Chapter 6

Financial Literacy

Making Sense of your Dollars and Cents

 Definitions You Should Know

• Literacy:
Having an expanse of
knowledge in a certain
subject
• Finance:
The management of
money

MoneyCounts: A Financial Literacy Series

How Does Financial Literacy Affect
You Today?

• You can never learn

something overnight.
An education on a
subject needs to grow
with time.
• If you learn about
money management
now, you will be
prepared in your
future.

MoneyCounts: A Financial Literacy Series

Does What You Know Now, Affect
Your Future?

• Of course what you know

today affects tomorrow
– You couldn’t drive a car
without a license
• That’s why you need to
begin learning about how
to spend your money
wisely today

MoneyCounts: A Financial Literacy Series

 What Are The Differences Between Savers
• Spenders: and Spenders?
– Receive short term satisfaction by getting an object
they want immediately.
• Savers:
– Save for items and appreciate them forever.
• Spenders:
– Have little money in the bank, because they spend
their money on pricey items. Often are in debt, and
have no money set aside for the inevitable “rainy
day.”
• Savers:
– Have money in the bank because they knew how to
manage their money. Prepared for financial
emergencies.
MoneyCounts: A Financial Literacy Series
Financial Literacy…What is it?

Financial literacy is the ability to understand

• How money works in the world.
• How someone earns money
• How someone manages money
• How he/she invests it (turn it into more)
More specifically, it refers to the set of skills and
knowledge that allows an individual to make
informed and effective decisions with all of their
financial resources

MoneyCounts: A Financial Literacy Series

What is Financial Literacy?

What is a Financial Literacy?

Financial Literacy is the ability to use knowledge and skills to

manage financial resources effectively for a lifetime of financial
wellbeing
The foundation for Money Management
The Knowledge behind Personal and Consumer Finance

Deals with budgeting, saving, investing, debts and risk

management

MoneyCounts: A Financial Literacy Series

Principles of Financial Literacy

Ten (10) Principles of

Financial Literacy

MoneyCounts: A Financial Literacy Series

Principles of Financial Literacy

1-Map Your Financial Future

2- Your Take Home NET PAY
3- Budget Your Money (Expenses = Revenue )
4- A Healthy Budget Sample
5- Pay Yourself First
6- Save and Invest at early AGE
7- Needs Versus Wants
8-Don’t Borrow What you Can’t Pay Back
9- Protect your credit history
10-Stay Insured

MoneyCounts: A Financial Literacy Series

Stay Insured

MoneyCounts: A Financial Literacy Series

 Financial Literacy
Step 1: Create a Budget-Expenses
• What do you want vs. what do you really need? Start with your
mandatory expenses on a monthly basis. Add them up.
Example:
My Monthly expenses are/will be:
1. Rent $_________
2. Utilities $_________
3. Food $_________
4. Transportation $_________
5. Other Bills $__________
(include: credit cards, loans, cell phone, internet, etc…)
6. Other expenses $_________
(include: eating out, clothes, movie tickets, etc…)

MoneyCounts: A Financial Literacy Series

 Financial Literacy
Step 1: Create a Budget-Income
• Next you want to determine your monthly income.
Example:
My Monthly Income will be:
1. Wages/Salary $_________
2. Business Income $_________
3. Other $_________
• TOTAL MONTHLY INCOME $__________

MoneyCounts: A Financial Literacy Series

 Financial Literacy
Step 2: Assess, Adjust and Make a Plan
• Next you want to subtract your total monthly expenses from your
total income.
Example:
• Total Monthly Income $________
• Total Monthly Expenses $________
• TOTAL SAVINGS $________
*If your expenses exceeds your income, prioritize your expenses and
look for ways to cut back on spending*

 The rule is that your expenses should not exceed

your income and there should be at least 3 months living
expenses in your savings.
 Assess your income and expenses, make a plan

MoneyCounts: A Financial Literacy Series

 Financial Literacy
Step 3: Start a Weekly Log of
Flexible Expenses
Example:
My Weekly expenses are/will be:
1. Fuel $_________
2. Groceries $_________
3. Dining Out/Take-Out $_________
4. Clothing/Shopping $_________
5. Entertainment $_________
6. Other $_________
Total- $_________
 These are items that should be monitored and assessed to determine if
over-spending is occurring.

MoneyCounts: A Financial Literacy Series

 Financial Literacy

Step 4: Create a Calendar of Fixed Expense Due

Dates and Income Received

 This will ensure payments are made on their due date to protect your housing,
food supply, transportation and line of credit.

MoneyCounts: A Financial Literacy Series

Healthy Relationship with Money

• In summary, financial well-being can

be defined as a state of being
wherein a person can fully meet
current and ongoing financial
obligations, can feel secure in their
financial future, and is able to make
choices that allow enjoyment of life.

MoneyCounts: A Financial Literacy Series

 THE END

......... THE END..

MoneyCounts: A Financial Literacy Series