Insufficient Financial Literacy in Public Schools

Submitted by: Ms. Eden E. Esmeralda, LPT.

Presented to: Dr. Emanuel C. de Guzman

President

Polythecnic University of the Philippines

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 ABSTRACT

This research study examined the effects of insufficient literacy on financial education
among public schools in the Philippines. As a former public school student, I knew that there’s a
need to add the financial subject in the present curriculum. Without the said topic, new
generation will just land on the same situation like the past generations. Yes, I can’t really
predict the future. I have neither power nor control over the issue. However, as the statistic
shows, there are a lot of poor Filipinos still struggling to survive even they have finished
education. How does this phenomenon happen? It is because of the weak root. Children need
to have financial literacy especially in Public Schools. I have interviewed two students from
different schools. One is in private school and the other one is in the public school. I have found
something profound to know about. One thing is for sure, in my own opinion and based with
other scientific studies of the mind, is the root creates the fruit.
 DEDICATION

I dedicate this to my old self. She is still in my mind vividly sitting on an armchair,
listening to her teacher who talks about World War. She has never had a clue about the most
important lesson to learn as a preparation once she bids goodbye to her beloved Alma Mater. I
dedicate this to all my fellow teachers, who struggle financially while being passionate in our
chosen profession. We deserve to be reprogrammed to financial success. Most especially, I
dedicate this to our beloved students who are born to have a freedom in terms of financial
situations.

I am offering this to the Higher Source who gave me this awakening.

I would like to extend my gratitude to all my life and financial coaches: Napoleon Hill,
Robert Kiyosaki, Eckhart Tolle, Louise Hay, Andrew Mathews, Dan Lok, and T. Harv Eker. Thank
you for the profound knowledge you’ve imparted me. Thank you for our beloved professor, Dr.
Emanuel C. De Guzman, president of Polytechnic University of the Philippines, for giving me a
chance to share this research study and its effect to all my classmates and to other people who
might read this in the future. Thank you to the Higher Source who supports me in every way of
my life now. Thank you to my life and business partner, C.E., who continuously believes in me in
my ups and downs.
 Table of Contents

Abstract

Dedication

Acknowledgement

Chapter I

Introduction

Purpose of the research

Methodology

Chapter II

Research questions

Statement of the problem

Hypothesis

Should Financial Literacy Be Taught in More Schools?

Figures and tables

References
 CHAPTER I

Introduction

Insufficient Financial Literacy in Public Schools

The financial literacy level of the average Filipino remains alarmingly low—a problem that
begins with poor childhood education that persists until their adult years, according to the
country’s financial regulator.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said Filipino adults could correctly answer
only three out of seven financial literacy-related questions covering basic numeracy, computing
compounding interest, fundamentals of inflation and investment diversification.

Citing the results of a study by the World Bank, the BSP said only 2 percent of Filipino adults
answered all questions about financial literacy correctly.

“The study also showed that Filipinos lack specific knowledge to make informed financial
decisions,” the central bank said, stressing that financial education was an “imperative,”
considering the country’s low financial literacy levels.

The same study indicated that money management habits formed in childhood stay into
adulthood.

Those who began saving as children display better attitudes to saving, and tend to outperform
their peers who did not develop the habit early in the areas of choosing financial products and
services, monitoring expenses and planning for retirement, the central bank said.

“The BSP believes that a financially-learned citizenry can be more effective in productively
contributing to the Philippine economy,” BSP Governor Nestor Espenilla Jr. said. “To date,
financial education remains a formidable task, one that requires coordinated multistakeholder
action.”

The central bank pointed to a growing body of literature indicating that a financially literate
population was able to make better financial decisions, have higher levels of savings and
diversified investments, and was more competent in managing debt.

These data suggest that the best way to nurture sound financial culture and behavior among
future adults is to start practical financial management lessons at a young age.
As such, the BSP, the Department of Education (DepEd) and BDO Foundation will sign today a
memorandum of agreement to advance financial education in the Philippines.

The agreement covers the development of videos as tools to teach basic financial literacy
concepts like saving and money management in public schools.

These videos, designed for learners as well as educators, are accompanied by teaching guides
to further equip and support the DepEd in mainstreaming financial education in the K-12
curriculum.

DepEd strengthens financial literacy program in public schools.

To boost financial literacy among Filipinos, the Department of Education has partnered with the
Bangko Sentral ng Pilipinas (BSP) and the BDO Foundation (BDOF) to disseminate learning
materials on managing finances to public schools nationwide.
Under the partnership, audiovisual tools will be distributed to around 700,000 public school
teachers and non-teaching personnel in the coming months. These learning materials will be
used for training teachers and other personnel, as well as for classroom instruction.

The videos, which will be distributed through different platforms based on the needs and
capabilities of the schools, will focus on teaching learners simple ways to save and manage
expenses.

Education Secretary Leonor Briones, BSP Gov. Nestor Espenilla Jr. and BDOF president Mario
Deriquito signed the memorandum of agreement in Pasig City earlier this week.

Financial literacy has already been integrated in several subjects under the basic education
system, with financial and entrepreneurial concepts included in the curricula of both
elementary and secondary students in the Technology and Livelihood Education and
“Edukasyong Pangkabuhayan at Pantahanan” subjects.

A study done by the World Bank in 2015 revealed poor financial literacy among Filipino adults,
who were able to answer less than half of the seven financial literacy-related questions
correctly.

Results of the study also show that one in 10 Filipino adults did not appear to have a “sound
grasp” of any of the basic concepts included in the test.
 Purpose of the Research

The primary goal of this research study is to open our eyes into the most important lesson that
we must know from the very beginning. Financial literacy is a core life skill for participating in
modern society. Children are growing up in an increasingly complex world where they will
eventually need to take charge of their own financial future. As young adults learning to live
independently they will need to know how to budget and make wise financial choices for
everyday living, for example, choosing mobile phone and utility contracts. They will need to
manage risks: save for a ‘rainy day’, avoid taking on unmanageable debt, and provide for their
old age and health care. Financial products and services vary widely and, in the case of credit,
can be almost too easily accessible for many of today’s young people. At the same time, these
products and services are becoming more complicated and the choices more difficult. Adding to
this complexity are economic and technological developments which have brought greater
global connectedness and massive changes in communication and financial transactions, as well
as in social interactions and consumer behavior. Poor financial decisions can have a long-lasting
impact on individuals, their families and society. The causes of the recent financial crisis were
complex, but the lack of financial literacy was certainly one of the aggravating factors leading to
ill-informed decisions on mortgage loans. Low levels of financial literacy have also been
associated with a lower standard of living, decreased psychological and physical well-being and
greater reliance on government support. Financial education can make a difference. It can
empower and equip young people with the knowledge, skills and confidence to take charge of
their lives and build a more secure future for themselves and their families. Supporting financial
education can be viewed by the main public, private and civil stakeholders as a critical long-
term investment in human capital.
 Methodology

RESEARCH METHODOLOGY

In this chapter, I discuss the research design, area of study, population, sample of the
population, sampling technique, and instrument for data collection, validation of the
questionnaire, administration of the instrument and method of data analysis. I chose a survey
research design because it best served to answer the questions and the purposes of the study.
The survey research is one in which a group of people or items is studied by collecting and
analyzing data from only a few people or items considered to be representative of the entire
group.

DELIMITATION OF THE STUDY In this study, the options, perceptions and attitudes of teachers
and educators of the Public Schools were sought on childhood education.
 Chapter II

Research Questions:

What is the main cause of financial struggles among newly graduates?

Do we consider adding more important subjects in the curriculum and remove unnecessary
ones?

What will be the best solution to avoid financial struggles after finishing studies?

Is financial literacy subject effective to the poverty problem of our country?

Statement of the problem:

• Mission: To achieve financial freedom or at least avoid severe poverty in the future.

• Propose financial literacy as a part of the curriculum.

• Only Academic Subjects, Religion, and Sports are being taught in school.

• Poverty is likely to continue without immediate actions.

• Examine present education system to achieve the mission.

Those who began saving as children display better attitudes to saving, and tend to outperform
their peers who did not develop the habit early in the areas of choosing financial products and
services, monitoring expenses and planning for retirement.

The BSP believes that a financially-learned citizenry can be more effective in productively
contributing to the Philippine economy.

The central bank pointed to a growing body of literature indicating that a financially literate
population was able to make better financial decisions, have higher levels of savings and
diversified investments, and was more competent in managing debt.

The same study indicated that money management habits formed in childhood stay into
adulthood.

These data suggest that the best way to nurture sound financial culture and behavior among
future adults is to start practical financial management lessons at a young age.

WHY MANY WELL-PAID EMPLOYEES WILL STILL END UP BROKE

From my personal experience, observation and research, I have discovered that there are
certain mistakes many well-paid employees that make them go broke after working for many
years. These mistakes have remained the same over the years. These mistakes are avoidable.

Because of the recession, a lot of employees are currently agitating an increase in their salary as
the salary they currently earn is no longer enough to take care of their expenses. But as long as
they are already making these mistakes, they will still end up BROKE, even if the salary is
increased.

If you have been “BROKE” before, you’ll agree with me that it is not a funny place to be. So, I
think it will be a good idea for you to take this information seriously, and save yourself the pain
of being broke. I have made some of these mistakes myself, and today, I am still facing some of
the consequences.
MISTAKE 1: Many well-paid employees do not save enough money when the times are good

There’s nothing wrong with spending your salary to buy the things you want, but if you keep
spending your entire salary every month, it simply means that you are working for other
people.

When you fail to save enough money from your salary, you put yourself at the mercy of your
employer, economic changes such as recession and inflation, and you make it difficult for you to
walk away from the job if you are no longer happy with the terms of employment or job
requirements.

As an employee, your salary quickly becomes income to other people who have things to sell,
and these people fall into 5 major groups - your family members, your friends, your colleagues,
your service providers, and strangers.

When you save enough money, you are paying yourself. Pay yourself well.

If you’ve followed the news long enough and if you’ve been in this country long enough, you’d
agree with me that job security is dead. As an employee you don’t have control over the job, so
it is very important that you maximize every opportunity that you have to save as much money
as you can when the times are good.

Who do you think would be wealthier in the next 5 years in terms of the amount of money in
savings - the guy who earns 400,000 monthly and saves only 50,000 or the guy who earns
200,000 monthly and saves 130,000?

In 5 years the guy who earns 400,000 would have saved 3,000,000 while the guy who earns
200,000 would have saved 7,800,000.

The question you may want to ask is, “How come the guy who earns more saves a lot less?” The
answer to this question is in the second mistake.

MISTAKE 2: Many well-paid employees will be wasteful with their salary when the times are
good

“When you are in the frame you cannot see the picture.” – Les Brown

Many well-paid employees will not agree that they are wasteful now, until they find themselves
broke. You can be different. You can choose to see the picture when you are still in the frame.
The choice is yours.
A guy gets a high-paying job, rents a 3-bedroom flat in an expensive location where he pays
1,500,000 annually even though he is single and doesn’t plan to get married in the next 5 years.
But the same guy would have been able to rent a 1-bedroom apartment in the same location
and pay as low as 500,000 annually instead. Isn’t this wasteful spending? If he had gone for the
1-bedroom apartment instead of the 3-bedroom apartment, in 5 years he would have had an
extra 5,000,000 in his savings.

And this is just one of the areas that many well-paid employees are wasteful. Other areas
include entertainment, transportation, clothing, charity, electronics, mobile phones, airtime,
feeding, hangouts and credit.

But like I said earlier, most well-paid employees will not agree that they are wasteful until they
find themselves broke. Don’t be one of such employees. As much as it is within your control,
don’t buy the things you don’t really need and don’t buy too many things on credit so that you
don’t end up buying your way into serious debt.

If the money does not come easy, don’t be in a hurry to waste it.

MISTAKE 3: They do not learn to sell any product or render any service when the times are
good

If you are not saving enough money, and you’re being wasteful, and you also do not know how
to sell, you are definitely going to end up BROKE. Being able to sell a product or render a service
gives you the power to generate income from multiple sources while you are still working.

Once you know and decide what to sell, you can now start leveraging on those groups of people
that have been leveraging on you. I am talking about your family members, friends, colleagues,
service providers and strangers.

It is always less risky to learn how to sell or how to do business when you are still employed.
Even if anything happens to your job, you would have already acquired one of the most
valuable skills in the marketplace which is the ability to sell, and with this skill, you can easily
get another job.

Learn to sell, supply or produce something of value that solves a problem for someone and that
people are willing to pay for. If you can do this, you can only be broke by choice.
MISTAKE 4: They do not invest in Personal Development early in their career or when the times
are good

Personal development is a process of acquiring knowledge, skills and expertise to cover up the
gap between where you are right now and where you want to be, and also to prepare yourself
in advance for challenges of life.

Many well-paid employees won’t see the need to invest in personal development because their
salary is still being paid. They ask questions like, “Why should I waste my time reading or
attending training programs?”

If you do not invest in knowledge, even if you succeed in saving enough money, you can lose all
that money by making bad investment, business, career, family, relationship and even health
choices. Personal development empowers you with the knowledge and skills needed to
minimize your expenses, invest wisely, and sell strategically and profitably.

You can acquire more skills and grow in knowledge by reading the right kind of books, attending
the right kind of training programs, obtaining relevant certification, and joining an
apprenticeship program.

Now that you know the mistakes many well-paid employees make that will make them end up
broke, you can choose to avoid making these same mistakes or you can choose to repeat them.

The choice is yours!

Anyone who’s ever struggled with a difficult class in high school has asked the question, Will I
ever actually use this stuff after I graduate?

Now that you’re on this side of graduation with high-school-aged kids of your own, you know
they probably won’t factor equations, diagram sentences, or need to remember what E stands
for in E=mc2 on a daily basis. But one thing is for sure: They will need to know how to handle
money wisely—and the sooner the better!

That’s why we’re such huge fans of teaching financial literacy in schools.

What Is Financial Literacy?

Financial literacy classes teach students the basics of money management: budgeting, saving,
debt, investing, and giving. That knowledge lays a foundation for students to build strong
money habits early on and avoid many of the mistakes that lead to lifelong money struggles.

Why We Think Personal Finance Belongs in High Schools

As a country, we’ve seen where a lack of personal finance education can lead. Millions of
Americans struggle every day with their money, living paycheck to paycheck and relying on
credit cards for necessities, only to wind up deep in debt and short on hope.

Beyond that, many Americans are finding that they can’t buy homes, invest for retirement, or
save for their child’s college fund because of their own student loan debt, massive car
payments, and general lack of financial planning.

But it doesn’t have to be that way. A lot of the money problems Americans are facing could
have been avoided if financial literacy was taught earlier, in school. That’s why we think more
schools should offer financial literacy courses as part of their graduation requirements.

Personal Finance Courses Give Students the Habits to Win With Money

So what advantages are there to learning money principles as a student rather than as an
adult? Well, students who learn personal finance principles early have the most time to apply
what they know, getting the most out of their knowledge. Even better, many personal finance
students apply what they learn right away—while they’re still in high school.
Figures and Tables:
 References:

http://www.thewritesource.com/apa/apa.pdf

Rich Dad Poor Dad by Robert Kiyosaki

The Secrets of the Millionaire mind by T. Harv. Eker

Financial Management.com