Module 8:

FINANCIAL LITERACY LEARNING OUTCOMES

LEARNING OUTCOMES

1. Define financial literacy

2. Distinguish among financial plan, budgeting. Saving, spending and

investing

3. Present ways on how to avoid financial crises and scams

4. Demonstrate understanding of insurance and taxes

5. Describe a financially stable person

6.Determine ways on how to integrate financial literacy in the curriculum

7. Draw relevant life lessons and significant values from personal

experiences on financial crises and scams

8. Analyze research abstract on financial literacy and its implications to

the teaching- learning process

9. Make a personal financial plan based on short-term and long-term goals

INTERACTIVE PRESENTATION

Deal or No Deal. This is an interactive activity adapted from a TV game

show segment which entails a student to pick any of the briefcases
containing an amount and he/she then, takes deal or no deal with the
banker’s offer against the amount in the last briefcase.

Procedure:

1. The teacher will choose 10 students who will prepare different

amounts written in 10 folders that will serve as briefcases. use of m
the

2. During the game, the class will choose a player.

3. While playing the "Deal or No Deal" with background music

downloaded from the Internet, the player will choose the briefcase to
be opened to see the amount.

4. The selection of briefcases to be opened shall continue until only

the last three remain. 5. Then, the teacher will say, "The banker has an
offer".
 6. There will be bidding of amount offered by the banker in lieu of
opening the remaining briefcases by the player.

7. The last briefcase will be opened and find out if the banker's offer is
higher than the amount in the chosen last briefcase.

8. There shall be a reflection in the class by asking "What will you do if

banker will offer an amount of money". The teacher will generate
answers from the students.

CONCEPT EXPLORATION

In some instances, teachers are confronted with issues and concerns on

financial debt, being victimized by fraud and other related scams, both
personal and electronic ways. More so, some teachers are drowned by
emergent financial needs and unexpected debt, especially in difficult times,
sickness and inevitable circumstances and calamities. Others do not prepare
for their retirement that they usually end up highly frustrated. This is the
reason why financial literacy has been a subject in many faculty
development programs, seminars, and even becomes a topic for researches,
while many schools have integrated it in the curriculum.

Financial Literacy

Financial literacy 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.

Poor financial decisions can have a long-lasting impact on

individuals, their families and the society caused by lack of financial literacy.
Low levels of financial literacy are associated with lower standards of living,
decreased psychological and physical well-being and greater reliance on
government support. However, when put into correct practice, financial
literacy can strengthen savings behavior, eliminate maxed-out credit cards
and enhance timely debt.

Financial literacy is the ability to make informed judgments and

make effective decisions regarding the use and management of money.
Hence, teaching financial literacy yields better financial management skills.

The importance of starting financial literacy while still

young.

National surveys show that young adults have the lowest levels of financial
literacy as reflected in their inability to choose the right financial products
and lack of interest in undertaking sound financial planning. Therefore,
financial education should begin as early as possible and be taught in
schools. Akdag (2013) stressed that in the recent financial crisis, financial
literacy is very crucial and tends to be advantageous if introduced in the very
early years as preschool years. Financial education is a long-term process
and incorporating it into the curricula from an early age allows children to
acquire the knowledge and skills while building responsible financial behavior
throughout each stage of their education (OECD, 2005).

Likewise, financial literacy is the capability of a person to handle

his/her assets, especially cash more efficiently while understanding how
money works in the real world.

Financial Plan

Teachers need to have and capacity to formulate their own financial

plan. It is wise to consider starting to plan the moment they hand in their
first salary, including the incentives, bonuses and extra remunerations that
they receive.

Kagan (2019) defines a financial plan as 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. It begins
with a thorough evaluation of the individual’s current financial state and
future expectations.

The following are steps in creating a financial plan.

1. Calculating net worth. Net worth is the amount by which assets

exceed liabilities. In so doing, consider (1) assets that entail one’s
cash, property, investments, savings, jewelry and wealth; and (2)
liabilities that include credit card debt, loans and mortgage. Formula:
total assets minus total liabilities = current net worth.

2. Determining cash flow. A financial plan is knowing where money

goes every month. Documenting it will help to see how much is needed
every month for necessities, and the”amount for savings and
investment.

3. Considering the priorities. The core of a financial plan is the person’s

clearly defined goals that may include: (1) Retirement strategy for
accumulating retirement income; (2) Comprehensive risk management
plan including a review of life and disability insurance, personal liability
coverage, property and casualty coverage, and catastrophic coverage;
 (3) Long-term investment plan based on specific investment objectives
and a personal risk tolerance profile; and (4) Tax reduction strategy for
minimizing taxes on personal income allowed by the tax code.
(https://www.investopedia.com/terms/f/financial_plan.asp)

Five Financial Improvement Strategies

Financial literacy shapes the way people view and handle money.
The following are financial improvements suggested by Investopedia as a
journey to financial literacy.

1. Identify your starting point. Calculating the net worth is the best way
to determine both current financial status and progress over time to avoid
financial trouble by spending too much on wants and nothing enough for the
needs.

2. Set your priorities. Making a list of rated needs and wants can help set
financial priorities. Needs are things one must have in order to survive (i.e.
food, shelter, clothing, healthcare and transportation); while wants are things
one would like to have but are not necessary for survival.

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. A budget lists down all income and expenses to help meet
financial obligations.

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
their financial goals.

5. Secure your financial future. Retirement is an uncontrollable stage in

a worker’s life, of which counterpart are losing the job, suffering from an
illness or injury, or be forced to care for a loved one that may lead to an
unplanned retirement. Therefore, knowing more about retirement options is
an essential part of securing financial future.

Financial Goal Planning and Setting

Setting goals is a very important part of life, especially in financial

planning. Before investing the money, consider setting personal financial
goals. Financial goals are targets, usually driven by specific future financial
needs, such as saving for a comfortable retirement, sending children to
college, or enabling a home purchase.

There are three key areas in setting investment goals for consideration.
 A. Time horizon. It indicates the time when the money will be needed. To
note, the longer the time horizon, the more risky (and potentially more
lucrative) investments can be made. B. Risk tolerance. Investors may let
go of the possibility of a large gain if they knew there was also a possibility of
a large loss (they are called risk averse); while others are more willing to
take the chance of a large loss if there were also a possibility of a large gain
(they are called risk seekers). The time horizon can affect risk tolerance.

C. Liquidity needs: Liquidity refers to how quickly an investment can be

converted into cash (or the equivalent of cash). The liquidity needs usually
affect the type of chosen investment to meet the goals.

D. Investment goals: Growth, income and stability. Once determined

the financial goals and how time horizon, risk tolerance, and liquidity needs
affect them, it is time to think about how investments may help achieve
those goals. When considering any investment, think about what it offers in
terms of three key investment goals: (1) Growth (also known as capital
appreciation) is an increase in the value of an investment; (2) Income, of
which some investments make periodic payments of interest or dividends
that represent investment income and can be spent or reinvested; and (3)
Stability, or known as capital preservation or protection of principal.

An investment that focuses on stability concentrates ling on

increasing the value of investment and more on trying to ensure that it never
lose value and can be taken when needed
(hitps://www.flexscore.com/leamingcenter/setting-financial-and investment-
goals).

Budget and Budgeting

A budget is an estimation of revenue and expenses over a specified

future period of time and is usually compiled and re- evaluated on a periodic
basis. Budgets casual made for a variety of individual or business needs or
just about anything else that makes and spends money. Budgeting, on the 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.

Thus, budgeting ensures to have enough money for the things

needed and those important 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. 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 is earned
each month and where it all goes, start tracking the expenses by recording
every single cent.

Step 3: Separate needs from wants. Set clear priorities and the decisions
become easier to make by identifying wisely those that are really needed or
just wanted.

Step 4: Design your budget. Make sure to avoid spending more than what is
earned. Balance budget to accommodate everything needed to be paid for.

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 debt.

Step 6: Plan for seasonal expenses. Set money aside to pay for unplanned
expenses so to avoid going into debt.

Step 7: Look ahead. Having a stable budget can take a month or two so,
ask for help if things are not getting well.

Spending

If budget goals serve as a financial wish list, a spending plan is a way to

make those wishes a reality. Turn them into an action plan. The following are
practical strategies in setting and prioritizing budget goals and spending
plan:

1. Start by listing your goals. Setting budget goals requires

forecasting and discussing future needs and dreams with the family.
2. Divide your goals according to how long it will take to meet
each goal

Classify your budget goals into three categories: short-term goals (less
than a year), medium-term goals (one to five years), and long-term goals
(more than five years). Short-term goals are usually the immediate needs
and wants; medium. Term goals are things that you and your family want
to achieve during the next five years; and long-term goals extend well
into the future, such as planning for retirement.
 3. Estimate the cost of each goal and find out how much it costs.
Before assigning priority to goals, it is important to determine the cost of
each goal. The greater the cost of a goal, the more alternative goals must
be sacrificed in order to achieve it.

4. Project future cost. For short-term goals, inflation is not a big factor,
but for medium and long-term goals, it is a big factor, To calculate the
future cost of the goals, there is a need to determine the rate of inflation
applied to each particular goal.

5. Calculate how much you need to set aside each period. Upon
knowing the future cost of the goals, next is to determine how much to
put aside each period to meet all the goals.

6. Prioritize your goals. Upon listing down all the goals and the
estimated amount needed for each goal, prioritize them. This serves as
guide in decision-making.

7. Create a schedule for meeting your goals. It is important to lay

down all the goals according to priority with the corresponding amount of
money needed, the time it will be needed, and the installments needed to
meet the goals. (https://www.flexscore.com/learningcenter/the-spending-
plan-setting-and- prioritizing-your-budget-goals)

Investment and Investing

As teachers, when you have saved more money than what you
expect at a time of need, consider investing this money to earn more
interest than what your savings account is paying you. There are many
ways you can invest your money but consider four aspects:

1. How long will you invest the money? (Time Horizon)

2. How much money do you expect your investment to earn each year?
(Expectation of Return)

3. How much of your investment are you willing to lose in the short-term
in order to earn more in the long-term? (Risk Tolerance)

4. What types of investment interest you? (Investment Type)

Savings

In order to get out of debt, it is important to set some money aside

and put it into a savings account on a regular basis. Savings will also help in
buying things that are needed or wanted without borrowing.
Emergency Savings Fund. Start as early, setting aside a little money for
emergency savings fund. If you receive a bonus from work, an income tax
refund or earnings from additional or side jobs, use them as an emergency
fund.

10 Reasons Why Save Money

With credit so easy to get, here are ten practical reasons why it is
important to save money that everyone, including teachers, must know.

1. To become financially independent. Financial independence is not

having to depend on receiving a certain pay but setting aside an amount to
have savings that can be relied on.

2. To save on everything you buy. With savings, you can buy things
when they are on sale and can make better spending choices without being
compromised on credit card interest charges.

3. To buy a home or a car. Savings can be used in buying a home in full or

down payment, especially in times of promo deals, bids and inevitable sale
and at a reasonable interest rate.

4. To prepare for the future. Through savings, you can be confident to

face the future without worrying on how you will survive.

5. To get out of debt. If you want to get out of debt, you have to save
money.

6. To augment annual expenses. In order to attain a good, stress-free

financial life, there is a need to save for annual expenses in advance.

7. To settle unforeseen expenses. Savings can respond to unforeseen

expenses in times of need.

8. To respond to emergencies. Emergencies may happen anytime and

these can be expensive so, there is a need to get prepared rather than
potentially become another victim of an emergency.

9. To mitigate losing your job or getting hurt. Bad things can happen
to anyone, such as losing a job, business bankruptcy or crisis, being injured
or becoming too sick to work. Therefore, having savings is the key to resolve
such a dilemma.

10. To have a good life. Putting aside some money to spend when needed
can bring about quality and worry-free life at all times.
Common Financial Scams to Avoid

Financial fraud can happen to anyone, including the teachers a any

time. While some forms of financial fraud, such as massive data breaches,
are out of one’s control, there are many ways to proactively get rid of
financial scams and identity theft.

Here are some of the most common financial scams, along with ways
to identify them early and how to protect one’s self from being victimized.

A. Phishing. Using this common tactic, scammers send an email that

appears to come from a financial institution, such as a bank and asks you to
click on a link to update your account information. If you receive any
correspondence that asks for your information, never click on the links or
provide account details. Instead, visit the company’s website, find official
contact information, and call them to verify the request.

B. Social Media Scams. Scammers are adept at using social media to

gather information about the traveling habits of potential victims. They also
have phishing tactics, including posts seeking charity donations with bogus
links that allow them to keep your money. Therefore, be conscious of the
information you post online, especially personal details and plans for a
vacation that you would leave your house unoccupied.

C. Phone Scams. Another prevalent tactic is scamming phone calls. The

scammers pose as a government agency, such as the Bureau of Internal
Revenue or local law enforcement agencies, and use scare tactics to acquire
your personal information and account numbers. Never provide your account
information over the phone. Look for the agency’s contact information, and
call them to verify any request. To note, government agencies will never text
or call you to ask for money.

D. Stolen Credit Card Numbers. There are 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 (i.e. ATMs, gas pumps, and more). These small devices
pull data from your card when you swipe it. Before you use an ATM or swipe
your card, look for suspicious devices that may be attached to the card
reader.

E. Identity Theft. Depending on the amount of information a scammer is

able to obtain, identity theft may extend beyond unauthorized charges on a
debit or credit card. If scammers are able to obtain your Social Security
number, date of birth, and other personal information, they may be able to
open new accounts in your name without your knowledge. Be aware of an
information you share and with whom, and always shred sensitive
information before disposing it.