Key Factors of Financial Literacy

Basic Financial Knowledge:

Example: Maria, a high school teacher, takes a financial literacy course offered by the Bangko
Sentral ng Pilipinas (BSP) to understand basic financial terms such as "interest rate," "inflation,"
and "investment."
Budgeting and Financial Planning:
Example: Juan, an office worker in Manila, creates a monthly budget using an Excel spreadsheet,
allocating his salary to different categories such as rent, utilities, food, transportation, and
savings. He also sets a goal to save PHP 50,000 for a trip to Palawan next year.
Saving and Investment:
Example: Ana, a call center agent, opens a high-interest savings account with BPI and starts
contributing to a mutual fund through BPI Asset Management. She learns about the benefits of
compounding interest and sets aside PHP 5,000 each month.
Credit and Debt Management:
Example: Carlo, a young professional, checks his credit score through the Credit Information
Corporation (CIC). He ensures he pays his credit card bill in full each month to avoid high-
interest charges and maintain a good credit score.
Insurance and Risk Management:
Example: Lea, a single mother, purchases a life insurance policy from Sun Life Financial to
ensure her children are financially secure in case of an unexpected event. She also buys health
insurance through PhilHealth and a private provider.
Retirement Planning:
Example: Robert, a government employee, contributes to the Government Service Insurance
System (GSIS) and also opens a Pag-IBIG MP2 savings account to prepare for his retirement. He
calculates how much he needs to retire comfortably and plans accordingly.
Tax Knowledge:
Example: Ella, a freelance graphic designer, attends a seminar by the Bureau of Internal Revenue
(BIR) to understand her tax obligations. She learns about allowable deductions and ensures she
files her taxes correctly to avoid penalties.
Consumer Rights and Responsibilities:
Example: Miguel buys a new smartphone and reads the warranty and return policy. When the
phone malfunctions within the warranty period, he contacts the Consumer Protection Group
(CPG) of the Department of Trade and Industry (DTI) to resolve the issue.
Elements of Financial Literacy
Income:
Example: Pedro, an OFW in Saudi Arabia, sends remittances to his family in Cebu. He discusses
with them how to manage the household budget and ensures they understand the difference
between gross and net income from his salary.
Expenses:
Example: Sofia, a college student, tracks her monthly expenses using a mobile app. She
identifies areas where she can cut back, such as eating out less frequently, to save more money.
Savings:
Example: Ben, a jeepney driver, opens a savings account with Land Bank of the Philippines. He
sets up an automatic transfer of PHP 500 each week from his daily earnings to build an
emergency fund.
Investments:
Example: Cora, a small business owner, invests in stocks through COL Financial. She diversifies
her portfolio by investing in different sectors and regularly reviews her investments to ensure
they align with her financial goals.
Debt:
Example: Lito, a construction worker, takes out a loan from a local cooperative to finance his
home renovation. He carefully reads the loan agreement, understands the interest rate and
repayment terms, and makes a plan to pay off the loan within three years.
Insurance:
Example: Gina, an entrepreneur, buys comprehensive auto insurance for her delivery van. She
compares policies from different providers to find the best coverage and premium. She
understands the importance of insurance in protecting her business assets.
Retirement:
Example: Alex, a nurse, regularly contributes to the Social Security System (SSS) and also
participates in the Personal Equity and Retirement Account (PERA) program. He periodically
reviews his retirement plan to ensure he is on track to meet his goals.
Taxation:
Example: Daisy, a bakery owner, keeps detailed records of her sales and expenses. She hires an
accountant to help her with tax planning and filing, ensuring she takes advantage of available tax
deductions and complies with BIR regulations.
Financial Decision-Making:
Example: Ramon, a recent college graduate, is approached with a high-risk investment
opportunity. He researches the company, seeks advice from a financial advisor, and ultimately
decides to avoid the investment, recognizing the potential for fraud and loss.