FINANCIAL

LITERACY
OBJECTIVES
1. define the financial Literacy
2. assess level of personal
financial literacy using set of
standards and question ;
3.characterize financial
literacyin the Philippines
4 start practical steps to
develop personal financial
literacy.
The national endowment for financial
education defines financial literacy as '' the
ability to read , analyze ,manage, and
communicate about the personal conditions
that affect material well-being .it includes the
ability to discern financial choices , discuss
money and financial issues without
discomfort , plan for the future ,and respond
competently to life events that affect every
financial decisions ,including events in the
general economy '' ( in charge 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 band , fixed vs adjustable rate mortgage .

2 .knowledge of financial concepts ( e.g inflation , compounding diversification , credit scores ) :

3, having 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 curiculum.
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 )
 STANDARDS KEY CONCEPTS

- Income earned or received by people

- Different types of jobs as well as different forms of income earned or received --------
- Benifits and cost of increasing income through the acquisition of education
andskills.
EARNING INCOME
- Government programs that affect income.
- Types of income and taxes
- labor market 


- Scarcity , and choice and cost

- factors that influence spending choices ; such as advertising ,peer pressure and
spending choices of others.
- Comparing the costs and benifits of spending decisions
- Basics of budgeting and planning
- Making a spending decisions
- Payment methods , costs and benifits of each
Buying goods and services
- Budgeting and classification of expenses
- ssatisfaction , determinants of demand , costs of information search , choice of
product durability
- tthe role of government and other institutions in providing information for
consumers.
 - Concept of saving and interest
- how people save money , where people can save money , and why people
save money .
- the role that financial institutions play as intermiditaries between saves and
borrowers.
- the role government agencies such as the Federal Deposit Insurance
Corpration ( FDIC ) p,ay in protecting savings deposits.
- role of markets in determining interest rates
- the mathematics of saving 
Savings - the power of compound interest
- real versus nominal interest rate
- Present versus future value
- financial regulatiors
- the factors determining the value of person's savings over time
- automatic savings plan '' rainy-day'' funds
- saving retirement
 -concept of credit and the cost of using credit

-why people use credit and the sources of credit

-why interest rates vary across borrowers

using credit
-basic calculations related to borrowing (principal, interest, compound interest)
-credit reports and credit scores

-behaviors that contribute to strong credit reports andscores

-impact of credit reports and scores on consumers
-consumer protection laws

concept of financial investment

variety of possible financial investments

calculate rates of return

financial
relevance and calculation of real and after-tax rates of return
investing

how markets cause rates of return to change in response to variation in risk and maturity

how diversification can reduce risk

how financial markets react to changes in market conditions and information

 concepts of financial risk and loss

insurance (transfer of risk through risk pooling)

managing risk

identity theft
protecting and Insuring
life insurance products

how to protect oneself against identity theft

Financial Investing

Protecting and Insuring

The Benefits of financial literacy

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 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.
 Financial literacy in the Philippines

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 network 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
 Developing Personal Financial literacy

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, spепа, differently from your parents about handling money? you
behave similarly or

There are six major characteristic types in how people view money ( In charge,
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 not
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.

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...
Fixed vs. Variable Expenses

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
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.

Developing a Spending Plan

Time and effort are necessary to build a sustainable spending plan. Three easy steps are
proposed below when developing your personal spending plan:

1. Record - Keep a record of what you spend.

2. Review - Analyze the information and decide what you do.

3. Take action - Do something about what you have written down.

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.
A Little Goes a Long Way - Small consistent savings go a long way.

There are two ways to save:

save before you spend;
and save after you spend wisely.

In order to stick to the savings habit, you should:

1. commit to a month;

2. find an accountability partner;

3. find a savings role model who is successful with his/her money,

through tried and true savings;

4. write your goal down and track it; and

5. avoid tempting situations (don't go to the mall to "hang out").

Needs vs. Wants

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 have 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. Setting Financial Goals

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.
thank you