Definition of Financial Literacy Assess the level of personal financial literacy using set of standards and questions; Characterize financial literacy in the Philippines Practical steps to develop personal financial literacy.

1. FINANCIAL
LITERACY
JOHNINA S. BAYBAYAN

2. What is Financial Literacy?
According to National Endowment for Financial Education, Financial
Literacy define as; the ability to use knowledge and skills to manage one’s
financial resources effectively for lifetime financial security.

3. Hastings et al refers to Financial Literacy as:
Knowledge of financial products
Knowledge of financial concepts
Mathematical skills or numeracy necessary for effective financial
decision making
Engaged in certain activities such as financial planning

4. Standards and Key Concepts:
STANDARDS
 Earning Income
KEY CONCEPTS
 Received by people
 Different types of Jobs as
well as different forms of
income earned or received
 Benefits and costs of
increasing income through
the acquisition of education
and skills
 Government programs that
affect income
 Types of income and taxes
 Labor market

5. STANDARDS
 Buying goods and services
KEY CONCEPTS
 Scarcity, choice, and
opportunity cost
 Factors that influence
spending choices, such as
advertising, peer pressure,
and spending choices of
others
 Comparing the cost and
benefits of spending
decision
 Basics of budgeting and
planning

6. STANDARDS
 Savings
KEY CONCEPTS
 Concept of saving and interest
 How people save money, where
people can save money, and
why people save money
 The role that financial
institutions plays as
intermediaries between savers
and borrowers
 The role government agencies
such as the Federal Deposits
Insurance Corporation (FDIC)
play in protecting savings
deposit.

7. STANDARDS
 Savings
KEY CONCEPTS
 Role of markets in determining
interest rates
 The mathematics of saving
 The power of compound interest
 Real versus nominal interest rates
 Present versus future value
 Financial Regulators
 The factor determining the value
of a person’s savings over time
 Automatic savings plan, “rainy-
day” funds
 Savings for retirement

8. STANDARDS
 Using Credit
KEY CONCEPTS
 Concept of credit and the cost of
using credits
 Why people use credit and the
sources of credit
 Basic calculations related to
borrowing (principal, interest,
compound interest)
 Credits reports and credits
scores
 Behavior that contribute to
strong credit reports and scores

9. STANDARDS
 Using Credit
KEY CONCEPTS
 Impact credits reports and scores
on consumers
 Consumers protection laws

10. STANDARDS
 Protecting and Insuring
KEY CONCEPTS
 Concepts of financial risk and
loss
 Insurance (transfer of risk
through risk pooling)
 Managing risk
 Identity theft
 Life insurance product
 How to protect oneself against
identity theft

11. STANDARDS
 Financial Investing
KEY CONCEPTS
 Concept of financial investment
 Variety of possible financial
investment
 Calculate rates of return
 Relevance and calculation of real
and after-taxes rates of return
 How many markets cause rates of
return to change in response to
variation in risk maturity

12. STANDARDS
 Financial Investing
KEY CONCEPTS
 How diversification can reduce
risk
 How financial markets react to
changes in marketing conditions
and information

13. Benifits of Financial Literacy:
 It enables people to understand and apply knowledge and skills to
achieve a lifestyle that is financially balanced, sustainable, ethical and
responsible.

14. Financial Literacy in the Philippines:
 World bank study in 2014 estimated 20 million Filipinos saved money but only
half had a bank account;
 Asian development(ADB) study in 2015 revealed that Philippines does not
have a national strategy for financial education and literacy;
 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;

15. Financial Literacy in the Philippines:
 As per standard & Poor’s (S&P) ratings services survey last year, only 25% of
Filipinos are financially literate. 75% of Filipinos have no idea about inflation,
risk, diversification, insurance, compound interest, and bank savings;
 10 years after discovery of the stock market, still less than 1% of Filipinos is
invested in it;
 More than 80% of the working middle class have no formal financial plan.
(Go, 2017)

16. Financial Literacy in the Philippines:
• BSP organized the very first Financial Education stakeholders Expo
last November 27-28, 2018.
• The expo supports RA No. 10922;
• Also aligned with the objectives of the Philippine national Strategy for
Financial inclusion.

17. Six types on how people view money:
PLEASURE
FRUGAL
STATUS INDIFFERENCE
SELF-
WORTH
POWERFUL

18. Characteristics that resembles attitude about money:
Spending
Patterns
Habitual Spending Impulsive Spending

19. Keywords
Keywords Keywords
Characteristics that resembles attitude about money:
Expenses
Fixed expenses
Variable
Expenses

20. Characteristics that resembles attitude about money:
Needs Wants

21. Are you Prudent or Lavish in spending money
in terms of?
Habitual Spending
Impulsive
Spending
Fixed Expenses
Variable Expenses
Needs
Wants

22. Practical steps to enhance Financial Literacy:
SETTING
FINANCIAL
GOALS
DEVELOPING
A SPENDING
PLAN
IMPORTANCE
OF SAVING