(GADE) very early years as preschool years.

Module 8: Financial Literacy Financial education is a long-term

Financial Literacy process and incorporating it into the
● Financial literacy is a core life skill in curricula from an early age allows
an increasingly complex world where children to acquire the knowledge
people need to take charge of their and skills while building responsible
own finances, budget, financial financial behavior throughout each
choices, managing risks, saving, stage of their education (OECD,
credit, and financial transactions. 2005).
● Poor financial decisions can have a ● Likewise, financial literacy is the
long-lasting impact on individuals, capability of a person to handle
their families and the society caused his/her assets, especially cash more
by lack of financial literacy. Low efficiently while understanding how
levels of financial literacy are money works in the real world.
associated with lower standards of Financial Plan
living, decreased psychological and ● Teachers need to have a deeper
physical well-being and greater understanding and capacity to
reliance on government support. formulate their own financial plan. It
However, when put into correct is wise to consider starting to plan
practice, financial literacy can the moment they hand in their first
strengthen savings behavior, salary, including the incentives,
eliminate maxed-out credit cards bonuses and extra remunerations
and enhance timely debt. that they receive.
● Financial literacy is the ability to ● Kagan (2019) defines a financial
make informed judgments and make plan as a comprehensive statement
effective decisions regarding the use of an individual's long-term
and management of money. Hence, objectives for security and well-
teaching financial literacy yields being and detailed savings and
better financial management skills. investing strategy for achieving the
The importance of starting financial objectives. It begins with a thorough
literacy while still young. evaluation of the individual's current
● National surveys show that young financial state and future
adults have the lowest levels of expectations.
financial literacy as reflected in their The following are steps in creating a
inability to choose the right financial financial plan.
products and lack of interest in 1. Calculating net worth. Net worth is the
undertaking sound financial amount by which assets exceed liabilities. In
planning. Therefore, financial so doing, consider (1) assets that entail
education should begin as early as one's cash, property, investments, savings,
possible and be taught in schools. jewelry and wealth; and (2) liabilities that
Akdag (2013) stressed that in the include credit card debt, loans and
recent financial crisis, financial mortgage. Formula: total assets - minus
literacy is very crucial and tends to total liabilities = current net worth.
be advantageous if introduced in the
2. Determining cash flow. A financial plan is budget lists down all income and expenses
knowing where money goes every month. to help meet financial obligations,
Documenting it will help to see how much is 4. Lay down your debt. Living with debt is
needed every month for necessities, and costly not just because of interest and fees,
the amount for savings and investment. but it can also prevent people from getting
3. Considering the priorities. The core of a ahead with their financial goals.
financial plan is the person's clearly defined 5. Secure your financial future.
goals that may include: (1) Retirement Retirement is an uncontrollable stage in a
strategy for accumulating retirement worker's life, of which counterpart are losing
income; (2) Comprehensive risk the job, suffering from an illness or injury, or
management plan including a review of life be forced to care for a loved one that may
and disability insurance, personal liability lead to an unplanned retirement. Therefore,
coverage, property and casualty coverage, knowing more about retirement options is
and catastrophic coverage; (3) Long-term an essential part of securing financial future.
investment plan based on specific
investment objectives and a personal risk (LLAMES)
tolerance profile; and (4) Tax reduction Financial Goal Planning and Setting
strategy for minimizing taxes on personal Setting goals is a very important part of life,
income allowed by the tax code. especially in financial planning. Before
investing the money, consider setting
Five Financial Improvement Strategies personal financial goals. Financial goals are
Financial literacy shapes the way people targets, usually driven by specific future
view and handle money, The following are financial needs, such as saving for a
financial improvements suggested by comfortable retirement, sending children to
Investopedia as a journey to financial college, or enabling a home purchase.
literacy. There are three key areas in setting
1. Identify your starting point. Calculating investment goals for consideration.
the net worth is the best way to determine A. Time horizon. It indicates the time when
both current financial status and progress the money will be needed. To note, the
over time to avoid financial trouble by longer the time horizon, the more risky (and
spending too much on wants and nothing potentially more lucrative) investments can
enough for the needs. be made.
2. Set your priorities. Making a list of rated B. Risk tolerance. Investors may let go of
needs and wants can help set financial the possibility of a large gain if they knew
priorities. Needs are things one must have there was also a possibility of a large loss
in order to survive (i.e. food, shelter, (they are called risk averse); while others
clothing, healthcare and transportation); are more willing to take the chance of a
while wants are things one would like to large loss if there were also a possibility of a
have but are not necessary for survival. large gain (they are called risk seekers).
3. Document your spending. One of the The time horizon can affect risk tolerance.
best ways to figure out cash flow or what C. Liquidity needs. Liquidity refers to how
comes in and what goes out is to create a quickly an investment can be converted into
budget or a personal spending plan. A cash (or the equivalent of cash). The
liquidity needs usually affect the type of Seven Steps to Good Budgeting
chosen investment to meet the goals. The following are seven steps that may help
D. Investment goals: Growth, income and in attaining good budgeting.
stability. Once determined the financial Step 1: Set realistic goals. Goals for the
goals and how time horizon, risk tolerance, money will help make smart spending
and liquidity needs affect them, it is time to choices upon deciding on what is important
think about how investments may help Step 2: Identify income and expenses.
achieve those goals. When considering any Upon knowing how much is earned each
investment, think about what it offers in month and where it all goes, start tracking
terms of three key investment goals: (1) the expenses by recording every single
Growth (also known as capital appreciation) cent.
is an increase in the value of an investment; Step 3: Separate needs from wants. Set
(2) Income, of which some investments clear priorities and the decisions become
make periodic payments of interest or easier to make by identifying wisely those
dividends that represent investment income that are really needed or just wanted.
and can be spent or reinvested; and (3) Step 4: Design your budget. Make sure to
Stability, or known as capital preservation or avoid spending more than what is earned.
protection of principal. Balance budget to accommodate everything
needed to be paid for.
An investment that focuses on stability Step 5: Put your plan into action. Match
concentrates less on increasing the value of spending with income time. Decide ahead of
investment and more on trying to ensure time what you will use each payday. Non-
that it never loses value and can be taken reliance to credit for the living expenses will
when needed protect one from debt.
Step 6: Plan for seasonal expenses. Set
Budget and Budgeting money aside to pay for unplanned
A budget is an estimation of revenue and ‘expenses so to avoid going into debt.
expenses over a specified future period of Step 7: Look ahead. Having a stable budget
time and is usually compiled and re- can take a month or two so, ask for help if
evaluated on a periodic basis. Budgets can things are not getting well.
be made for a variety of individual or
business needs or just about anything else
that makes and spends money. Budgeting,
on the other hand, is the process of creating
a plan to spend money. Creating this
spending plan allows one to determine in
advance whether he/she will have enough
money to do the things he/she needs or
likes to do. Spending If budget goals serve as a
financial wish list, a spending plan is a way
Thus, budgeting ensures to have enough to make those wishes a reality. Turn them
money for the things needed and those into an action plan. The following are
important ones and will keep one out of practical strategies in setting and prioritizing
debt. budget goals and spending plan:
1. Start by listing your goals. Setting (LUMBAB)
budget goals requires forecasting and Savings
discussing future needs and dreams with In order to get out of debt, it is important to
the family: set some money aside and put it into a
2. Divide your goals according to how long savings account on a regular basis. Savings
it will take to meet each goal Classify your will also help in buying things that are
budget goals into three categories: short- needed or wanted without borrowing.
term goals (less than a year), medium-term Emergency Savings Fund. Start as early,
goals (one to five. years), and long-term setting aside a little money for emergency
goals (more than five years). Short-term savings fund. If you receive a bonus from
goals are usually the immediate needs and work, an income tax refund or earnings from
wants; medium- term goals are things that additional or side jobs, use them as an
you and your family want to achieve during emergency fund.
the next five years; and long-term goals
extend well into the future, such as planning 10 Reasons Why Save Money
for retirement. With credit so easy to get, here are ten
3. Estimate the cost of each goal and find practical reasons why it is important to save
out how much it costs. Before assigning money that everyone, including teachers,
priority to goals, it is important to determine must know.
the cost of each goal. The greater the cost 1. To become financially independent.
of a goal, the more alternative goals must Financial independence is not having to
be sacrificed in order to achieve it. depend on receiving a certain pay but
4. Project future cost. For short-term setting aside an amount to have savings
goals, inflation is not a big factor, but for that can be relied on.
medium and long-term goals, it is a big 2. To save on everything you buy. With
factor. To calculate the future cost of the savings, you can buy things when they are
goals, there is a need to determine the rate on sale and can make better spending
of inflation applied to each particular goal. choices without being compromised on
5. Calculate how much you need to set credit card interest charges. 3. To buy a
aside each period. Upon knowing the future home or a car. Savings can be used in
cost of the goals, next is to determine how buying a home in full or down payment,
much to put aside each period to meet all especially in times of promo deals, bids and
the goals. inevitable sale and at a reasonable interest
6. Prioritize your goals. Upon listing down rate.
all the goals and the 'estimated amount 4. To prepare for the future. Through
needed for each goal, prioritize them. This savings, you can be confident to face the
serves as guide in decision-making. future without worrying on how you will
7. Create a schedule for meeting your survive.
goals. It is important to lay down all the 5. To get out of debt. If you want to get out
goals according to priority with the of debt, you have to save money.
corresponding amount of money needed, 6. To augment annual expenses. In order to
the time it will be needed, and the attain a good, stress-free financial life, there
installments needed to meet the goals. is a need to save for annual expenses in
advance.
7. To settle unforeseen expenses. Savings tactics, including posts seeking charity
can respond to unforeseen expenses in donations with bogus links that allow them
times of need. to keep your money. Therefore, be
8. To respond to emergencies. conscious of the information you post
Emergencies may happen anytime and online, especially personal details and plans
these can be expensive so, there is a need for a vacation that you would leave your
to get prepared rather than potentially house unoccupied
become another victim of an emergency C. Phone Scams. Another prevalent tactic
9. To mitigate losing your job or getting hurt. is scamming phone calls. The scammers
Bad things can happen to anyone, such as pose as a government agency, such as the
losing a job, business bankruptcy or crisis, Bureau of Internal Revenue or local law
being injured or becoming too sick to work. enforcement agencies, and use scare
Therefore, having savings is the key to tactics to acquire your personal information
resolve such a dilemma. and account numbers. Never provide your
10. To have a good life. Putting aside some account information over the phone. Look
money to spend when needed can bring for the agency's contact information, and
about quality and worry-free life at all times. call them to verify any request. To note,
government agencies will never text or call
Common Financial Scams to Avoid you to ask for money.
Financial fraud can happen to anyone, D. Stolen Credit Card Numbers. There are
including the teachers at any time. While numerous ways that scammers can obtain
some forms of financial fraud, such as your credit card information, including
massive data breaches, are out of one's hacking, phishing, and the use of skimming
control, there are many ways to proactively devices, such as small card readers
get rid of financial scams and identity theft. attached to unmanned credit card readers
Here are some of the most common (i.e. ATMs, gas pumps, and more). These
financial scams, along with ways to identify small devices pull data from your card when
them early and how to protect one's self you swipe it. Before you use an ATM or
from being victimized. swipe your card, look for suspicious devices
A. Phishing. Using this common tactic, that may be attached to the card reader..
scammers send an email that appears to E. Identity Theft. Depending on the amount
come from a financial institution, such as a of information a scammer is able to obtain,
bank and asks you to click on a link to identity theft may extend beyond
update your account information. If you unauthorized charges on a debit or credit
receive any correspondence that asks for card. If scammers are able to obtain your
your information, never click on the links or Social Security number, date of birth, and
provide account details. Instead, visit the other personal information, they may be
company's website, find official contact able to open new accounts in your name
information, and call them to verify the without your knowledge. Be aware an
request. information you share and with whom, and
B. Social Media Scams. Scammers are always shred sensitive information before
adept at using social media to gather disposing it.
information about the traveling habits of
potential victims. They also have phishing
By taking preventative measures and being 6. Install Antivirus and Spyware protection.
aware of scams, you can minimize the risks Protect the sensitive information stored on
of fraud. Monitoring your online or mobile your computer by installing antivirus, firewall
banking accounts daily can also help you and spyware protection. Once you install
see fraudulent charges quickly. the program, turn on the auto-updating
feature to make sure the software is always
(VILLARIN) up-to-date.
10 Tips to Avoid Common Financial 7. Don't shop with unfamiliar online retailers.
Scams When it comes to online shopping, only do
Every year, fraud cases are getting worse, business with familiar companies. When
leaving countless victims in trouble and purchasing a product from an unfamiliar
danger through data breaches, identity theft retailer, do some research to ensure the
and online scams. Unfortunately, new and business is legit and reputable.
improved technology only gives fraudsters 8. Don't download software from pop-up
an edge, making it easier than ever for windows. When you are online, do not trust
scam artists to nab financial data from pop-up windows that appear and claim your
unsuspecting consumers (Bell, 2019). computer is unsafe. If you click on the link in
1. Never wire money to a stranger. Although the pop-up to start the "system scan" or
it is one of the oldest Internet scams, there some other programs, malicious Software
are still consumers who fall for this rip-off or known as “malware" could damage your
some variations of it. operating system.
2. Don't give out financial information. Never 9. Make sure the websites you visit are
reveal sensitive personal financial safe. Before you enter your financial
information to a person or business you information on any website, double-check
don't know, thru phone, text or email. the website's privacy rules. Also, make sure
3. Never click on hyperlinks in emails. If you the website uses encryption, which is
receive an email from a stranger or usually symbolized by a lock to the left of
company asking you to click on a hyperlink the web address which means it is safe and
or open an attachment and then, enter your protected against hackers
financial information, delete the email 10. Donate to known charities only. If you
immediately. receive a call or an email for solicitation of
4. Use difficult passwords. Hackers can charity donations, critically examine it.
easily find passwords that are simple Some scammers create bogus charities to
number combinations. Create passwords steal credit card information.
that are at least eight characters long and
that include some lower and upper case Financial Scams among Students.
letters, numbers and special characters. Students can also be susceptible to different
You should also use a different password financial scams and fraud. Learning how to
for every website you visit. manage finances and being aware of
5. Never give your social security number. If financial scams are skills that every student
you receive an email or visit a website that should master.
asks for your Social Security number, ignore The following are common financial scams
it. . that students should watch out for, and
learn to protect one's identity and finances.
A. Fake scholarships. While it is beneficial There are various types of insurance to
for students to apply for as many choose from, such as life insurance, health
scholarships, it is important to become insurance, motor insurance, property
aware of related scams and frauds. insurance, business insurance, etc.
Students should thoroughly check Besides, the financial protection derived
scholarship sources before applying to from insurance entails tax benefit claim on
verify legitimacy. Never apply for a the paid premiums.
scholarship that asks for money in return. The following are concepts related to
B. Diploma mills. There are schools that insurance and taxes that every teacher
offer fake degrees and diplomas in should know. However, he/she should
exchange for a fee. Check from government carefully analyze and critically examine well
education agencies the prospective school before pursuing any deal with them.
to enroll in if it is government-recognized, 1. Employer-Sponsored Insurance. If
legitimate or accredited. working in a company with 50 or more full-
C. Online book scams. While students time employees, the employer is required to
often go for the best deals on textbooks provide employee-only insurance that meets
online, scammers can use this opportunity minimum guidelines. Examine the plan
to get students' credit card information. offered, but do not pay over 9.66 percent of
When buying thing online, be sure to it on a household income in premiums.
credible site. 2. Marketplace Plans. Marketplace plans
D. Credit card scams. Oftentimes, credit are available based on an area of residence
card companies go to school campuses to and income upon meeting minimum
convince students to fill out card coverage requirements. Marketplace plans
applications. Scammers may also grab this come in three tiers: bronze, silver and gold.
chance to steal students' information. It is Generally, bronze plans offer the least
important to visit a local credit union or bank coverage at the lowest premiums, while
for credit card application. Also, regularly gold plans provide the most coverage at the
check the credit card statement and once highest price.
there are any unrecognized charges,
contact your banking institution immediately. (GABE)
Life insurance. Life insurance is a type of
Insurance and Taxes insurance that compensates beneficiaries
Insurance is a contract (in the form of a upon the death of the policyholder. The
policy) between the policyholder and the company will guarantee a payout for the
insurance company, whereby the company beneficiaries in exchange of premiums. This
agrees to compensate for any financial loss compensation is called "death benefit.”
from specific insured events. In exchange Depending on the type of insurance one
for the financial protection offered, may have, these events can be anything
policyholder agrees to pay a certain sum of from retirement, to major injuries, to critical
money, known as premiums to the illness or even to death
insurance company. Insurance is the best The following are common risk categories:
form of risk management against uncertain 1. Preferred Plus - The policyholder is in
loss. excellent health, with normal weight, no
history of smoking, chronic illnesses, or
family history of any life-threatening the form of fund accumulation for specific
disease. future financial goals.
2. Preferred – The policyholder is in 4. Acts as a retirement secured conform.
excellent health but may have minor issues Modern life insurance also serves as a tool
on cholesterol or blood pressure but under that principal holders can use to get in a
control. better financial position in the future.
3. Standard Plus - The policyholder is in 5. It covers costs incurred from taxes and
very good health but some factors, like high debt. Life insurance can serve as protection
blood pressure or being overweight impede since the premium can be used to pay for
a better rating. unsettled debts and taxes.
4. Standard - Most policyholders belong to
this category, as they are deemed to be
healthy and have a normal life expectancy Types of Life Insurance
although, they may have a family history of The table below shows a comparative
life-threatening diseases or few minor health analysis of different of life insurance along
issues. characteristics, advantages and
5. Substandard - Those with serious health disadvantages that may serve as a
issues, like diabetes or heart disease are reference
placed on a table rating system, ranked
from highest to lowest. On average, the
premiums will be similar to Standard with an
additional 25% lower claim on table ratings.
6. Smokers - Due to an added risk of
smoking, the policyholders in this category
are guaranteed to pay more. Aside from (HANGCAN)
health class, age is also a critical factor in
determining premiums. Therefore, older
people pay more expensive premiums.

Benefits of Life Insurance

The following are the benefits of life
insurance.
1. It pays for medical and funeral costs. Life
insurance helps solve the incurred
expenses for medical and funeral services
to lessen the grief among family and
Financial Stability
relatives for being unprepared.
Like anyone else, teachers also aim to
2. for financial support. Life insurance can
become financially stable if not today,
become a source of temporary income
maybe in the future. Being financially stable
during the difficult period of adjusting and
means confidence with the financial
coping with the loss of a loved one,
situation, worriless paying the bills because
especially if he/she is the breadwinner.
of available funds, debt-free, money savings
3. for funding various financial goals. Life
for future goals and enough emergency
insurance offers additional benefits through
funds.
 Financial stability is not about being rich but 7. Use the envelope system. Set aside
rather more of a mindset. It is living a life three amounts in your budget each payday,
without worrying about how to pay the next withdraw those amounts and put them in
bill, and becoming stressfree about money three separate envelopes. In that way, you
while focusing energy on other parts of life can easily track how much remains for each
(Silva, 2019). of the expenses or if you already run out of
money.
10 Strategies in Reaching Financial 8. Pay bills immediately. One good habit is
Stability to pay bills as soon as they come in and try
Just like any goal, getting the finances to get your bills to be paid through
stable and becoming financially successful automatic deduction.
requires the development of good financial 9. Read about personal finances. The
habits. Babauta (2007) suggests 10 habits more you educate yourself, the better your
toward financial stability and success. finances will be.
1. Make savings auto magical. Savings 10. Look to grow your net worth. Do
should be made top priority, especially as whatever you can to improve your net
an emergency fund and a bill payment from worth, either by reducing your debt,
the amount are automatically transferred increasing your savings, or increasing your
from the checking account, like an online income, or all of the above
savings account. .
2. Control your impulsive spending. (NANALIS)
Control yourself from impulsive spending on Signs of Being Financially Stable
eating out, shopping and online purchases 1. You never overdraw your checking
that may ruin your finances and budget. account.
3. Evaluate your expenses and live 2. You don't lose sleep over finances.
frugally. Analyze how you spend your 3. You use credit cards for convenience and
money, see what you can reduce and rewards but never out of necessity.
determine expenses that are necessary and 4. You don't worry about losing your job.
eliminate the unnecessary. 5. You pay your bills ahead of time.
4. Invest in your future. Start preparing 6. People ask your opinion about financial
and investing for your future retirement matters and you inspire them.
while still young in your career field. 7. You're generally happy with your financial
5. Keep your family secure. Save for an situation.
emergency fund, so that you have 8. You finance your cars over five years or
something to spend if anything happens less if you take loans at all.
with the family emergently 9. You contribute more to your retirement.
6. Eliminate and avoid debt. Eliminate 10. You don't feel guilty when you're out for
credit cards, personal loans, or other debt special occasions.
forms as it will not work on you but even pull 11. You can afford to buy the things you
you down and make you drowned with really want.
obligations that may even resort to 12. Recreational spending doesn't appeal to
surrendering your properties, jewelry and you.
investments as payment. 13. You're a natural saver.
14. You're generous with money when it mathematics, economics, social studies,
comes to charities or helping others. technology and home economics, values
15. You're confident about your future. education and others. Financial education
16. Your net worth grows significantly from can give a range of 'real-life' contexts
year to year. across a range of subjects.
17. You have substantial equity in your
home. Teachers should be adequately trained and
18. You consistently live beneath your resourced, made aware of the importance of
means. financial literacy and relevant pedagogical
19. You could survive for months without a methods and they should receive
paycheck. continuous support to teach it or integrate in
20. You feel in control of your finances and their lesson.
never dominated by them.

Integrating Financial Literacy into the

Curriculum
Financial education in schools should be
part of a collaborative national strategy to
ensure relevance and long-term
sustainability. The education system and
profession should be involved in the
development of the strategy.

In support, Barry (2013) underscored that

financial literacy has a wide repercussion
outside the family circle and more precisely,
the school. Hence, administrators and
professors need to develop a curriculum
that would provide students insights on
having the value of financial literacy
including the effect it can bring them.

Moreover, there should be a learning

framework, which sets out goals, learning
outcomes, content, pedagogical
approaches, resources and evaluation
plans. The content should cover knowledge,
skills, attitudes and values. A sustainable
source of funding should be identified at the
outset.

Financial education should ideally be a core

part of the school curriculum. It can be
integrated into other subjects like