FINANCIAL

LITERACY
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GROUP 2
 The national Endowment for Financial
Education defines financial literacy as ‘’the
ability to read, analyze, manage, and
communicate about personal financial
conditions that affect material well-being.
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 It includes the ability to discern financial choices,
discuss money and financial issues without (or despite)
discomfort, plan for the future, and respond
competently to life events that affect every day
financial decisions, including events in the general
economy’’ (In charge Education Foundation, 2017).
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 Hastings, et. al. (2013) refers to financial
literacy as:
• Knowledge of financial product (e.g., a stock vs. a bond, fixed
vs. adjustable rate mortgage);
• Knowledge of financial concepts (e.g., inflation,
compounding, diversification, credit scores);
• Having the mathematical skills or numeracy for effective
financial decision making; and
• Being engaged in certain activities such as financial planning
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 THE SIX STANDARDS

Buying Goods
Earning and Services Saving Using
Income Credits

Financial Protecting and

Investing Insuring
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 FINANCIAL LITERACY IN THE
PHILIPPINES
‘’State of Financial Education in the Philippines,’’ Go (2017)
indicated several findings of researches with regards to the state of
financial literacy in the country including the following:

• World Bank study in 2014 estimated 20 million Filipinos saved

money but only half had bank accounts.
• Asian Development Bank (ADB) study in 2015 revealed that PH does
not have a national strategy for financial education and literacy.
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 FINANCIAL LITERACY IN THE
PHILIPPINES
• In 2016, Bangko Sentral ng Pilipinas (BSP) released the
national strategy for financial inclusion, stating that while
institutions strive to broaden financial services, financial
literacy should also complement such initiatives.

• As per Standard & Poor’s (S&P) Ratings services survey

last year, only 25% Filipinos are financially literate.
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 BENEFITS OF FINANCIAL LITERACY

• One’s level of financial literacy

affects one’s quality of life
significantly.
• It determines one’s ability to provide
basic needs, attitude toward money
and investment, as well as one’s
contribution to the community.
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 BENEFITS OF FINANCIAL LITERACY

• Financial literacy enables people

to understand and apply
knowledge and skills to achieve
a lifestyle that is financially
balanced, sustainable, ethical,
and responsible.
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 Developing Personal Financial
Literacy
• There are six major characteristic types in how
people view money (Incharge, 2017).
a. FUGAL
b. STATUS
c. POWERFUL
d. PLEASURE
e. INDIFFERENCE
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f. SELF-WORTH
 Spending patterns

Two common types of spending pattern

1. Habitual Spending – occurs when one spends out of habits,

when one buys the same items daily, weekly or monthly.
ex: daily: water, rice, coffee, and the like
weekly: groceries and the like
monthly: electric bills, internet bills and the like
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 Spending patterns

2. Impulsive Spending – occurs when one

mindlessly purchases items that he or she does
not need.
ex: sales on malls and the like
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 Fixed vs. Variable Expenses

•Fixed expenses remain the same year-round.

Car payment is an example.
•Variable expenses occur regularly but the
amount you pay varies. Electric and gas bills
are examples of these.
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 NEEDS vs. WANTS

• Needs are essential for survival.

ex: water, rice and the like
• Wants are things that you would
like to have but can live without.
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 Practical Steps to enhance Financial
Literacy
• Setting Financial Goals
1. Short – term goals – can be measured in weeks and can provide instant gratification and
feedback.
2. Medium goals – should be accomplished within one to six month.
3. Long-term goals – can take years to achieve.
• Developing a Spending Plan
Three easy steps:
1. Record – keep record of what you spend
2. Review – analyze the information and decide what you do
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3. Take action – do something about what you have written down

 Practical Steps to enhance Financial
Literacy

• Importance of Saving
Here are some reasons why saving is important:
1. Emergency Bolster
2. Retirement
3. Future Events
4. Instability of Social Security
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5. A Little Goes a Long Way

 Practical Steps to enhance Financial
Literacy
There are two ways to save:
1. save before you spend; and
2. save after you spend wisely
In order to stick to the savings habit, you should:
1. commit to a month;
2. find an accountability partner;
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 Practical Steps to enhance Financial
Literacy

3. find a savings role model who is successful

with his/her money, through tried and true
savings; and
4. write your goal down and track it; and
5. avoid attempting situations (don’t go to the mall
to ‘’hang out’’)
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 Thank you
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