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Arrange the scrambled letter.

 Arrange Me!
FALANINCI IELRTAYC
FINANCIAL LITERACY
Arrange Me!
SNVIGA
SAVING
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IVEISGNNT
INVESTING
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ENESXPES
EXPENSES
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ENSED ADN TASWN
NEEDS AND WANTS
Financial
Literacy

Group 05
Financial Literacy
The national Endowment for Financial
Education defines Financial literacy as “the
ability to read, analyze, Manage and
communicate about the personal financial
conditions that affect material well being. It
includes the ability to discern financial choices,
discuss money and financial issues without (or
despite) discomfort, plan for future, and respond
competently to life events that affect everyday
financial decisions including events in general
economy (incharge education Foundation 2017).
 Hasting et. Al 1. Knowledge of financial
(2003) refers products

financial literacy 2. Knowledge of financial

concepts.

3. Having the mathematical skills

or numeracy necessary for
effective financial decision
making.

4. Being engaged in certain

activities such as financial
planning.
 Benefits of
Financial Literacy
• Become self sufficient and achieve

financial stability

• Less unnecessary spending

• Debt management

• Won’t fall for Fake Schemes

• Less stress
Standards for developing understanding of
Financial Literacy
• Earning Income
• Buying Goods and
Services
• Saving
• Using Credit
• Financial Investing
• Protecting and
Insuring
 Earning Income
Income for most people is
determined by the market value of
their labor, paid as wages and
salaries.
 Buying Goods and
Services
People cannot buy or make all the
goods and services they want; as a
result, people choose to buy some
goods and services and not buy
others.
 Saving
Saving is the part of income that
people choose to set aside for future
uses.
 Using Credit
Credit allows people to purchase
goods and services that they can use
today and pay for those goods and
services in the future with interest.
 Financial Investing
Financial investment is the purchase
of financial assets to increase income
or wealth in the future. Investors
must choose among investments that
have different risks and expected
rates of return..
 Protecting and Insuring

People make choices to protect

themselves from the financial risk of
lost income, assets, health, or
identity. They can choose to accept
risk, reduce risk, or transfer the risk to
others. Insurance allows people to
transfer risk by paying a fee now to
avoid the possibility of a larger loss
later.
Characteristics on How People view Money

Frugal
Pleasure
Status
Indifference
Powerful
Self-worth
 Frugal
People seek financial security by
living below their means and saving
money. Frugal people rarely buy
luxury items and some even have a
hard time buying necessities. They
save money because they believe
money will offer protection from life’s
uncertainties, money makes them feel
more secure.
 Pleasure
Pleasure seekers use money to bring
pleasure to themselves and others. This
money profile is more likely to spend
than to save. Pleasure seekers often
live beyond their means by spending
more than they make. Pleasure seekers
can find themselves in deep debt if
they are not careful.
 Status
Some people use money to express
their social status. Having the best and
buying popular brand names are
important to people in this profile.
Status spenders like to “show off” their
purchases.
 Indifference
People who treat money with indifference
tend to place very little importance on
having money. Having money makes them
nervous. They would rather spend time
and resources being independent by
growing their own food or making their
own clothes. They are hobby-oriented and
involved with arts and crafts.
 Powerful
Some people use to express their power.
This profile may also use money to control
other people including their spouses
children and friends.
 Self-worth
People who spend money for self-
worth tend to judge their own worth by
how much money they have. They
believe that people only judge them
based on the amount of money they
have. They value how much they have
accumulated.
 Fix Expenses
A fixed expense just means an expense
in your budget that you can expect to
stay the same, or close to it, over time.
When you sit down to make your
monthly budget, you don’t have to
guess how much you’ll pay toward
fixed expenses. You can simply carry
over those amounts from last month’s
budget.
 Fixed expenses can • Rent or mortgage payments
include essential expenses, • Renter’s insurance or
such as those needed to homeowner’s insurance
maintain a basic standard
• Cell phone service
of living each month.
• Internet service
Some of the most
• Health, disability or life
common fixed expense
samples include: insurance premiums
• Property taxes
• Childcare expenses
• Student loan or car loan
payments
 Variable Expenses
Variable expenses are the opposite of
fixed expenses. A variable expense
may recur from month to month. But
the amount you pay in any given
month could be different from
previous payments or ones you’ll make
in the future.
 What’s included in a • Gas
budget under variable • Parking fees
expenses will vary from • Groceries
one person to another. But
• Dining out
some of the most common
• Clothing
variable expenses you
may pay include: • Personal care expenses
• Healthcare expenses
• Home maintenance and repairs
• Entertainment
• Hobbies and recreation
 Needs and Wants

A need is something A want is something that

necessary to live and can improve your quality
function. of life.
 Steps to Undertake to Enhance Financial
Literacy
Financial Goals - this is the first step to managing ones
financial life, this will help you to see what you want to do
with your money and guide your financial decisions.

Developing a Spending Plan - this will allow you to

effectively manage your finances and determine where to best
spend your money.

Important of Saving - It provides financial security and

freedom and secures you in a financial emergency.
Two ways to save;
• Save before you spend
• Save after you spend wisely
Thank You!