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Personal Financial Literacy: Resolving Issues and Challenges

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 Personal Financial Literacy: Resolving Issues and Challenges

CHRISTOPHER M. LEE
Technological University of the Philippines - Manila
christopher.lee@tup.edu.ph

March, 2021

ABSTRACT:

The research article is all about learning and how to acquire Personal Financial Literacy,
which is the way on how to resolve any personal issues and challenges when dealing to our personal
wealth or money savings management. It likewise portray a big impact in our personal undertakings,
wherein people do their financial budgeting and at the same time resolving their financial problems.
Creating such research study article that talks about personal wealth management is one way to
exercise personal freedom of budgeting forecasts, and encouraging individuals to invest, and divert or
throw off financial incapability practices.

During the onset of this research study, the researcher is focusing on the financial capability
issues which concerns people that are engage by their self-directed financial literacy. Likewise, the
research content encompasses certain financial literacy observations, recommendations, and it’s
attributable results, which is the main goal on every individuals to resolve and overcome any problems
regarding personal wealth management. As a researcher, my interpretation on the given research
study article, primarily to engage and address readers’ financial learning, and to apply basic financial
recommended solutions toward Financial Literacy networks and the importance thereof.
Keywords: Personal Financial Literacy, research study, issues and challenges, personal wealth
management

INTRODUCTION: our uncertainties and financial difficulties in all

levels of the society, many of us have so much
Financially literate or illiterate? A really
to buy, gain, and achieve; and there can be
big question about personal financial literacy
different reasons and apprehensions to
practices, or somehow an intriguing statement
address for. To be financially ready and be
or a question, which anyone can relate to. It
aware of earning and saving, is to work on our
has been said that anyone should know how
personal finances so that everything will be
to invest, do their personal budgeting, and
manageable like our financial indebtedness at
learn how to save money for their future
present.
spending ideals. Categorically speaking, there
are several perceptions, challenges, and To be financially literate and
apprehensions for most (Lee, 2021) responsible citizen requires more than
individuals’ point of views, because in times of avoiding bankruptcy, giving to charity,

Personal Financial Literacy: Resolving Issues and Challenges |1

adequately calculating financial risk or even capabilities, and knows how to resolve any
cultivating financial risk or even cultivating the financial risk situations and conditions.
disposition to hold back from blatantly ripping
And those who are considered and
off low income customers with variable rate
don’t know about financial literacy, the main
mortgages that one then sells to others who
goal of financial education is to apply,
take on the default risk – through these skills
exercise, and manage both personal financial
and virtues are obviously not without
adequacy and financial capability
significant merit. It requires that we understand
engagements. Financial literacy is a narrower
our responsibility for socially created economic
concept that “emphasize(s) objective
risk so that we can act responsibly and be held
knowledge on specific topics related to money,
responsible for the effects of our collective
economics, or financial matters, and subjective
producer and consumer actions (some having
measures of self-reported confidence” (PRI,
more responsibility than others). These effects
2005: 4). The term has been defined as
go beyond the current financial crisis and
follows (PRI, 2004: 5):
include effects (structural unemployment,
poverty, shortened life-expectancies, The ability to read, analyze, manage, and
starvation, etc.) that occur during what are
communicate about the personal financial
called “boom-times” and which require
conditions that affect material well-being. It
collective responses rather than individualized
consumer responses that place some at a includes the ability to discern financial choices,
distinct disadvantage vis’-a-vis their fellow discuss money and financial issues without (or
competitor consumer-citizens. Financial despite) discomfort, plan for the future, and
literacy education ought to support our civic respond competently to life events that affect
duty to, in concert with others, alter how we
everyday financial decisions, including events
produce, distribute and consume the fruits of
in the general economy.
our collective labour so that we can create, if
we choose, new conditions (i.e. new relations
of production) that will support and create
LITERATURE REVIEW:
different choices (less work hours, guaranteed
income, more equitable share of the surplus Huston (2010) explains that Financial
created, etc.) (Arthur, C. 2012). Literacy is made up of two elements:
Understanding and use. Understanding
Moreover, individuals who are
financial literacy implies that a person is
considered financially literate can always
knowledgeable about personal finance, and
exercise proven financial strategies and
applies such knowledge in dealing with one’s
personal budgeting. That is why income
finances. Meanwhile, Hastings, et. al. (2013)
earners and those who knows personal
refers to Financial Literacy as:
savings shows financial appreciation; able to
understand and be aware about the a.) Knowledge of financial products
importance of financial management (e.g., what is a stock vs. a bond;
Personal Financial Literacy: Resolving Issues and Challenges |2
 the difference between a fixed vs. including the ability to deal with
an adjustable rate mortgage); everyday financial matters and
make the right choices for one’s
b.) Knowledge of financial concepts
own needs.
(such as inflation, compounding,
diversification, credit scores);
b.) Financial skills and competence

c.) Having the mathematical skills or -The ability to apply knowledge

numeracy necessary for effective and understanding across a range
financial decision making; and of contexts including both
predictable and unexpected
d.) Being engaged in certain activities
situations and also including to
such as financial planning.
manage and resolve any financial
problems or opportunities.
RESEARCH INFORMATION
AND OBSERVATIONS : c.) Financial responsibility

Both financial literacy and financial -The ability to appreciate the wider
capability aspects should be applied in all impact of financial decisions on
levels of individuals in the society. One should personal circumtances, the family,
maintain their personal financial contact and and the broader community, and
closely update their wealth literacy attributes to better understand rights,
that includes several participative financial responsibilities, and sources of
activities, which can benefit them into their advice or guidance.
personal wealth management success. This
research study article aims to strengthened
and widen our personal learning development 3.1. Different Issues and Challenges
governing Financial Literacy Management:
about financial literacy, and for us to sustain
and be educated on what we can do during In knowing several issues and

amidst of financial issues and challenges. challenges behind financial literacy, whether
short-term or long-term debts, one person
Financial capability is understood as
should always remember that personal money
being a set of financial knowledge, skills, and
management is very critical, and it somehow
behaviours among individuals, with each part
reflects different problems:
defined as follows (PRI, 2005: 4):

a.) Financial knowledge and a.) Personal Financial Debt:

understanding
-Financial borrowings that are
-The ability to make sense of and unsettled, such as personal
manipulate money in its different borrowings from a third party.
forms, uses, and functions, Other financial debt are related to

Personal Financial Literacy: Resolving Issues and Challenges |3

 car loans, and housing loans.
(short-term and long-term)
b.) Know the Best Financial
b.) Loans from Financial Products available:
Institutions:
-This refers to both public and
-Refers to our personal loans in private banks that offers low
banks, government institutions, interest on financial flexibility
credit card companies, corporate savings account.
investments, and other financial
c.) Stay connected with different
institution borrowings. (short-term
Professional Financial
and long-term)
Organizations:

-Those who can educate people

c.) Other Expenditures/Expenses:
about financial literacy strategies
-Unpaid and accountable personal and other personal wealth
payments, such as emergency, management planning techniques.
miscellaneous, general and
household mandatory payables.
(short-term and long-term)
CONCLUSIONS:

Financial difficulties, struggles and

RESEARCH STUDY never ending problems about money

RECOMMENDATIONS: management and its financial incapabilities,
that includes financial resolutions suffice the
Dealing with these financial literacy
whole content of the research study article. It
issues and challenges, several financial
might be boring to talk about our financial
literacy programs are being offered to the
triumphs and challenges, but the most
public. Such learning access to financial
important part of the research article is to
education does not always a guarantee
enlighten people when dealing to any personal
resolution, but it can minimized personal
savings management. There might be other
spending and promote personal household
personal financial literacy issues and
savings:
resolutions to be included in the research
a.) Financial Management: study article, but the disposition of the
researcher will still be open and unbiased on
-Refers to managing ones’
any related comments and topics to be
financial literacy, and the financial
discussed in the future. My conclusion, is that
adjustment capabilities. Assuring
people should first, anticipate financial risks or
that any individual are responsible
problems; second, learn how to manage their
and accounted for, towards their
financial capabilities; third, following proven
financial management practices.
financial literacy practices; and lastly seek an
Personal Financial Literacy: Resolving Issues and Challenges |4
 immediate tips and advices to an expert or a and Their Money: A National
financial counselor, in order to attain financial Symposium on Financial Capability.”
management success entirely. Thank you very Ottawa, June 9-10, 2005.
much.

REFERENCES:

Arthur, C. (2012). Financial Literacy Education

(pp. 1-12). Brill Sense.

Hastings, J.S., Madrian, B.C., Skimmyhorn,

W.L. (2013). Financial Literacy,
Financial Education and Economic
Outcomes. Annual Review of
Economics. Volume 5: 347-373.
https://www.stlouisfed.org/on-the-
economy/2015/march/the-impact-of-
financial-education

Huston, Sandra. (2010). Measuring Financial

Literacy. The Journal of Consumer
Affairs, Volume 44, No.4.

Lee, C.M. (2021). Business to Consumers

(B2C) Relationships: Should Local
Businesses have to be Honest with
their Customers all time?

PRI (Policy Research Initiative). (2004).

Financial Capability and Poverty
Discussion Paper. Prepared by
Social and Enterprise Development
Innovations for the PRI Project “New
Approaches for Addressing Poverty
and Exclusion.” Ottawa: PRI.

PRI (Policy Research Initiative). (2005). Why

Financial Capability Matters,
Synthesis Report. Prepared by
Social and Enterprise Development
Innovations for the PRI Project “New
Approaches for Addressing Poverty
and Exclusion,” Report on “Canadians

Personal Financial Literacy: Resolving Issues and Challenges |5

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