Financial Literacy

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 F inancial E ducatio n, Financial Literacy define as ; t he ability to use knowledge and skills to manage one’s financial resources effectively for lifetime financial security.

3. Hastings et al refers to F inancial 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 K ey C oncepts : 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 C oncepts 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 i nvestment 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 informatio n

13. B enifits of F inancial L iteracy : It enables people to understand and apply knowledge and skills to achieve a lifestyle that is financially balanced, sustainable, ethical and responsible.

14. F inancial L iteracy in the P hilippines : 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. F inancial L iteracy in the P hilippines : As per standard & Poor’s (S&P) ratings services survey last year, only 25% of Filipinos are f inancially 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. F inancial L iteracy in the P hilippines : 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. S ix types on how people view money :

18. C haracteristics that resembles attitude about money :

19. Keywords Keywords Keywords C haracteristics that resembles attitude about money :

20. C haracteristics that resembles attitude about money :

21. Are you Prudent or Lavish in spending money in terms of?

22. P ractical steps to enhance F inancial L iteracy :