Republic of the Philippines

PALAWAN STATE UNIVERSITY

College of Community Resources Development
Brooke’s Point

BACHELOR OF ELEMENTARY EDUCATION (BEEd)

FINANCIAL LITERACY
Objectives
At the end of the lesson, students should be able to:

• define financial literacy;

• assess level of personal financial literacy using set of standards and questions;
• characterize financial literacy in the Philippines; and
• start practical steps to develop personal financial literacy.

Financial literacy
→ It is “the ability to read, analyze, manage, and communicate about the personal financial
that affect material well-being. 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 financial decision, including events in
the general economy” (In- charge Education Foundation,2017).
→ Simply “the ability to use knowledge and skills to manage ones financial resources
effectively for lifetimes financial security” (Mandell,2009).
→ Hastings, et al (2013) refers financial literacy as:
• knowledge of financial products (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 necessary for effective financial
decision making; and
• being engaged in certain activities such as financial planning.
→ 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 private and public sectors have been
identified as key areas in building and improving financial system in the Philippines
(Go,2017).
→ Republic act 10922, known as the “Economic and Financial Literacy Act,” mandates
DepED to “ensure that economic and financial education becomes an integral part of
formal learning.”
→ The Council for Economic Education focuses on the economic and financial education of
students from Kindergarten through high school developed six standards gearing toward
deepening students understanding the personal finance through an economic perspective.
The standards and key concepts are summarized in the table below.
Standards Key Concepts
• income earned or received by people
• different types of jobs as well as different forms of income
earned or received.
• benefits and cost of increasing income through the
Earning Income acquisition of education and skills.
• government programs that affect income
• types of income and taxes
• labor market.

MISSION PROGRAM OBJECTIVES

VISION Palawan State University is committed to upgrade people’s quality of life by The Bachelor of Elementary Education Program
An internationally recognized university that provides relevant providing education opportunities through excellent instruction, research aims to develop teachers who are: multi-literate; effective communicators;
and innovative education and research for lifelong learning and and innovation, extension, production services and transnational noble; transnational; optimists; result- oriented.
sustainable development. (BOR Res.1209-3, s. 2019) collaborations. (BOR Res.1209-3, s. 2019)
 Republic of the Philippines
PALAWAN STATE UNIVERSITY
College of Community Resources Development
Brooke’s Point

BACHELOR OF ELEMENTARY EDUCATION (BEEd)

• scarcity, choice, and opportunity cost

• factors that influence spending choices, such as advertising,
peer pressure, and spending choices of others
• comparing the costs and benefits of spending decisions
• basic of budgeting and planning
• making a spending decision
Buying Goods and • payment methods, cost and benefits of each
Services • budgeting and classification of expenses
• satisfaction, determinants of demand, costs of information
search, choice of product durability
• the role of government and other institutions in providing
information of costumers

• concept of saving and interest

• how people save money, where people save money, and why
people save money
• the role that financial institutions play as intermediaries
between savers and borrowers
• the role of government agencies such as Federal Deposit
Insurance Corporation (FDIC) play in protecting savings
deposits
• role of markets in determining interest rates
Saving • the mathematics of saving
• the power of compound interest
• real versus nominal interest rates
• present versus future value
• financial regulators
• the factors determining the value of a person’s savings over
time
• automatic savings plans, “rainy- day” funds
• saving for retirement

• concept of credit and the cost of using credit

• why people use credit and the sources of credit
• why interest rates vary across borrowers
• basic calculations related to borrowing (principal, interest,
Using Credit compound interest)
• Credit reports and credit scores
• Behaviors that contribute to strong credit reports and scores
• Impact of credit reports and scores on consumers
• Consumer protection laws

MISSION PROGRAM OBJECTIVES

VISION Palawan State University is committed to upgrade people’s quality of life by The Bachelor of Elementary Education Program
An internationally recognized university that provides relevant providing education opportunities through excellent instruction, research aims to develop teachers who are: multi-literate; effective communicators;
and innovative education and research for lifelong learning and and innovation, extension, production services and transnational noble; transnational; optimists; result- oriented.
sustainable development. (BOR Res.1209-3, s. 2019) collaborations. (BOR Res.1209-3, s. 2019)
 Republic of the Philippines
PALAWAN STATE UNIVERSITY
College of Community Resources Development
Brooke’s Point

BACHELOR OF ELEMENTARY EDUCATION (BEEd)

• concept of financial investment

• variety of possible financial investments
• calculate rates of return
Financial Investing • relevance of calculation of real after-tax rates of return
• how markets cause rates of return to change in response to
variation in risk and maturity
• how diversification can reduce risk
• how financial markets react to changes in market conditions
and information
• concepts of financial risk and loss
• insurance (transfer of risk through risk pooling)
• managing risk
Protecting and Insuring • identity theft
• life insurance products
• how to protect oneself against identity theft

The 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 investments, as well as
one’s contribution to the community. Financial literacy enables people to understand to
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. These changes in
behavior pay dividends to society as well. People who work, spend, save borrow, invest
and manage risk wisely are less likely to require a government rescue. Taking
responsibility for one’s financial life cultivates proper decision- making skills and
discipline.
Financial literacy in the Philippines
→ In his article “State of Financial Education in the Philippines,” Go (2017) indicates the
several findings of researches with regards to the state of financial literacy in the country
including the following:
o World bank study in 2014 estimated 20 million Filipinos saved money but
only half had bank accounts.
o Asian Development Bank (ADB) study in 2015 revealed that Ph does not
have a national strategy for financial education and literacy.
o 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.
o As per Standard & Poor’s (S&P) ratings services survey last year, only 25%
of Filipinos are financially literate. This means that about 75 million
Filipinos have no idea about inflation, risk diversification, insurance,
compound interest, and bank savings.
o Ten years after discovery of the stock market, still less one percent on PH
population is invested in it.
o More than 80% of the working middle class have no formal financial plan.

MISSION PROGRAM OBJECTIVES

VISION Palawan State University is committed to upgrade people’s quality of life by The Bachelor of Elementary Education Program
An internationally recognized university that provides relevant providing education opportunities through excellent instruction, research aims to develop teachers who are: multi-literate; effective communicators;
and innovative education and research for lifelong learning and and innovation, extension, production services and transnational noble; transnational; optimists; result- oriented.
sustainable development. (BOR Res.1209-3, s. 2019) collaborations. (BOR Res.1209-3, s. 2019)
 Republic of the Philippines
PALAWAN STATE UNIVERSITY
College of Community Resources Development
Brooke’s Point

BACHELOR OF ELEMENTARY EDUCATION (BEEd)

→ Because of these findings, public and private sectors alike have recognized the need to
strengthen financial education in the country.
→ The Expo is deigned to build an organized network of players that share the vision of a
financially literate citizenry and cohesively a variety of initiatives to achieve this vision. It
supports Republic Act No. 10922 which designates second week of November as
Economic and Financial Literacy Week.
Developing Personal Financial literacy
Six Major Characteristic Types in How People View Money (Incharge,2017).
1. Frugal: Frugal people seek financial security by living below their means and
saving money. They rarely buy luxurious items; they save more instead. They save
money because they believe that money will offer protection form unprecedented
events and expenses.
2. Pleasure: Pleasure seekers use money to bring pleasure to themselves and to others.
They are more likely to spend than to save. They often live beyond their means and
spend more than they earn. If they are not careful and do not change, they may fall
into deep debt.
3. Status: Some people use money to express their social status. They like to purchase
and “show off” their branded items.
4. Indifference: Some people place very little importance of having money and would
rather grow their own food and craft their own clothes. It is as if having too much
money makes them nervous and uncomfortable.
5. Powerful: Powerful people use money to express power or control over others.
6. Self-worth: people who spend money for self-worth value how much they
accumulate and tend to judge others based on the amount of money they have.
Spending patterns
Two Common Spending Patterns:
o Habitual spending- occurs when one spends out of a habit, when one buys the
same items daily, weekly or monthly. Daily items may include water, rice, or a cup
of coffee. Weekly items may be grocery items. Monthly items are the electricity
and internet bills.

o Impulsive spending- occurs when one mindlessly purchases items that he or she
does not need. Many people are often enticed by monthly sales at the malls with
the attitude that they may lose the items the following day.

Fixed vs. Variable expenses

o Fixed expenses remain the same year-around. Car payment is an example.
o Variable expenses occur regularly but the amount you pay varies. Electric and gas
bills are examples of these.

Needs and Wants

o Needs are essential to our survival.
o Wants are things that you would like to have but you can live without. You want
them but do not necessarily need them.

MISSION PROGRAM OBJECTIVES

VISION Palawan State University is committed to upgrade people’s quality of life by The Bachelor of Elementary Education Program
An internationally recognized university that provides relevant providing education opportunities through excellent instruction, research aims to develop teachers who are: multi-literate; effective communicators;
and innovative education and research for lifelong learning and and innovation, extension, production services and transnational noble; transnational; optimists; result- oriented.
sustainable development. (BOR Res.1209-3, s. 2019) collaborations. (BOR Res.1209-3, s. 2019)
 Republic of the Philippines
PALAWAN STATE UNIVERSITY
College of Community Resources Development
Brooke’s Point

BACHELOR OF ELEMENTARY EDUCATION (BEEd)

PRACTICAL SKILLS TO ENHANCE FINANCIAL LITERACY

Setting Financial Goals
Setting financial goals is the first step to managing one’s financial life. Goals may be short,
medium, and long term. Short term goals can be measured in weeks and can provide instant
gratification and feedback. Medium term goals should be accomplished within one to six months.
These goals provide opportunity for reflection and feedback and require discipline and
consistently. Long term goals can take years to achieve.
Developing a Spending plan
Time and effort are necessary to build a sustainable spending plan. Three easy steps are
proposed below when developing your personal spending plan.
1. Record. Keep a record what you spend.
2. Review. Analyze the information and decide what you do.
3. Take action. Do something about what you have written down.

Importance of Saving
Because no one can predict the future with certainly, we need to save money for anything
that might happen. Here are the reasons why saving is important:
• Emergency Bolster. You should save money to avoid going to debt just to pay
emergency situations.
• Retirement. You will need savings/investments to take the place of income you
will no longer receive when you retire.
• Future Events. You need to save for future events like weddings, birthdays ,
anniversaries and travels so as not to sacrifice your fixed expenses.
• Instability of Social Security. Pensions from social security should only serve
as supplementary and not the primary source of income after retirement.
• A little goes a long way. Small consistent savings go a long way.

Two ways to save

1. Save before you spend
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;
3. find a savings role model who is successful with his/ her money, through tried
and savings;
4. Write your goal down and track it;
• Avoid tempting situations (don’t go to the mall to “hang out”).

MISSION PROGRAM OBJECTIVES

VISION Palawan State University is committed to upgrade people’s quality of life by The Bachelor of Elementary Education Program
An internationally recognized university that provides relevant providing education opportunities through excellent instruction, research aims to develop teachers who are: multi-literate; effective communicators;
and innovative education and research for lifelong learning and and innovation, extension, production services and transnational noble; transnational; optimists; result- oriented.
sustainable development. (BOR Res.1209-3, s. 2019) collaborations. (BOR Res.1209-3, s. 2019)