FINANCIAL

LITERACY
JOHNINA S. BAYBAYAN
 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.
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
 Standards and Key Concepts:

KEY CONCEPTS
STANDARDS 
 Earning Income 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
 STANDARDS KEY CONCEPTS
 Buying goods and services  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
STANDARDS KEY CONCEPTS
 Concept of saving and
 Savings
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
STANDARDS KEY CONCEPTS
 Role of markets in
 Savings
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
STANDARDS KEY CONCEPTS
 Using Credit
 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
STANDARDS KEY CONCEPTS
 Using Credit
 Impact credits reports and
scores on consumers
 Consumers protection
laws
STANDARDS KEY CONCEPTS
 Protecting and Insuring
 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
STANDARDS KEY CONCEPTS
 Financial Investing
 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
STANDARDS KEY CONCEPTS
 Financial Investing
 How diversification can
reduce risk
 How financial markets
react to changes in
marketing conditions and
information
 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.
 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;
 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)
 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.
 Six types on how people view money:

INDIFFERENCE
PLEASURE SELF-WORTH
STATUS
FRUGAL POWERFUL
 Spending
Characteristics that resembles attitude about
money:
Patterns

Impulsive
Habitual Spending
Spending
Characteristics that resembles attitude about
money:
Expenses

Keywords

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

Needs Wants
 Are you Prudent or Lavish in spending money in
terms of?

Habitual
Spending Fixed Expenses Needs

Impulsive Variable Wants

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