FINANCIAL LITERACY

CHAPTER 4
OBJECTIVES:
At the end of this chapter, you should be able to:
• define financial literacy
• assess level of personal financial literacy using set of
standards and questions;
• characterize financial literacy in the Philippines; and
• 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 affects
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
everyday financial decisions, including events in the general
economy.
To put it simply, it is the ability to use knowledge and skills to
manage one’s financial resources effectively for lifetime
financial security.
Hasting refers financial literacy as:
1. Knowledge as financial products.
2. Knowledge of financial concept.
3. Having the 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 curriculum.
• Financial Education and advocacy programs of the
public and private sectors have been identified as key
areas in building and improved financial system in the
Philippines.
• Republic Act 10922, otherwise known as the
“Economic and Financial Literacy Act”, mandates
DepEd to “ensure that economic and financial
education becomes an integral part of formal learning.
The council for Economic Education, the
leading organization in the United States that
focuses on the economic and financial
education of students from kindergarten
through high school developed six standards
gearing toward deepening student
understanding of personal finances.
 STANDARDS KEY CONCEPT
Earning Income • Income earned or received by people
• Different types of jobs as well as different forms of
income earned or received
• Benefits and cost of increasing income through the
acquisition of education and skills.
• Government programs that affect income
• Types of income and taxes
• Labor market

Buying Goods and • Scarcity, choice and opportunity cost

• Factors that influence spending choices, such as
Services advertising, peer pressure, and spending choice of
others
• Comparing the cost and benefits of spending decisions
• Basics of budgeting and planning
• Making a spending decision
• Payment methods, cost and benefits each
 • Budgeting and classification of expenses
• Satisfaction, determinants of demand, cost of
information search, choice of product durability
• The role of government and other institutions in
providing information for consumers

Saving • Concept of saving and interests

• How people save money, where people can save
money, and why people save money
• The role that financial institutions play as
intermediaries between savers and borrowers
• The role government agencies such as the Federal
Deposit Insurance Corporation (FDIC) play in
protecting saving deposits
• Role of markets in determining interest
rates
• The mathematics of saving
• The power of compound interests
• Real versus nominal interest rates
• Present versus future value
• Financial regulation
• The factors determining the value of
person’s savings over time
• Automatic saving plans. “rainy-day” funds
• Saving for retirement
THANK YOU!!!