MODULE 8

FINANCI
AL
LITERAC
Team Adele ( Section -

Y
2031 )
LEARNING OUTCOMES
• define financial literacy
• distinguish among financial plan, budgeting, saving,
spending and investing
• present ways on how to avoid financial crises and
scams
• demonstrate understanding of insurance and taxes
• describe a financially stable person
• determine ways on how to integrate financial literacy
in the curriculum
• draw relevant life lessons and significant values from
personal experiences on financial crises and scams
• analyze research abstract on financial literacy and its
implications to the teaching-learning process
• make an personal financial plan based on short -term
and long-term goals
WHAT IS
FINANCIAL
LITERACY?
Financial literacy is the ability to make informed
judgments and make effective decisions regarding
the use and management of money. It is a core life
skill in an increasingly complex world where people
need to take charge of their own finances, budget,
financial choices, managing risks, saving, credit and
financial transactions. Hence, teaching financial
literacy yields better financial management skills.
 BENEFITS OF FINANCIAL
LITERACY FOR THE
YOUNG GENERATION
The younger The younger
generation is able to generation can plan
manage their their future with
expenses and income economic literacy,
more effectively, which includes saving
thereby avoiding for education
waste
Young people can A healthy credit score
grow their wealth over can be maintained and
time by making smart the younger
investment decisions generation can avoid
and understanding the trap of excessive
how debt with a good
FINANCIAL PLAN

Financial plan is a
comprehensive statement of
an individual’s long-term
objectives for security and
well-being and detailed
savings and investing
strategy for achieving the
objectives. (Kagan,2019)
STEPS IN Asse
ts
Entail one’s cash, property,
CREATING investments savings, jewelry
and wealth
FINANCIAL PLAN Liabilit
1. Calculating net ies
Include credit card debt, loans
and mortgage
worth
Net worth is the
amount by which Formul
a:
Total Assets minus Total
asset exceeds Liabilities = Current Net
liabilities. Worth
STEPS IN Asse
ts
CREATING
FINANCIAL PLAN
2. Determining cash
flow
A financial plan is knowing where money
Formul
goes every month. Documenting it will help
a:
to see how much is needed every month for
necessities, and the amount for savings and
investment.
 1.
Retiremen
- strategy for
t accumulating
STEPS IN retirement income
2. Comprehensive risk
CREATING management plan
- including a review of life
and disability insurance,
FINANCIAL PLAN personal liability coverage,
property and casualty
coverage and catastrophe
3. Considering the 2. Comprehensive risk
[Link] Long-term
priorities management plan
investment plan
- based on specific
The core of a investment objectives and
financial plan is a personal risk tolerance
profile
the person’s 4. Tax Reduction
clearly defined Strategy
- for minimizing taxes on
personal income allowed by
goals that may
FIVE FINANCIAL
IMPROVEMENT STRATEGIES
1. Identify your starting
point.
Calculating the net worth is the best way to
determine both current financial status and
progress over time to avoidFormul
financial trouble by
spending too much on wantsa:and nothing enough
for the needs.
FIVE FINANCIAL
IMPROVEMENT STRATEGIES
2. Set your priorities.

Making a list of rated needs and wants can

help financial priorities. Needs are things one
must have in order to survive ( i.e.
Formul food, shelter,
clothing, healthcare and transportation);
a: while
Wants are things one would like to have but are
not necessary for survival.
FIVE FINANCIAL
IMPROVEMENT STRATEGIES
3. Document your
spending.
One of the best ways to figure out cash flow or
what comes in and what goes out is to create a
budget or a personal spending plan.
Formul A budget lists
down all income and expenses a: to help meet
financial obligations.
FIVE FINANCIAL
IMPROVEMENT STRATEGIES
4. Lay down your debt.

Living with debt is costly not just because of

interest and fees, but it can also prevent people
from getting ahead with theirFormul
financial goals.
a:
FIVE FINANCIAL
IMPROVEMENT STRATEGIES
5. Secure your financial
future.
Retirement is an uncontrollable stage in a
worker’s life, of which counterpart are losing the
job, suffering from illness or injury,
Formul or can be
forced to care for a loved one
a: that may lead to
unplanned retirement. Therefore , knowing more
about retirement options is an essential part of
FINANCIAL GOAL PLANNING
AND
• KEY
SETTING
AREAS IN SETTING
INVESTMENT GOALS
A. Time Horizon
- it indicates the time when money will be needed.

B. Risk Tolerance
- Risk Averse : Investors that let go of the
possibility of a large gain if they knew there was also a
possibility of a large loss.
- Risk Seekers: Investors that are willing to take
the chance of a large loss if there were also a possibility
of a large gain.

C. Liquidity needs
- Liquidity refers to how quickly an investment
FINANCIAL GOAL PLANNING
AND SETTING
INVESTMENT GOALS : GROWTH, INCOME
AND STABILITY

[Link]
- is an increase in the value of an assessment

2. Income
- of some investments make periodic payments of
interest or dividends that represent investment income
and can be spent or reinvested

3. Stability
- known as capital preservation or protection of
principal.
 BUDGET AND BUDGETING

BUDGET BUDGETING
- is an estimation of revenue - is the processof creating a
and expenses over a specified plan to spend money. It ensures
period of time and is usually to have enough money for the
compiled and re-evaluated on a things needed and those
periodic basis. im[portant ones and will keep
one out of debt.
 SEVEN STEPS TO GOOD
BUDGETING
The following are seven steps that may help in attaining
good budgeting.
Step 1: Set realistic goals.
Step 2: Identify income and
expenses.
Step 3: Separate needs from
wants. Formul
Step 4: Design your budget.
a:
Step 5: Put your plan into
action.
 SEVEN STEPS TO GOOD
BUDGETING
STEP 1: SET REALISTIC GOALS.
Goals for the money will help make
smart spending choices upon deciding on
what is important.
STEP 2: IDENTIFY INCOME AND EXPENSES.
Upon knowing how much
Formul
is earned
each month and where a: it all goes, start
tracking the expenses by recording every
single cent.
 SEVEN STEPS TO GOOD
BUDGETING
STEP 3: SEPARATE NEEDS FROM WANTS.
Set clear priorities and the decisions
become easier to make by identifying wisely
those that are really neede or just wanted.
STEP 4: DESIGN YOUR BUDGET.
Formul
Make sure to avoid spending
more
a:
than what is earned. Balance budget to
accommodate everything needed to be paid
for.
 SEVEN STEPS TO GOOD
BUDGETING
STEP 5: PUT YOUR PLAN INTO ACTION.
Match spending with income time. Decide
ahead of time what you will use each payday. Non-
reliance to credit for the living expenses will protect
one from
STEP 6:debt.
PLAN FOR SEASONAL EXPENSES.
Set money aside to pay for unplanned
expenses so to avoid going to debt. Formul
STEP 7: LOOK AHEAD. a:
Having a stable budget can take a month
or two so, ask for help if things are not getting well.
SPENDING
PRACTICAL STRATEGIES IN SETTING AND
PRIORITIZING BUDGET GOALS.

[Link] by listing your goals.

[Link] your goals according to how
long it will take to meet each goal.
3. Estimate the cost of each goal and
find out how much it costs.
4. Project future cost.
[Link] how much you need to set
aside each period.
[Link] your goals.
7. Create a schedule for meeting your
goals.
INVESTMENT AND INVESTING

There are many ways you can invest your money

but consider four aspects:
[Link] long will you invest the money?
[Link] much money do you expect your
investment to earn each year?
[Link] much of your investment are you willing to
lose in the short-term in order to earn more in
the long-term?
[Link] types of investment interest you?
 SAVINGS
10 REASONS WHY SAVE MONEY...

[Link] become financially

independent.
[Link] save on everything you buy.
[Link] buy home or a car.
[Link] prepare for the future.
[Link] get out of debt.
Formul
[Link] augment annual expenses.
a:
[Link] settle unforeseen expenses.
[Link] respond to emergencies.
[Link] mitigate losing your job or
COMMON
FINANCIAL
SCAMS TO
A. PHISHING
Scammers send an e-mail that
appears to come from a financial
institution, such as a bank and ask you to
click on a link to update your account
information.
B. SOCIAL MEDIA
SCAMS
Scammers are adept at using social
media to gather information about the
traveling habits of potential victims.
C. PHONE SCAMS
Scammers pose as a government
agency such as the Bureau of Internal
Revenue or local law enforcement
agencies, and use tactics to acquire your
personal information and account
numbers.
D. STOLEN CREDIT CARD
There
NUMBERSare numerous ways that
scammers can obtain your credit card
information, including hacking, phishing,
and the use of skimming devices such as
small card readers attached to unmanned
credit card readers.
E. IDENTITY THEFT
Depending on the amount of
information, a scammer is able to obtain,
identity theft may extend beyond
unauthorized charges on a debt or credit
card.
10 TIPS TO AVOID COMMON
FINANCIAL SCAMS
1. Never wire money to a
stranger.
2. Don’t give out financial
information.
3. Never click on hyperlinks in e-
mails.
4. Use difficult password.
5. Never give your social security
detail.
6. Install Antivirus and Spyware
protection.
7. Don’t shop with unfamiliar
 FINANCIAL SCAMS
AMONG STUDENTS
FAKE SCHOLARSHIPS DIPLOMA MILLS
When it is beneficial for There are schools
students to apply for as that offer fake degrees
many scholarships, it is and diplomas in
important to become aware exchange for a fee.
of related scams and fraud.
CREDIT CARD SCAMS ONLINE BOOK SCAMS
Oftentimes, credit card While students often go
companies go to school for best deals on textbooks
campuses to convince students
online, scammers use this
to fill out card informations.
Scammers grab this chance to opportunity to get student’s
steal student’s information. credit card information.
 INSURANCE AND TAXES

INSURANCE is a contract (in the form

of a policy) between the policyholder and
the insurance company, whereby the
company agrees to compensate for any
financial loss from specific insured events.
In exchange for financial protection offered,
the policyholder agrees to pay a certain
sum of money, known as premiums to the
 INSURANCE AND TAXES

VARIOUS TYPES OF
INSURANCE
• Life Insurance The financial protection
derived from insurance
• Health Insurance entails tax benefit claim on
• Motor Insurance the paid premiums.
• Property Insurance
• Business Insurance,
etc.
 INSURANCE AND TAXES

Concepts related to insurance and taxes :

[Link]-Sponsored Insurance
If working in a company with 50 or more
employees, the employer is required to provide
employee-only insurance that meets minimum
guidelines.
 INSURANCE AND TAXES

Concepts related to insurance and taxes :

2. Marketplace Plans
Marketplace plans are available
based on an area of residence and income upon
meeting minimum coverage requirements. It
comes in three tiers; bronze, silver, and gold.
 INSURANCE AND TAXES

Concepts related to insurance and taxes :

2. Marketplace Plans
Marketplace plans are available
based on an area of residence and income upon
meeting minimum coverage requirements. It
comes in three tiers; bronze, silver, and gold.
 Asse
LIFE ts

INSURANCE
LIFE INSURANCE is a type of
insurance that compensate
beneficiaries upon the death of a
Formul
policyholder. The company
a: will
guarantee a payout for the
beneficiaries in exchange of
COMMOM RISK Asse
ts
CATEGORIES:

PREFFERED PLUS
The policyholder is in excellent health,
with normal weight, no history
Formul of smoking,
chronic illnesses, or family
a: history of any
life-threatening disease.
COMMOM RISK Asse
ts
CATEGORIES:

PREFFERED
The policyholder is in excellent health,
but may have minor issues on cholesterol
Formul
or blood pressure but under
a: control.
COMMOM RISK Asse
ts
CATEGORIES:

STANDARD PLUS
The policyholder is in very good health
but some factors, like high blood pressure
Formul
or being overweight impede a: a better
rating.
COMMOM RISK Asse
ts
CATEGORIES:
STANDARD
Most policyholders belong to this
category, as they are Formuldeemed to be
healthy and have a normal a: life expectancy
although, they may have a family history
of life-threatening diseases or fewer minor
COMMOM RISK Asse
ts
CATEGORIES:
SUBSTANDARD
Those with serious health issues like
diabetes or heart diseaseFormul
are placed on a
table rating system, ranked
a: from highest
to lowest.
COMMOM RISK Asse
ts
CATEGORIES:
SMOKERS
Due to an added risk of smoking, the
policyholders in this Formul
category are
guaranteed to pay more. a:
Aside from health
class, age is also a critical factor in
determining premiums.
BENEFITS OF LIFE INSURANCE
The following are the benefits of
life insurance.
[Link] pays for medical and
funeral costs.
[Link] financial support.
[Link] funding various
financial goals.
[Link] as retirement secured
conform.
[Link] covers cost incurred
from taxes and debt.
TYPES OF LIFE INSURANCE

TYPE CHARACTERISTIC ADVANTAGE DISADVANTAGE

It grants a lump sum

after a specified It allows for saving up
It requires higher
amount of time or upon for specific purposes.
premiums than other
death. The policy owner
types of life insurance.
[Link] is required to pay the It guarantees return
t premium for a upon maturity.
It is not the best option
predetermined number
for those looking for at
of specific years or until It offers some form of
full life protection.
a specific age is insurance coverage.
reached.
TYPES OF LIFE INSURANCE

TYPE CHARACTERISTIC ADVANTAGE DISADVANTAGE

It entails low premium

It has no benefit if
It is the simplest form requirements.
policyholder outlives the
of life insurance to
term period set.
obtain, of which upon It is a strong option for
2. TERM
death, the beneficiaries policyholders who need
Premium usually gets
are paid with the insurance but cannot
higher upon renewal of
benefit. afford whole life or
terms.
endowment.
TYPES OF LIFE INSURANCE

TYPE CHARACTERISTIC ADVANTAGE DISADVANTAGE

It offers permanent
protection for full life or
It provides coverage for
100 years.
the policyholder’s
entire life or until they It requires higher
It is flexible in terms of
reach 100 years old. It premiums.
payment of premiums.
acts both protection
3. WHOLE LIFE
and savings It is difficult to
It entails fixed
mechanisms since a understand due to
premiums.
portion of the premium complexity.
is allocated to build up
It usually comes with
cash values.
additional features and
“living” benefits.
TYPES OF LIFE INSURANCE

TYPE CHARACTERISTIC ADVANTAGE DISADVANTAGE

It serves as both life

It takes dual purpose:
protection and Cash values and
life insurance plus
investment vehicle in dividends are not
investment tool.
one package. A portion guaranteed.
of the premium is
4. VARIABLE It has no maturity age.
allocated into various Face amount and death
UNIVERSAL
investment vehicles for benefit are dependent
LIFE (VUL) The cash value is
the purposes of wealth on investment
payable along with the
creation. The contract’s performance.
assured sum
earnings are based on
the performance of It includes various inves
.
selected investments.
 FINANCIAL STABILITY

Being financially stable means confidence with

financial situation, worriless paying the bills because of
available funds, debt-free, money savings for future
goals and enough emergency funds.

It is not about being rich but rather more of a

mindset. It is living a life without worrying about how to
pay the next bill, and becoming stress-free about
money while focusing energy on their parts of life.
( Silva,2019)
10 STRATEGIES IN REACHING FINANCIAL
STABILITY
[Link] savings automagical.
[Link] your impulsive spending.
[Link] your expenses and live frugally.
[Link] in your future.
[Link] your family secure.
[Link] and avoid debt.
[Link] the envelope system.
[Link] bills immediately.
[Link] about personal finances.
[Link] to grow your net worth.
SIGNS OF BEING FINANCIALLY
STABLE
[Link] never overdraw your checking
account.
[Link] don’t lose sleep over finances.
[Link] use credit cards for convenience and
rewards but never out of necessary.
[Link] don’t worry about losing your job.
[Link] pay your bills ahead of time.
[Link] ask your opinion about financial
matters and you inspire them.
[Link]’re generally happy with your financial
situation.
[Link] finance your cars over five years or
less if you take loans at all.
[Link] contribute more to your retirement.
SIGNS OF BEING FINANCIALLY
STABLE
11. You can afford to buy things you
really want.
12. Recreational spending doesn’t
appeal to you.
13. You’re a natural saver.
14. You’re generous with money when it
comes to charities or helping others.
15. You’re confident about your future.
16. Your net worth grows significantly
from year to year.
17. You have substantial equity in your
home.
18. You consistently live beneath your
 INTEGRATING
FINANCIAL
LITERACY INTO
THE
 Financial education in schools should be a part of
a collaborative national strategy to ensure the relevance
and long-term sustainability.

Barry(2013), underscored that financial literacy has

a wide repercussion outside 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.

Teachers should be adequately trained and

resourced, made aware of the importance of financial
literacy and relevant pedagogical methods and they