
ng,managi ngandpay i
ngof fdebts,andunder standingcredi
tandinv
estmentproducts.
Basicstepst oimpr ovey ourpersonalf i
nancesi ncludecr eati
ngabudget,keepi
ngt rackof
expenses,beingdil
igentabouttimelypayment s,beingpr udentaboutsavi
ngmoney,peri
odical
ly
checki
ngy ourcreditr
eport,andinvesti
ngf oryourfuture.

 St
rat
egi
est
oImpr
oveYourFi
nanci
alLi
ter
acySki
ll
s

Developi
ngfi
nanci
alli
teracytoimprov
ey ourpersonalfi
nancesinv
olveslear
ningandpract
ici
ng
avari
etyofski
ll
srelat
edt obudgeti
ng,managingandpay i
ngoffdebts,andunderst
andi
ngcredit
andinvest
mentproducts.Herearesev
eralpract
icalst
rat
egiestoconsider
.

 CreateaBudget —Trackhow muchmoneyy our ecei

veeachmont hagainsthow much
youspendi nanExcelsheet ,onpaper,orwi thabudget i
ngapp.Yourbudgetshoul d
i
nclude i
ncome ( paychecks,invest
ments,alimony )
,fi
xed expenses (rent
/mortgage
payments,util
i
ties,l
oan pay ments)
,discr
etionaryspending (
nonessential
s such as
eati
ngout,shopping,
andt r
avel)
,andsavi
ngs.

 PayYour sel
fFirst
—Tobuil
dsavi
ngs,t
hisrev
ersebudget
ingstrat
egyinvol
veschoosi
nga
savingsgoal( say,adownpaymentf orahome) ,decidi
nghow muchy ouwantt o
contri
butetowarditeachmont
h,andsett
ingthatamountasidebeforeyoudivv
yupt he
restofyourexpenses.

 PayBill
sPromptl
y—Stayontopofmont hl
ybi
ll
s,maki
ngsurethatpayment
sconsistent
ly
arr
iveonti
me.Considertaki
ngadvant
ageofautomati
cdebit
sf r
om acheckingaccount
orbil
l-
payappsandsignupforpay
mentr emi
nder
s(byemail
,phone,ort
ext)
.

 GetYourCr editReport—Onceay ear,consumer scanr equestaf r

eecr editr epor
tfrom
thethreemajorcredi
tbureaus—Exper i
an, Equi
fax,andTransUnion—t hr
ought hefeder
all
y
createdwebsit
eAnnual Credit
Report
.com. 5Rev i
ewt hesereport
sanddi sputeanyer ror
s
byi nfor
mingthecr editbureauofi naccuraci
es.Becausey oucangett hreeoft hem,
considerspaci
ngouty ourrequest
st hroughoutthey eart
omoni toryourselfregular
ly.
  CheckYourCr edi
tScore—Hav i
ngagoodcr edi tscor
ehel psyouobtai
nt hebestint
erest
ratesonl oansandcr editcards,amongot herbenefit
s.Moni tory
ourscorev iaaf ree
creditmonitori
ngservice(or,ifyoucanaf fordt oandwantt oaddanext ral ay
erof
protect
ionf oryourinformation,useoneoft hebestcr edi
tmonitor
ingser vi
ces).In
additi
on,beawar eofthef i
nancialdeci
sionst hatcanraiseorloweryourscore,suchas
crediti
nquir
iesandcredituti
li
zati
onr at
ios.

 ManageDebt—Usey ourbudgett ostayont opofdebtbyr educi

ngspendingand
i
ncr
easingrepayment.Developadebt -
reducti
onplan,suchaspay ingdowntheloanwit
h
t
hehighestinter
estrat
ef i
rst.Ifyourdebtisexcessive,contactlender
storenegot
iat
e
r
epayment,consoli
dat
eloans, orf
indadebt -
counsel
ingprogram.

 InvestinYourFut ur
e—I fy ouremploy
eroffersa401( k)reti
rementsavi
ngsaccount,be
suret osignupandcont r
ibutethemaximum t or ecei
vet heemployermatch.Consider
openi ngani ndivi
dualr et
irementaccount(IRA)andcr eati
ngadi v
ersi
fiedinvest
ment
portfoli
oofst ocks,fi
xedi ncome,andcommodi t
ies.Ifnecessary
,seekfinanci
aladvice
from pr of
essionaladvisorst ohelpyoudeterminehow muchmoneyy ouwi l
lneedt o
reti
recomf ortabl
yandt odev elopst
rat
egiestoreachy ourgoal.

 Thr
eeBasi
cPr
inci
plesofMoneyManagement

1.Needsv
sWant
s

Know yourpr i
ori
t i
es.Cl
earl
ydist
ingui
shbetweeny ourneedsandy ourwants.Needsar el
if
e’s
essenti
alsthaty oucannotliv
ewi t
hout– t
hinkfood,wat er,andshelt
er.Wantsarethingsyou
wishfor,ordesi retohave,buttheyarenotessenti
alforsur vi
val– thi
nkthelatestphone,a
l
uxuryvehicle,or200pairsofshoes.Yes,y
ouneedcl othes.Butdoy ouneeddesignerclot
hes?
Yes,youneedf ood.Butdoy ouneedthemostexpensivest eakonthemenu?

Therei
snot hi
ngwr
ongwithgett
ingthet
hingsy
ouwant
,aslongasyouhaveal
readythor
oughly
takencareofthet
hingsyouneed.Onceyouknowt
hediff
erencebet
weenyourneedsvsy our
wants,youcanmoveontobasi
cmoneymanagementpri
nci
plenumbertwo.

2.Budget
ing

Alwayshaveabudget.Peoplewhofoll
owabudgetarel
essl
i
kel
ytoover
spend.I
fyouoft
en
wonderwhereyourmoneywent ,
youfi
ndy oudon’
thav
eenoughmoneyt
opayyourbil
l
s,ory
our
cr
editcar
dbalancei
sthr
ought heroof
,youneedabudget
.

Abudgetisthekeyt
oyourf
inanci
alpl
an.I
thel
psy
oukeept
rackofy
ourf
inancesandy
our
f
inanci
algoal
s.

 Begi
ny ourbudgetbywr i
ti
ngdowny ourtot
almonthl
yi ncome.Whatisyourmont
hly
sal
ary
?Doy ouhaveotherincomesuchaschi
ldsuppor
t,ali
mony,asi
dehust
le,
orapar
t-
ti
mejob?
  Next
,writ
eouty ourtot
alexpenses.Forexampl
e,how muchdo y
oupayf
orr
ent
,
mort
gage,gr
ocer
ies,
heal
thi
nsurance,
orchi
l
dcare?

 Final
l
y,takeyourt
otali
ncomeandsubt
ractyourtot
alexpenses(i
.e.
,tot
ali
ncome–t
otal
expenses)tofi
ndouthowwell
youaredoingwithbudgeti
ngyourincome.

+:Ifyougetaposi
ti
venumber,goodj
ob!Yourincomei
smor
ethany
ourexpenses.Youhav
e
moneylef
ttosav
e(orspendononeofyourwant
s).

-:Ify
ougetanegati
venumber
,gett
owor k.Yourexpensesar
emor ethanyouri
ncome.Lookat
yourbudgetandfi
ndwaystocutyourexpensesori ncr
easeyourincome.Regul
arl
yeval
uate
yourbudgett
oensur
eyouarel
i
vingwit
hinyourmeans.

3.Sav
ingsandEmer
gencyFunds

Alwayshaveanemer gencyf und.Li

feisf ullofunexpectedev
ents.Youneverknow whenyou
mightneedamajorcarrepair,l
oseyourjob, haveamedi cal
emergency,
orexper
ienceadeat
hin
thefamil
y.Dur
ingthesestressfult
imes,y oursavingsmaybey oursavi
or.I
fyoudonothav ea
savi
ngsaccountoranemer gencyfund,startone.

Buil
dy ourfundbypay i
ngy oursel
ff i
rst
.Inyourbudget ,i
ncorpor
atesavi
ngasar ecurr
ing
expense.Si
milar
lytopayingyourbil
lsonaschedul e,cont
ri
butetoyoursav
ingsonaschedul e.
Know thatassoonasy oureceiveincome,aporti
onofi tgoestoyoursavingsoremergency
fund.I
fyouarejuststart
ingout,beginwithonefund.Putwhateveryoucaninyouremergency
fundanddonott ouchthemoneyunl essyouhaveamaj oremergency.

I
fy ouaremor eadv anced,andy ourneedsar et hor
oughlytakencareof ,consi derhavingtwo
funds.Buildyouremer gencyfundandusei tforemer genci
esonly.Bui
ldy oursav ingsfundand
useittosav eupf ory ourwants( e.
g.,av acation).I
fy oudeci
detohav et wof unds,makesur e
youcontribut
et othem both;onlyuseeachf undf orit
sdesignatedpurpose.Fori nstance,i
fyou
donothav eenoughmoneyi ny oursavingsf und,donotusey ouremergencyf undt omakeup
thedif
ferencesoy oucangoonv acat
ion.Thati snotwhaty ouremergencyf undi sfor.

I
fyoul
ackt
hedi
scipl
i
netohavetwof
unds,
hav
eonedesi
gnat
edemer
gencyf
und.Onl
yuset
he
f
undwheny
ouhaveanemergency
.

I
mpor
tanceofTeachi
ngFi
nanci
alLi
ter
acy
Fi
nancialli
teracyisimpor t
antforcur
rentmoneyhabit
sandalsofutureprepar
ati
on.The
l
ackoff inancialli
ter
acyskill
scanleadtopoorspendingchoi
ces,i
ncreaseddebt,anda
gener
ationalweal thgap.Learni
ngtobef i
nanci
all
i
ter
atehasimmedi at
eresult
sandalso
l
ongtermr et
ur nsoninvestment.

Today’
sst udentsli
veinaworldthathasthebenef
it
soft echnology
,instantaccessto
i
nformati
on,andt heabil
it
ytocommuni cat
eandadvocatethroughdiffer
entplatfor
ms.
Teachi
ngf inanci
alli
ter
acyisbenefi
cialtoastudent’
sadul thoodandt oincreasi
ng
opport
uni
ti
es forf utur
e homeowners,business l
eaders,and pr
oducti
ve ci
ti
zens.
Expandi
ngstudents’knowl edgeandr esour
cebaseallowsforconti
nuedgrowthin
fi
nanci
all
it
eracyski
llsandrealwor
ldappli
cati
ons.

 St
rat
egi
esandAct
ivi
ti
esf
orTeachi
ngFi
nanci
alLi
ter
acy

 FocusonTeachi
ngConcept
s

Forthestudentnew tofinanciall
iteracy,therecanbeaf eel
ingofbei ngoverwhel
med
andconfused.Wheni tcomest ot eachingf i
nanci
allit
eracy,i
ti simportanttobreak
downinformationbyconcept s.Learningf i
nanciall
it
eracycanst artasearlyasmiddle
school
.Howev er,
highschoolisaf undament alpl
acetolearnaboutfinanci
alli
ter
acy
.

Duri
nghighschool,studentsbegintheirfi
rstjobs,havenew responsibi
l
iti
essuchas
l
earni
nghow todrive,applyi
ngf orcol
lege,andpi cki
ngfut
urecar eerpaths.Teachi
ng
eff
ecti
vefi
nanci
all
iter
acyf orhighschoolstudentscanprepar
eay oungadultforali
fe
offi
nanci
aldi
sci
pli
neandmaxi mizi
ngfinanci
alandeducati
onali
nv estments.

 MakeFi
nancesPer
sonal

Ther ealit
yis:fi
nancesar eper sonal
.Often,highschoolst udentswi l
lseeonlywhati s
i
mpor t
antt othem pr esentl
y,butmayhav edi f
fi
cult
yplanningaheadf orthefut ur
eand
forper sonalgoals.Onest rategytomaket eachingfi
nancialli
teracyrelev
antist oallow
student stolearnt hebasicsofper sonalfi
nancebutal sof i
ndscenar iosandr ealwor l
d
situat
ionst hatappl ydir
ectlytot hem.Thi scoul dincl
udegames,r oleplaying,ora
classroom discussi onthatfocusesont her eal
it
iesofpayingr ent,owningproper t
y,and
sav i
ngandi nvesting.

Whent eachingf i
nanciall
i
ter
acy,
iti
simpor t
anttoallowstudent
smul t
ipleplat
formsand
choi
ceswhenl earninghowpersonalf
inanciall
it
eracyisspeci
fi
ctotheirli
ves.Ther
eare
multi
plefinancialli
ter
acygamesandi nt
eracti
veact i
vi
ti
esthatcanshow st udent
sthe
real
i
tiesofpersonal fi
nance.

 Hel
pSt
udent
sPl
anAhead

Forhi gh schoolstudents,time managementand pl anni

ng ahead becomes more
i
mpor tant
.Whent eachingfinancialli
teracyskil
l
s,onefocusshouldbeonpl anni
ngand
prepari
ngf orf
utur
ef i
nances.Thisi ncludescreati
ngabudget,payi
ngy our
selff
ir
stwi
th
asav i
ngsaccount,obtai
ningacr editreport
,andinvest
ingint
hefuture.

Anexampl
eoft eachi
ngthesefinanci
all
it
eracyski
l
lswouldbehav ingalessonon
cr
eat
ingaper
sonalbudgetorbudgetforaspeci
fi
cbusi
ness.Teachi
ngtheconceptof
i
nvestinginthef ut
urecoul
dt r
ansl
ateintoteachi
ngstudentsaboutr et
ir
ementsav i
ngs
accountssuch asa 401( k)or457( b).Student
scoul d do a resear
ch proj
ectthat
i
nvestigat
eswhi chcompanieseit
hercurrent
lyorint
hef ut
uretheywantt obei nv
olved
with.Thesestudentscoul
dlearnwhetherthecompanyhasar eti
rementsavingsplanor
anystocks.

 ExposeSt
udent
stoResour
ces

Whent eachinghi ghschoolst udentsfinancialli

ter
acy ,i
tisimportanttokeepl essons
andact ivi
ti
esr elevant.Justasgeneralcur r
icul
umssuchasEngl i
sh,science,math,and
socialstudiesl essonsar eenhancedbyr eal,relev
ant,andst udent-
centeredactiv
iti
es,
thesamei st ruef orfinanci
alli
ter
acy.Thi scanbedonebygi v
ingstudent saccesst o
resourcestol earnmor eaboutfi
nancialli
teracy.Forstudent
swhowantt olear
nlessons
anddopr acticeact i
vi
tiesintheareaofper sonalf i
nance,TheKhanAcademyi sagr eat
resource.

Otherstudentsandteacher
smaypr eferconversati
onsandbr
iefvi
deosonrealworl
d
examples.Talkshowcoversawidevariet
yoft opi
csincl
udi
ngr
eti
rementpl
ans,
savi
ngs
accounts,i
nvest
ingi
nstocks,andr
ealestate.

Cur
rentI
ssueExampl
e:

DepEdi
ntensi
fi
esf
inanci
aleducat
iont
oimpr
ovel
it
eracyi
nPH

MANI LA–TheDepar tmentofEducat

ion( DepEd)onThursdaysaidithasexpandedand
i
ntensif
ied t
he i
ntegrat
ion offi
nancialeducation i
nt he K t
o 12 Basic Educati
on
Curr
icul
um toimprovethefi
nanci
all
it
er acyandcapabil
i
tyofit
slearnersandteacher
s.

Accordi
ngtoast atement,theDepEdissuedi t
sFinancialEducati
onPolicyunderDepEd
OrderNo.022,whichai mstohelplearnersandteachingandnon- t
eachingpersonnelto
makesoundf inancialdeci
sionsbyincludingfi
nancialeducati
oninschooll essonsfor
l
earnersandcapabili
tybuil
dingact
ivi
ti
esf ort
eachingandnon- t
eachingpersonnel.

Education Secretary LeonorMagtoli

s Briones saidf i
nanciall i
ter
ate cit
izens can
contri
butemor epr oduct
ivel
ytoi
ncl
usivegrowthandbemor eef fect
iveagentsofnat ion
-bui
ldi
ng.Br i
onesci tedaBangkoSent ralngPi l
i
pinas( BSP)sur veyshowi ngt hat41
percentofFili
pinoscanonl yansweroneoft hreefinanci
alli
teracyquestionscor rectl
y
andameager8per centcananswerthr
ee.

“Financi
alEducati
onisv i
talindev el
opi
ngaf i
nanci
all
yli
ter
ateci
ti
zenr
y,empower i
ng
them tomakewi sefi
nanci
aldecisions,t
akeadvant
ageofeconomi
copportuni
ti
es,and
achievefi
nanci
alheal
th,
”Brionessaid.
Underthepoli
cy ,l
earnerswillbetaughtkeyfi
nancialconcept
sandskil
lsonear ning,
savi
ng,spending,budgeting,donati
ng,inv
esti
ng,pl
anning,consumerprot
ecti
on,and
ent
repr
eneurship.Theywillal
solearnandunder
standthevalueofmoneyandresources,
howtheyareacquired,howt oplanandmanageassets,andhowt osav
eandshare.

"Learnerswil
lalsobet aughthow toopenasav i
ngsaccountandhelpmanagethei
r
resourcesprudent
ly,whichhel
psthem appl
ytheseconcept
sinreall
i
fe--whi
chi
sone
ofthepol i
cy’
skeyobject
ives,
"theDepEdsai
d.

Meanwhile,t
eachersandnon-t
eachingpersonnelwillbeprovi
dedtr
aini
ngtoequi
pt hem
wit
hknowl edgeonf i
nanci
aleducationconcepts,aswel lashel
pthem honetheirown
fi
nanci
almanagementski l
l
stopr oduceaf i
nancial
lylit
erat
eanddebt-f
reet
eachingand
non-
teachingfor
ce.(PNA)

Gr
oup3Member
s:

1.Al
i
ahC.Odal

2.Asl
i
mahI
.Saf
ar

3.Er
ikaMar
eyC.Act
ub

4.Far
hanaM.Sambodat
u

5.HananM.Al
i

6.Saj
ani
fahM.Lagui
ndab