Financial Literacy

Seminar
BY: PMAJ MARIA ROSARIO S CALUSOR
Chief PAS, RFSO5
@Camp Simeon A Ola, Legazpi City
Feb. 11, 2022
Basics of Budgeting and
Expenditure
Learning Objectives

L.01. Explain the basics of budgeting.

 
L.02. Explain the factors affecting budget consumption.
 
L.03. Discuss the different aspects in budgeting.
What are the factors that affect our
consumption pattern?

• Income
• Occasion
• Advertisements
• Prices
• Values
• Season
• Imitation/Bandwagon Effect
Factors that affect our consumption
pattern
 Income- influence a person’s consumption pattern. If a person has a low
income, tendency is he/she will prioritize more on their basic necessities and
if a person has higher income he/she can focus on other miscellaneous
expenses.
 Occasion- the celebration of any occasion make people spend more than
usual.
 Advertisement- is a way of motivating and convincing consumers to patronize
certain products.
WAYS: bandwagon effect, testimonials, branding
 Price- people tend to ask for the price before buying anything.
PRICE = THINK TWICE IN BUYING
PRICE = HIGHER PROBABILITY IN SPENDING
Factors that affect our consumption
pattern
 Values- attitude/behavior in spending
thriftiness (matipid/kuripot) = plan out the things he/she need to buy

 Season – some things are bought depending on the weather.

 Imitation/ Bandwagon Effect- we imitate other people in buying things

- people join the rest in patronizing products
-“SUNOD SA USO” mentality
Filipino values and culture that
influence consumer behavior
 Indebtedness- buying something or spending for someone with whom we are
indebted or to someone who has done something good to us.
- form of repaying the kindness by buying the products offered
even when we do not need them.

 Colonial Mentality- giving high regard for foreign products

 Regionalism- supporting and patronizing the products of their region or province.

- everybody wants to prove that their product is much better than
others
Basics of Budgeting

 Budgeting is the process of creating a plan to spend your money. This

spending plan is called a budget. Creating this spending plan allows you to
determine in advance whether you will have enough money to do the things you
need to do or would like to do.
Importance of Budgeting

 Since budgeting allows you to create a spending plan for your money, it
ensures that you will always have enough money for the things you
need and the things that are important to you. Following a budget or spending
plan will also keep you out of debt or help you work your way out of debt if you
are currently in debt.
Budgeting is simply balancing your expenses with your income.
If they don't balance and you spend more than you make, you
will have a problem. Many people don't realize that they spend
more than they earn and slowly sink deeper into debt every
year.
Budget Forecasting

 Once you create your first budget, begin to use it and get a good feel for how it
can keep your finances on track, you may want to map out your spending
plan or budget for 6 months to a year down the road. By doing this you can
easily forecast which months your finances may be tight and which ones you'll
have extra money. You can then look for ways to even out the highs and lows in
your finances so that things can be more manageable and pleasant.
Income Generation
Learning Objectives

L.01. Understand the rank and pay structure of the PNP.

 
L.02. Learn the different alternative sources of income.
Rank and Pay Structure in the PNP

 Salary- a form of payment from an employer to an employee, which may be

specified in an employment contract. It is contrasted with piece wages, where
each job, hour or other unit is paid separately, rather than on a periodic basis.
 Monthly Basic Monthly
Rank Rank
Pay Basic Pay
Patrolman/Patrolwoman (Pat) –
Php29,668.00 Police Lieutenant (PLT) - INSP Php49,528.00
PO1

Police Corporal (PCpl) – PO2 Php30,867.00 Police Captain (PCPT) - PSINSP Php56,582.00

Police Staff Sergeant (PSSg) -

Php32,114.00 Police Major (PMAJ) - PCINSP Php62,555.00
PO3
Police Master Sergeant (PMSg) Police Lieutenant Colonel
Php33,411.00 Php71,313.00
- SPO1 (PLTCOL) - PSUPT

Police Senior Master Sergeant

Php34,079.00 Police Colonel (PCOL) - PSSUPT Php80,583.00
(PSMS) - SPO2

Police Chief Master Sergeant Police Brigadier General (PBGEN)

Php34,761.00 Php91,058.00
(PCMS) - SPO3 - PCSUPT(1-star)

Police Executive Master Police Major General (PMGEN) -

Php38,366.00 Php102,896.00
Sergeant (PEMS) - SPO4 PDIR (2-star)
Police Lieutenant General
    Php125,574.00
(PLTGEN) - PDDG (3-star)
Police General (PGEN) - PDG (4-
    Php149,785.00
star)
Alternative Sources of Income

a. Rents

Renting is an agreement where a payment is made for the temporary use of a

good, service or property owned by another. A gross lease is when the tenant pays
a flat rental amount and the landlord pays for all property charges regularly
incurred by the ownership.
Alternative Sources of Income

b. Interests

Interest is payment from a borrower or deposit-taking financial institution to

a lender or depositor of an amount above repayment of the principal sum (i.e. the
amount borrowed). It is distinct from a fee which the borrower may pay the lender
or some third party.
Alternative Sources of Income

c. Dividends

A dividend is a distribution of a portion of a company's earnings, decided by

the board of directors, paid to a class of its shareholders. Dividends can be issued
as cash payments, as shares of stock, or other property.
Alternative Sources of Income

d. Incomes Derived from Small-Scale Industries

A small-scale industry is a project or firm created on a small budget or for a

small group of people. A small-scale industry produces its goods using small
machines, less power and hired labor. It is located within a single place and
produces goods meant for few people.
Evaluation

1. What alternative sources of income is most suitable for police officers?

2. Which among the options in income generation would you pursue?

3. What are the constraints in pursuing alternative sources of income?

Financial Coaching
Why Do We Need
Financial Education
We need FINANCIAL EDUCATION BECAUSE:

 When it comes to securing and saving their future,

many GOOD People fail. Many HARD-WORKING
people fail. Many SMART people fail. Many YOUNG
people fail. Many OLD people fail. Many TEACHERS
fail. Many ENGINEERS and DOCTORS fail. Many end
up retiring without enough savings.

 These people don’t set out to fail. They do because

they fail to PLAN and MANAGE their personal
finances.
“KULANG SA PAG-AARAL”
 They lack Financial Education.
WRONG MONEY MIND SET

 Many people believe that Financial Education is ONLY for the Wealthy.

 Many think that the only Solution to Financial Challenges is to BORROW

money.

 Some even rely on “Luck”

 Some say that because they are POOR, they don’t need to save.
 And many OFWs who work for 20-30 years still end up retiring poor.

“MGA MALING AKALA”

LOW SAVINGS and HIGH DEBT

 Many people use their Credit Cards as Emergency Fund.

 Most people don’t know how to manage their debts. Their debts
manage them.

 “Their SALARY move from Hand to Mouth, to Hand to Hand , to Touch

me Not!”

 CAR LOANS, HOUSING LOANS, SALARY LOANS, CREDIT CARD DEBTS are
accumulated rather than INVESTMENTS

“BAON SA UTANG. HIRAP MAG RETIRE”

LOW SAVINGS and HIGH DEBT

 Also, around 50% of Marriage fall due to Financial related concern.

 Only 2% achieve Financial Independent
WHY ARE WE HERE TODAY?
How to SAVE &
INVEST?

How to MANAGE
FINANCES?

How to Increase CASH-

FLOW?
How to Eliminate
DEBTS?

How to be TRULY RICH?

Why do we need Financial
Literacy?
1. Money without financial literacy
is MONEY GONE SOON! -Robert Kiyosaki
2. Majority of talented people have NO
SAVINGS for their SENIOR YEARS (OFWs, Experts,
Actors, etc., still END UP POOR!)

3. Many PROFESSIONALLY Literate Filipinos (but

ILLITERATE FINANCIALLY) have been victims of SCAMS!

 Why Most People have NO SAVINGS?

BASIC FINANCIAL MISTAKES

 Lack of Financial Planning

 Depend on Someone else

No Discipline & Procrastination


Lack of Financial Intelligence

6 Steps on How to Achieve Financial Independence
1. Plan

• Income – can be from salary, business, or investment.

• Expenses – classify your needs and wants, classify assets

vs liabilities, and cut the little expenses.

• Debt – borrow money effectively.

FUTURE
PRESENT
INCOME INCOME
• Retirement – how you handle your finances today will
affect your life when you retire.
PRESENT FUTURE
NEEDS NEEDS
 Tool: X – Curve Concept
Big Big
Resp. Savings
Lin
 Food e Food ✓
 Shelter Shelter ✓
 Clothing Clothing ✓
 Education Education ✓
 Health Health ✓
 Debts/loans Debt-Free ✓

Active Income Passive Income

(You Work for the Money) (Money Working for You)
No
Savings
LIFE No
Resp.

YOUNG DIE TOO SOON LIVE TOO LONG OLD

AGE Line PROTECT YOUR FAMILY PROTECT YOURSELF
YOUNGER(Instant Money) (Investments) OLDER
Income Replacement Living on Interests

GET SICK
PROTECT YOUR
SAVINGS
Get a HEALTH CARE
INSURANCE
  PROBLEM:
 Most people want to save but don’t know how.
 most people know only how to spend …

INCOME
-
EXPENSE
=
?
SAVINGS

INCOME – Meralco – NAWASA – PLDT

– Smart – Globe – Sun
– SM – Robinsons – Ayala
– Mcdo – Jollibee – KFC – Starbucks
– Petron – Shell – Caltex
YOURSELF – VISA – Master
Classify your needs and wants.
“Purpose o porma?”

IMG Financial Coaching Seminar

2. Save (Pay Yourself)

• Wrong Way of Saving

INCOME EXPENSES SAVINGS
• Right Way of Saving
“
INCOME SAVINGS EXPENSES
• Best Way of Saving
INCOME TITHES SAVINGS EXPENSES

WARREN
BUFFET
 • SOLUTION:
PAY GOD AND YOURSELF FIRST

- Love
offering
- =
EXPENSES + LIFESTYLE
INCOME T ITHES SAVINGS
(10%) (20%) (70%)

Prosperity
Abundance Formula
Formula
3. Invest

• Investment – means money is working for you.

IF YOU INVEST: IF YOU INVEST:
• Stocks – is an instrumentP10,000
P10,000 that signifies equity ownership in a
corporations
at 3% interest:and represents
at a5%
proportionate
interest:claim on a company’s
assets and profits.
300 500
• Direct Stocks
Less 20% tax: Less 20% tax:
60 100
• Indirect
Net After Tax:Stocks Net After Tax:
10,240 10,400

Less 3.5% inflation: Less 3.5% inflation:

350 350

Actual Return: Actual Return:

9,890 10,050
UNDERSTAND WHERE YOUR
MONEY GOES
Know your big leaks.
“Assets are anything you buy or have that puts money in your
pocket.” –Robert Kiyosaki
HOW DO WE MAKE MONEY WORK FOR US?
“RULE OF 72” (Power of Compounding Interest)
Dividing the number 72 by the interest rate of your savings or
investments will give the estimated number of years it will take
for your money to double.

72 ÷ 4 = 18 72 ÷ 8 = 9 72 ÷ 12 = 6
Money doubles every 18 years Money doubles every 9 years Money doubles every 6 years

Age 4% Age 8% Age 12%

29 Php 100,000 29 Php 100,000 29 Php 100,000

47 Php 200,000 38 Php 200,000 35 Php 200,000
65 Php 400,000 47 Php 400,000 41 Php 400,000
56 Php 800,000 47 Php 800,000
65 Php 1,600,000 53 Php 1,600,000
59 Php 3,200,000
4X 65 Php 6,400,000

16X
 BUT WHERE WILL
YOU SQUEEZE OUT
THE MONEY TO
INVEST?
 With Discipline &
financial literacy
You can Create Your
Millions

10/29/2012 RVCS JR TRULY RICH MAKER 43

imguae.support@gmail.com
 Cut the little expenses.
Monthly Annual @12% in
Item Cost Frequency
Cost cost 20 years
Soft drinks/water P20/Can 2 cans/day P1200 P14400 P1.2M
Coffee P20/Cup 3 cups/Day P1800 P21600 P1.8M
Cigarettes/beer P30/Pack 2 pack/day P1800 P21600 P1.8M
Lotto Tickets P20/Ticket 2 Ticket/Day P1200 P14400 P1.2M
Extra Phone Bills P1000 1x/Month P1000 P12000 P1M
Pedicure/
Manicure
P300 1x/2 weeks P600 P7200 P600K
Hair Maintenance ,
Curl, Straight P2000 1x/Month P2000 P24000 P2M
 INVEST CONSISTENTLY LONG TERM
SAVE PER 10 YRS 20 YRS 30 YRS
DAY
138,428 589,984 2,062,980
346,069 1,474,961 5,157,449
692,139 2,949,923 10,314,898
1,384,278 5,899,845 20,629,796
3,460,695 14,749,613 51,574,489

6,921,390 29,499,225 103,148,978

Note: Calculations is based on 12% Compounded Per Year
4. Build a Solid Financial Foundation

LIKE BUILDING A HOUSE, YOU MUST BUILD IT FROM THE GROUND UP!
BUILD IT RIGHT AND STRONG!
SOLID FINANCIAL FOUNDATION

INVESTMENT
EMERGENCY FUND
MANAGE/ELEMINATE DEBT

INSURANCE PROTECTION
HEALTHCARE
SHORT TERM & LONG TERM CARE
 WHERE DO YOU WANT TO BE CONFINED?

PUBLIC SEMI EXECUTIV

WARD PRIVATE E
SOLID FINANCIAL FOUNDATION

INSURANCE PROTECTION
HEALTHCARE
SHORT TERM & LONG TERM CARE
 LUXURY
FA MILY
FAMILY

COMFORT
NC
R A
SU BASIC
IN
E
POVERTY
SOLID FINANCIAL FOUNDATION

MANAGE/ELEMINATE DEBT

INSURANCE PROTECTION
HEALTHCARE
SHORT TERM & LONG TERM CARE
SOLID FINANCIAL FOUNDATION

EMERGENCY FUND
EQUIVALENT TO YOUR
MANAGE/ELEMINATE DEBT 3
TO 6 MONTHS SALARY
INSURANCE PROTECTION
HEALTHCARE
30,000
SHORT TERM X 3 = TERM
& LONG 90,000
CARE
SOLID FINANCIAL FOUNDATION

INVESTMENT
EMERGENCY FUND
DEBT FREE

INSURANCE PROTECTION
HEALTHCARE
SHORT TERM & LONG TERM CARE
5. Choose the Right Financial Vehicle
6. Do It Now!

• Time – the sooner you save, the better for your future.

• The High Cost of Waiting

MR. Save Early MR. Save Later

At age of 22 then openned
an account at 12% and
invest P20,000 a year for
6 years, then stops
investing.
At age of 28 then openned
an account at 12% and
invest P20,000 a year for
6 years, then stops
investing.

When he reaches the age When he reaches the age

of 60, his money of 60, his money
accumulates and it grows accumulates and it only
to an amount of reached the amount of
P7,651,400 P3,876,450
 HIGH COST OF WAITING
MR SAVE EARLY MR SAVE LATER
Age Savings Total Age Savings Total
22 20,000 22,400 22 0 0
23 20,000 47,490 23 0 0
24 20,000 75,590 24 0 0
25 20,000 107,060 25 0 0
26 20,000 142,300 26 0 0
27 20,000 181,780 27 0 0
28 0 203,590 28 20,000 22,400
29 0 228,030 29 20,000 47,490
30 0 255,390 30 20,000 75,590
31 0 286,030 31 20,000 107,060
32 0 320,360 32 20,000 142,300
33 0 358,800 33 20,000 181,780
 MR SAVE EARLY MR SAVE LATER
Age Savings Total Age Savings total
34 0 401,860 34 0 203,590
35 0 450,080 35 0 228,030
36 0 504,090 36 0 255,390
37 0 564,580 37 0 286,030
38 0 632,330 38 0 320,360
39 0 708,210 39 0 358,800
40 0 793,200 40 0 401,860
41 0 888,380 41 0 450,080
42 0 994,990 42 0 504,090
43 0 1,114,390 43 0 564,580

62 0 9.6 M 62 0 4.8 M

TIME is our greatest ASSET!

 RECAPITULATION
6 Steps on How to Achieve Financial Independence
• PLAN
• SAVE
• INVEST
• BUILD A SOLID FINANCIAL FOUNDATION
• CHOOSE THE RIGHT FINANCIAL VEHICLE
• DO IT NOW!
DID YOU LIKE WHAT YOU HAVE

?
LEARNED TODAY?
 IF YOU DO, CAN YOU SLEEP AT
NIGHT KNOWING THAT YOU’RE
SAVING THE RIGHT WAY AND YOUR
NEIGHBOR AND FRIENDS ARE

?
SAVING THE WRONG WAY?
ARE YOU HAPPY WHEN YOU ARE
GETTING RICHER WHILE YOUR

?
FRIENDS AND RELATIVES ARE IN
DEBT?
BE AN ADVOCATE!
End