BUILDING AND ENHANCING NEW LITERACIES ACROSS

CURRICULUM

FINANCIAL LITERACY 1

BY: Gielemie G. Talucod

Raquel D. Rivera
WHAT IS FINANCIAL LITERCY?
FINANCIAL LITERACY

Mandell as cited by Maur (2019) defined financial

literacy as “the ability to use knowledge and skills to
manage one’s financial resources effectively for
lifetime financial security.” Further she quoted
Huston to have explained that financial literacy is
made up of two elements: understanding and use.
Understanding financial literacy implies that a person
is knowledgeable about personal finance, and applies
such knowledge in dealing with one’s finances.
Financial Literacy, financial knowledge and
financial education are used interchangeably in
formal literature and popular media. Various
sources provide various definitions to financial
literacy, but have one thing in common everything
revolves around money, knowledge and use.
According to hastings as mentioned by Maur (2019) fnancial literacy
refers to:
 Knowledge of financial products (what is stock vs. a bond; the
difference between a fixed vs. an adjustable rate mortgage.
 Knowledge of financial concepts (inflation, compounding,
diversification, credit scores)
 Having the mathematical skills or numeracy necessary for
effective financial decision making; and
 Being engaged in certain activities such as financial planning.
Alata et al (2019) discussed that 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 an 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 the integral part of formal learning.
On the international side, the leading organization in the United States known as
the council for economic education (CEE) which focuses on the economic and
financial education of students from kindergarten through high school,
developed six (6) standards gearing towards deepening students understanding
of personal finance through economic perspective. The graphic on the next page
presents a summary of the standards and key concepts.
EARNING INCOME
Earning Income – Income for most
people is determined by the market
value of their labor, paid as wages and
salaries. People can increase their
income and job opportunities by
choosing to acquire more education,
work experience and job skills The
decisions to undertake activity that
increases income or job opportunities
is affected by the expected benefits
and cost of such activity. Income also
is obtained from other sources such as
interest, rents, capital gains,
dividends, and profits.
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. People can improve
their economic well being by
making informed spending
decisions, which entails
collecting information,
planning, and budgeting.
SAVING

Saving is the part of income

that people choose to set
aside for future uses. People
save for different reasons
during the course of their
lives. People make different
choices about how they save
and how they save. Time,
interest rates, and inflation
affect the value of savings.
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.
People choose among different
credit options that have different
costs. Lenders approve or deny
applications for loans based on an
evaluation of the borrowers past
credit history and expected ability to
pay in the future. Higher risk
borrowers are charged higher
interest rates; lower risk borrower
are charged lower interest rates.
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. Investments with
higher expected rates of return
tend to have greater risk.
Diversification of investment
among a number of choices can
lower investment risk.
PROTECTING & 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. The price of
insurance is influenced by an
individual behavior.
THE BENEFITS OF FINANCIAL LITERACY
ALATA (2019)

 One’s level of financial literacy affects ones quality

of life significantly.
 It determines one’s ability to provide basic needs,
attitude towards money and investment, as well as
one’s contribution to the community.
 It enables people to understand and apply knowledge
and skills to achieve a lifestyle that is financially
balanced, sustainable, ethical and responsible.
 Increased personal financial literacy affects one’s
financial behavior.
MAUR (2019) ESSENTIAL POINTS ON FINANCIAL LITERACY

Bernheim, et al (2001) believe that although financial literacy is a

somewhat new, policy initiatives in financial literacy is not. In 1950s, the
United States began recommending policies to improve the quality of
personal financial decision making through financial education thru the
“inclusion of personal finance, economics, and other consumer education
topics" to children enrolled in the K-12 educational curriculum.
Financial education should be the best tool effectively come up with
better financial outcomes. Previous studies have shown that lower levels
of financial literacy is associated with lower rates for planning for
retirement, lower rates of asset accumulation, using higher –cost
financial services, lower participation in the stock market, and higher
level of debt.
Saving is imperative to improve individual and societal welfare. At the
personal level, savings help households achieve smooth consumption
patterns. Savings also help productive investments in human and business
capital. At the macro economical level, savings rates are strongly predictive
of future economic growth.
However, access to financial education does not guarantee that poor
financial practices are provided with solutions. In saving, learners should be
taught the best way to save and safeguard their money. Although saving is
now taught in school and various conferences, policy makers need to look
into teaching people possibility of saving more by paying down existing
debt. In the Philippines, the current administration has been taking small
steps to pin down the problem on debts and encourage saving more by
offering lower loan rates to micro and small business enterprise.
THANK YOU!