FINANCIAL LITERACY

MODULE 8
FINANCIAL LITERACY

• A core life skill in an increasingly complex world where people

need to take charge of their own finances , budget, financial
choices, managing risks, saving, credit, and financial
transactions.
• The ability to make informed judgements and make effective
decisions regarding the use and management of money. Hence,
teaching financial literacy yields better financial management
skills.
• Poor financial decisions can have a long-lasting
impact on individuals, their families and the society
caused by lack of financial literacy. Low level of
financial literacy are associated with lower standards
of living, decreased psychological and physical well-
being and greater reliance on government support.
However, when put into correct practice, financial
literacy can strengthen savings behavior, eliminate
maxed-out credit cards and enhance timely debt.
THE IMPORTANCE OF STARTING FINANCIAL
LITERACY WHILE STILL YOUNG

• National surveys show that young adults have the lowest levels of
financial literacy as reflected in their inability to choose the right
financial products and lack of interest in undertaking sound financial
planning. Therefore, financial education should begin as early as possible
and be taught in school.
• Akdang (2013) stressed that in the recent financial crisis, financial
literacy is very crucial and tends to be advantageous if introduced in the
very early years as preschool years.
• Financial education is a long term process and incorporating it into the
curricula from the early age allows children to acquire the knowledge and
skills while building responsible financial behavior throughout each stage
of their education. (OECD, 2005).
FINANCIAL PLAN

• Kagan (2019) defines a financial plan as a

comprehensive statement of an individual’s
long-term objectives for security and well-
being and detailed savings and investing
strategy for achieving the objectives. It begins
with through evaluation of the individual’s
current financial state and future expectations.
STEPS IN CREATING FINANCIAL PLAN

• 1. Calculating net worth – Net worth is the amount by which assets exceed liabilities.
In so doing, consider (1) assets that entail one’s cash, property, investments, savings,
jewelry and wealth; and (2) liabilities that include credit card debt, loans and mortgage.
Formula: total assets – minus total liabilities = current net worth.
• 2. Determining cash flow – Financial plan is knowing where money goes every
month. Documenting it will help to see how much is needed every month for
necessities, and the amount for saving and investments.
• 3. Considering the priorities – The core of financial plan is the person’s clearly
defined goals that may include: (1) Retirement strategy for accumulating retirement
income; (2) Comprehensive risk management plan including a review of life and
disability insurance, personal liability coverage; (3) Long term investment plan based
on specific investment objectives and personal risk tolerance profile; and (4) Tax
reduction strategy for minimizing taxes on personal income allowed by the tax code.
FIVE FINANCIAL IMPROVEMENT
STRATEGIES

• Suggested by Investopedia as a journey to financial

literacy.
1. Identify your starting point
2. Set Your priorities
3. Document your spending
4. Lay down your debt
5. Secure your financial future
FINANCIAL GOAL PLANNING AND
SETTING

• Setting goals is very important part of life, especially in financial planning.

Before investing the money, consider setting personal financial goals.
Financial goals are targets, usually driven by specific future financial
needs, such as saving for a comfortable retirement, sending children to
college, or enabling a home purchase.
• There are three key areas in setting investment goals for considerations.
A. Time horizon – it indicates the time when the money will be needed. To note, the
longer the time horizon, the more risky ( and potentially more lucrative) investments can
be made.
B. Risk tolerance – Investors may let go of the possibility of a large gain if they knew there
was also a possibility of a large loss ( they are called risk averse); while others are more
willing to take the chance of a large loss if there were also a possibility of a large gain
( they are called risk seekers ). The time horizon can affect risk tolerance.
C. Liquidity needs – Liquidity refers to how quickly an investment can be converted into
cash ( or the equivalent of cash). The liquidity needs usually affect the type of chosen
investment to meet the goals.
D. Investment goals : Growth, income and stability. When considering any investment,
think about what it offers in terms of three key investment, think about what it offers in
terms of key investments:
(1) Growth ( also known as capital appreciation) is an increase in the value
of an investment;
(2) Income, of which some investments make periodic payments of interest
or dividends that represent investment income and can be
spent or reinvested; and
(3)Stability, or known as capital preservation or protection of principal.
BUDGET AND BUDGETING

• Budget – an estimation of revenue and expenses over a specified future period of

time and is usually compiled and re-evaluate on a periodic basis. Budgets can be made
for a variety of individual or business needs or just about anything else that makes and
spends money.
• Budgeting – on the other hand, is the process of creating a plan to spend money.
Creating this spending plan allows one to determine in advance whether he/she will
have enough money to do things he/she needs or likes to do. Budgeting ensures to
have enough money for the things needed and those important ones and will keep one
out of debt.
SEVEN STEPS TO GOOD BUDGETING

• STEP 1: Set realistic goals

• STEP 2: identify income and expenses
• STEP 3: Separate needs fro wants
• STEP 4: Design your budget
• STEP 5: Put your plan into action
• STEP 6: Plan for seasonal expenses
• STEP 7: Look ahead
SPENDING

• If budget goals serve as a financial wish list, a spending plan is a way to

make those wishes a reality. Turn them into an action plan. The following are
practical strategies in setting and prioritizing budget goals and spending
plan:

• 1. start by listing your goals

• 2. Divide your goals according for how long it will take to meet each goal.
• 3. Estimate the cost of each goal and find out how much it costs.
• 4. Project future cost
• 5. Calculate how much you need to set aside each period
• 6. Prioritize your goals
• 7. Create a schedule for meeting your goals
INVESTMENT AND INVESTING

• A teachers, when you have saved more money than what you
expect at time of need, consider investing the money to earn
more interest than what your savings account is paying you.
• There are many ways you can invest your money but consider four
aspects:
1. How long will you invest the money? ( time horizon)
2. How much money do you expect your investment to earn each year?
( Expectation of Return)
3. How much of your investment re you willing to lose in the short-term
in order to earn more in the long-term? ( Risk Tolerance)
4. What types of investment interest you? ( investment type)
SAVINGS

• in order to get out of debt, it is important to set some money

aside and put it into a savings account on a regular basis.
Savings will also help in buying things that are needed or
wanted without borrowing.
• Emergency Saving Fund – start as early, setting aside a
little money for emergency savings fund. If you receive a bonus
from work, an income tax refund or earnings from additional or
side jobs, use them as an emergency fund.
10 REASON WHY SAVE MONEY

1. To become financially independent

2. To save on everything you buy
3. To buy a home or a car
4. To prepare for the future
5. To get out of debt
6. To augment annual expenses
7. To settle unforeseen expenses
8. To respond to emergencies
9. To mitigate losing your job or getting hurt
10.To have a good life
COMMON FINANCIAL SCAMS TO
AVOID

1. Phishing – using this tactic, scammers send an email that appears to come from a financial
institutions, such as a bank and asks you to click on a link to update your account
information. If you receive any correspondence that asks for your information, never click on
the links or provide account details. Instead, visit the company’s website, find official contact
information, and call them to verify.
2. Social Media Scams – Scammers are adept at using social media to gather information
about the traveling habits of potential victims. They also have phishing tactics, including
posts seeking charity donations with bogus links that allow them to keep your money.
Therefore, be conscious of the information you post online, especially personal details and
plans for a vacation that you would leave your house unoccupied.
3. Phone Scams – Another prevalent tactic is scamming phone calls. The scammers pose as a
government agency, such as the Bureau of Internal Revenue local law enforcement agencies,
and use scare tactics to acquire your personal information over the phone. Look for the
agency's contact information, and call them to verify any request. To note, government
agencies will never text or call you to ask for money.
4. Stolen Credit Card Numbers – There are numerous ways that scammers
can obtain your credit card information, including hacking, phishing, and the
use of skimming devices, such as small card readers attached to unmanned
credit card readers (i.e. ATMs gas pumps and more). These small devices pull
data from your card when you swipe it. Before you use an ATM or swipe your
card, look for suspicious devices that may be attached to the card reader.
5. Identify Theft – depending on the amount of information a scammer is
able to obtain, identify theft may extend beyond unauthorized charges on a
debt or credit card. If scammers are able to obtain your Social Security
number, date of birth, and other personal information, they may able to open
new accounts in your name without your knowledge. Be aware of an
information you share and with whom, and always shred sensitive information
before disposing.
10 TIPS TO AVOID COMMON
FINANCIAL SCAMS

1. Never wire money to a stranger.

2. Don’t give out financial information.
3. Never click on hyperlinks in emails.
4. Use difficult passwords.
5. Never give your social security number.
6. Install Antivirus and Spyware protection.
7. Don’t shop with unfamiliar online retailers.
8. Don’t download software from pop-up windows.
9. Make sure your website you visit are safe.
10.Donate to known charities only.
FINANCIAL SCAMS FOR STUDENTS

A. Fake scholarships – students should thoroughly check scholarship

sources before applying to verify legitimacy.
B. Diploma mills – There are schools that offer fake degrees and
diplomas in exchange for free. Check from government education
agencies and prospective school to enroll in if it is government-
recognized, legitimate or accredited.
C. Online book scams – While students often go for the best deals on
textbooks online, scammers can use this opportunity to get students’
credit card information. When buying anything online, be sure to do it
on a credible site.
D. Credit card scams – Oftentimes, credit card companies go to school
campuses to convince students to fill out card applications. Scammers
may also grab this chance to steal student’s information: it is important
to visit a local credit union or bank for credit card application.
INSURANCE AND TAXES

• Insurance – is a contract ( in the form of the policies between the policy

holder and the insurance company policy holder and the insurance company,
whereby the company agrees to compensate for any financial loss from
specific insured events. Any change for the financial protection offered,
policy holder agrees to pay a certain sum of money known as a premiums to
the insurance company. Insurance is the best form of risk management
against uncertain loss.
• There are various type of insurance to choose from, such a life insurance,
health insurance, motor insurance, property insurance, business insurance,
and etc. Besides, the financial protection derived from insurance entails tax
benefit claim on the paid premiums.
• The following are concept related to insurance and taxes that every teacher should
know. However he/she should carefully analyze and critically examine well before
pursuing any deal with them.

• 1. Employer- Sponsored Insurance – If working on a company with 50 or more full

time employees, the employer is required to provide employee just only insurance that
meets minimum guidelines. Examine the plan offered. But do not pay over 9.66% of
household income in premiums.
• 2. Marketplace Plans- Marketplace plans are available base on an area of residents
and income upon meeting minimum coverage requirements. Marketplace plans come in
three tiers: bronze, silver, and gold. Generally, bronze plans offer the less coverage at
the lowest premium, while gold plans provide the most coverage at the highest price.
LIFE INSURANCE

• a type of insurance that compensates beneficiaries upon the death of the

policyholder. The company will guarantee a payout for the beneficiaries in
exchange of premiums. This compensation is called “death benefit”.
• Depending on the type of insurance one may have, these events can be
anything from retirement, to major injuries, to critical illness or even to
death.
The following are common risk categories:
1. Preferred Plus- The policyholder is in excellent health, with normal weight, no
history of smoking, chronic illnesses, or family history of any life threatening disease.
2. Preferred – The policy holder is in excellent health but may have minor issues on
cholesterol or blood pressure but under control.
3. Standard Plus- The policyholder is in very good health but some factors, like high
blood pressure or being overweight impede a better rating.
5. Standard – Most policyholders belong to category, as they are deemed to be
healthy and have a normal life expectancy although, they may have a family history of
life-threatening diseases or few minor health issues.
6. Substandard – Those with serious health issues, like diabetes of heart disease are
placed on the table rating system, ranked from highest to lowest. On average, the
premiums will be similar to Standard with an additional 25% lower claim on table
ratings.
7. Smokers – Due to an added risk of smoking, the policy holders in this category are
guaranteed to pay more. Aside from health class, age is also a critical factor in
determining premiums. Therefore, older people pay more expensive premiums.
BENEFITS OF LIFE INSURANCE

• It pays for medical and funeral costs.

• For financial support.
• For funding various financial goals.
• Acts as a retirement secured conform.
• It covers costs incurred from taxes and debt.
TYPES OF LIFE INSURANCE
Type Characteristics Advantage Disadvantage
1. Endowment It grants a lump sum It allows for saving up It requires higher
after a specified for specific purposes. premiums than other
amount of time or types of life insurance.
upon death. The It guarantee returns
policy owner is upon maturity. It is not the best
required to pay the option for those
premium for a It offers some form of looking at full life
predetermined insurance coverage. protection.
number of years or
until a specific age is
reached.
2. Term It is the simplest form It entails low premium It has no benefit if
of life insurance to requirements. policyholder outlives
obtain, of which upon the term period set.
death, the It is a strong option for
beneficiaries are paid policyholders who Premium usually gets
with the benefit. need insurance but higher upon renewal
cannot afford whole of terms.
life or endowment.
3. Whole Life It provides coverage It offers permanent It requires higher
for the policyholder protection for full premiums.
‘s entire life or until life or 100 years.
they reach 100 years It is flexible in terms
old. It acts both as of payments of It is difficult to
protection and premiums. understand due to
savings mechanisms It entails fixed complexity.
since a portion of premiums.
the premium is It usually comes with
allocated to build up additional features
cash values. and “living”
benefits.
4. Variable universal It serves as both life It takes dual purpose: Cash values and
life (VUL) protection and Life insurance plus dividends are not
investment vehicle in investment tool. guaranteed.
one package. A portion It has no maturity age.
of the premium is The cash value is Face amount and death
allocated into various payable along with the benefit are dependent
investment vehicles for assured sum. on investment
the purposes of wealth The death component performance.
creation. The contract’s is not limited to face
earnings are based on value. It includes various
the performance of It depicts liquidity, investment fees.
selected investments. wherein funds can be
accessed in times of
FINANCIAL STABILITY

• Like anyone else, teachers also aim to become financially

stable if not today, maybe in the future. Being financially stable
means confidence with the financial situation, worriless paying
the bills because of available funds, debt-free, money savings
for future goals and enough emergency.
• Financial stability is not about being rich but rather more of a
mindset. It is living a life without worrying about how to pay the
next bill, and becoming stress-free about money while focusing
energy on other parts of life ( Silva,2019).
10 STRATEGIES IN REACHING
FINANCIAL STABILITY

1. Make savings automagical

2. Control your impulsive spending
3. Evaluate your expenses and live frugally.
4. Invest in your future.
5. Keep your family secure.
6. Eliminate and avoid debt.
7. Use your envelope system.
8. Pay bills immediately.
9. Read about personal finances.
10.Look to grow your neth.
SIGNS OF BEING FINANCIALLY
STABLE

Rose (2019) presents some signs of a financially stable person.

1. You never overdraw your checking account.
2. you don’t lose sleep over finances.
3. Your credit cards for convenience and rewards but never out
of necessity.
4. You don’t worry about losing your job.
5. You pay your bills ahead of time.
6. People ask your opinion about financial matters and you
inspire them.
7. You’re generally happy with your financial situation
8. You finance your cars over five years or less if you take loans
at all.
9. You contribute more to your retirement.
INTEGRATING FINANCIAL LITERACY
INTO THE CURRICULUM

Financial education in schools should be part of a collaborative national strategy to ensure relevance and
long term sustainability. The education system and profession should be involved in the development of the
strategy.
In support, Barry(2013) underscored the financial literacy has a wide repercussion outside the family circle
and more precisely, the school hence administrators and professor needs to develop a curriculum would
provide students insights on having the value of financial literacy. Including the effect it can bring them.
Moreover there should be a learning framework which sets out goals learning outcomes contents
pedagogical approaches, resources and evaluation plans. The content should cover knowledge, skills, attitudes
and values. A sustainable source of founding should be identify at the outset.
Financial education should be ideally be a core part of the school curriculum. It can be integrated into other
subjects like mathematics, economics, social studies, technology and home economic, values education and
others. Financial education and can give a range of “ real-life” contexts across a range of subjects.
Teachers should be adequately trained and resourced made
aware of the importance of financial literacy and relevant pedagogical
methods and they should receive continuous support to teach it or
integrate in their lesson. More so, there should be easily accessible,
objective, high-quality and effective learning tools and pedagogical
resources available to schools and teachers that are appropriate to the
level of study. Student’s progress should also be assessed through
various high impact models.
ANY QUESTION?
THANK YOU!