MODULE 8:

Financial Literacy

Combiene, Karen
Rasco, Mervin
Villaester, Marinella
Tychingco, Jerson
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 and experiences on financial crises and scams
8. Analyze research abstract on financial plan based on
short-term and long term goals.
Concept Exploration
In some instances, teachers are confronted with issues and concerns on
financial dept, 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 dept, 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 for their own finances, budget,
financial choices, managing risks, saving credit, and financial transaction.
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 physiological and physical well-being and greater reliance on
government support. However, when put into correct practice, financial
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, 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 efficient while understanding how money works in the real
world.

Financial Plan
Teachers need to have a deeper understanding 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
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
dept, loans and mortgage. Formula: total assets-minus total liabilities = current net
worth.
2. Determining cash flow. A core of 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.
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 related 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 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 dept. Living with dept 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 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 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
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 determine 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 less on increasing the value of
investment and more on trying to ensure that it never loses value and can be taken
when needed.
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-evaluted on a periodic basis.
Budgets can be made for a variety of individual or business needs or just
about anything else that makes and spends money. Budgeting, 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 like to do.
Thus, budgeting ensures to have enough money for the things needed
and those important ones and will keep one of dept.

Seven Steps to Good Budgeting

The following are the (7) 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 decision
become easier to make by the 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. Balanca budget to accommodate everything needed to be paid for.
Step 5: Put your 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 dept.
Step 6: Plan for seasonal expenses. Set money aside to pay for unplanned
expenses so to avoid going into dept.
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:
Start by listing your goals.
1.
2. Devide your goals according to how long it will take to meet each goal.
3.
4. Estimate the cost of each goals and find out how much it costs.
5.
6. Project future cost.
7.
8. Calculate how much you need to set aside each period.
9.
10. Prioritize your goals.
11.
12. Create a schedule for meeting your goals.
13. Investment and Investing
14. As teachers, when you have saved more money than what you expect at all time of need,consider
this investing of money to earn more interest than what your savings account is paying you.
15.
16. Savings
17. In order to get out of dept, 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 dept. If you want to get out of dept, 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
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 be 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 at 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.
A. Phishing. Using 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, never click on the links or provide account details.
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.
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. Identify Theft. Depending on the amount of information a scammer is able to
obtain, identify 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 whom, and
always shred sensitive information before disposing it.
By taking preventative measures and being aware scams you can minimize the
risks or fraud. Monitoring your online or mobile banking accounts daily can also
10 Tips to Avoid Common Financial Scams
Every year, fraud cases are getting worse, leaving countless victims in
trouble and danger through data breaches, identify theft and online
scams. Unfortunately, new and improved technology only gives
fraudsters an edge, making it easier than ever for scam artists to nab
financial data from unsuspecting consumers (Bell, 2019).
1. Never Wire money to a stranger. Although it is one of the oldest internet
scams, there are still consumers who fall for this rip-off or some variations of it.
2. Don’t give out financial information. Never reveal sensitive personal
financial information to a person or business you don’t know, thru phone, text or
email.
3. Never click on hyperlinks in emails. If you receive an email from a stranger
or company asking you to click on hyperlink or open an attachment and then,
enter your financial information, delete the email immediately.
4. Use difficult passwords. Hackers can easily find passwords that are simple
number combinations. Create passwords that are at least eight characters long
and that include some lower and upper case letters, numbers and special
characters. You should also use a different password for every website you visit.
5. Never give your social security number. If you receive an email or visit a
6. Install Antivirus and Spyware protection. Protect the sensitive information
stored on your computer by installing antivirus, firewall and Spyware protection.
Once you install the program, turn on the auto-updating feature to make sure the
software is always up-to-date.
7. Don’t shop with unfamiliar online retailers. When it comes to online
shopping, only do business with familiar companies. When purchasing a product
from an unfamiliar retailer, do some research to ensure the business is legit and
reputable.
8. Don’t download software from pop-up windows. When you are online, do
not trust pop-up windows that appear and claim your computer is unsafe. If you
click on the link in the pop-up to start the “system scan” or some other programs,
malicious software known as “malware” could damage your operating system.
9. Make sure the website you visit are safe. Before you enter your financial
information on any website, double-check the website’s privacy rules. Also, make
sure the website uses encryption, which is usually symbolized by a lock to the left
of web address which means it is safe and protected against hacked.
10. Donate to known charities only. If you receive a call or an email for
solicitation of charity donations, critically examine it. Some scammers create bogus
charities to steal credit card information.
Financial Scams among Students.
Students can also be susceptible to different financial scams and fraud.
Learning how to manage finances and being aware of financial scams are
skills that every student should master.
The following are the common financial scams that students should
watch out for, and learn to protect one’s identity and finances.
A. Fake scholarships. While it is beneficial for students to apply for as many
scholarships, it is important to become aware of related scams and frauds.
Students should thoroughly check scholarship sources before applying to verify
legitimacy. Never apply for a scholarship that ask for money in return.
B. Diploma mills. There are schools that offer take degrees and diplomas in
exchange for a fee. Check from government education agencies the prospective
school to enroll in if it is government-recognized, legitimate or accredited.
C. Online book scams. While students often go for the best deals on textbooks
online, scammers can use this opportunity to get students’ credit card information.
When buying anything online, be sure to do it on a credible site.
D. Credit Card scams. Oftentimes, credit card companies go to school campuses
to convince students to fill out card applications. Scammers may also grab this
chance to steal students’ information. It is important to visit a local credit union or
bank for credit card application. Also, regularly check the credit card statement and
once there are any unrecognized charges, contact your banking institution
immediately.

Insurance and Taxes

Insurance is a contact (in the form of a policy) between the policyholder
and the insurance company, whereby the company agrees to compensate
for any financial loss from specific insured events. In exchange for the
financial protection offered, policyholder agrees to pay a certain sum of
money, known as premiums to the insurance company. Insurance is the
best form of risk management against uncertain loss.
There are various types of insurance to choose from, such as life
insurance, health insurance , motor insurance, property insurance,
business insurance, etc. Besides, the financial protection derived from
insurance entail tax benefit claim on the paid premiums.
The following are concepts related to insurance and taxes that every
Employer-Sponsored Insurance. If working in a company with 50 or more full-
time employees, the employer is required to provide employee-only insurance that
meets minimum guidelines. Examine the plan offered, but do not pay over 9.66
percent of household income in premiums.
1.
2. Marketplace Plans. Marketplace plans are available based on an area of
residence and income upon meeting minimum coverage requirements.
Marketplace plans come in three tiers: bronze, silver and gold. Generally,
bronze plans offer the least coverage at the highest price.
3.
4. Life insurance. It is a type of insurance that compensates beneficiaries upon
the death of the policyholder. The company will guarantee a payout for the
beneficiaries in exchange of premiums. This compensation is called “death
benefit.”
5. Depending the type of insurance is a type of insurance one may have, these
events can be anything from retirement, to major injuries, to critical illness or
even to death.
6. The following are common reisk categories:
1. Preferred Plus – The policyholder is in excellent health, with normal weight, no
2. Preferred – The policyholder is in excellent health but may have minor issues
on cholesterol or blood pressure but under control.
3. Stardard Plus – The policyholder is in very good health but some factors, like
high blood pressure or being overweight impede a better rating.
4. Standard – Most policyholders belong to this category, as they are deemed to
be healthy and have a normal life expectancy although, they may have a family
history of life-threatening diseases or few minor health issues.
5. Substandard – Those with series health issues, like diabetes or heart disease
are placed on a table rating system, ranked from highest to lowest. On average,
the premiums will be similar to Standard with an additional 25% lower claim on
table ratings.
6. Smokers - Due to an added risk of smoking, the policyholders in this category
are guaranteed to pay more. Aside from health class, age is also a critical factor in
determining premiums. Therefore, older people pay more expensive premiums.
Benefits of Life Insurance
The following are the benefits of life insurance.
1. It pays for medical and funeral costs. Life insurance helps solve the incurred
expenses for medical and funeral services to lessen the grief among family and
relatives for being unprepared.
2. For financial support. Life insurance can become a source of temporary income
during the difficult period of adjusting and coping with the loss of a loved one,
especially if he/she is the breadwinner.
3. For funding various financial goals. Life insurance offers additional benefits
through the form of fund accumulation for specific future financial goals.
4. Acts as a retirement secured conform. Modern life insurance also serves as a tool
that principal holders can use to get in a better financial position in the future.
5. It covers costs incurred from taxes and debt. Life insurance can serve as
protection since the premium can be used to pay for unsettled debts and taxes.
Types of Life Insurance

The table below shows a comparative analysis of different types of life insurance
along characteristics,advantages and disadvantages that may serveas a reference.
Financial Stability
Like anyone else, teacher also to become financially stable if not
today, maybe in the future. Being financially stable means confidence
with the financial situation, worriless paying the bills because of
available funds, debts-free, money savings for future goals and enough
emergency funds.
Financially stability is not about being rich but rather more of a
mindset. It is livingba life without worrying about how tonpay the next
bill, and becoming stress-free about money while focusing energy on the
other parts of life(Silva, 2019).

10 Strategies in Reaching Financial Stability

Just like any goal, getting the finances stable and becoming
financially successful requires the development habits. Babauta (2007)
suggests 10 habits toward financial stability and success.
1. Make savings automagical. Savings should be made a top priority, especially
as an emergency fund and a bill payments from the amount are automatically
transferres from the checking account, like an online savings account.
2. Control your impulsive spending. Control your self from implusive spending
on eating out, shopping and online purchases that may ruin your finances and
budget.
3. Evaluate your expenses and live frugally. Analyze how you spend your
money, see what you can reduce and determine expenses that are necessary and
eliminate the unneccessary.
4. Invest in your future. Start preparing and investing for your future retirement
whike still young in your career field.
5. Keep your family secured. Save for an emergency fund, so that you have
something to spend if anything happens with the family emergently.
6. Eliminate and avoid debt. Eliminate credit cards, personal loans, or other
debts forms as it will not work on you but even pull you down and make you
drowned with obligations that may even resort to surrendering your properties,
jewelry and investment as payment.
7. Use the envelope system. Set aside three amounts in your budget each
payday, withdraw those amounts and put them in three separate envelopes. In
that way, you can easily track how much remains for each of the expenses or if
you already run out of money.
9. Read about personal finances. The more you educate yourself, the better
your finances will be.
10. Look to grow your net worth. Do whatever you can to improve your net
worth, either by reducing your debt, increasing your savings, or increasing your
income, or all of the above.

Signs of Being Financially Stable

Teachers, like any one else, often work to the extent to earn more even
through additional jobs on the side just for their desire for financial
stability.
Rose (2019) present some signs of a financially stable person.
1. You never overdraw your checking account.
2. You don’t lose sleep over finances.
3. You use credit cards for convenience and rewards but never out of
neccessity.
4. You don’t worry about losing your job.
5. You pay your bills ahead of time.
8. You finance your cars over five years or less if you take loans at all.
9. You contribute more to your retirement.
10. You don’t feel guilty when you’re out for special occassions.
11. You can afford to buy the things you really want.
12. Recreational spending doesn’t appeal to you.
13. You’re a natural saver.
14. You’re generous with money when it comes to charities or helping others.
15. You’re confident about your future.
16. Your net worth grows significantly from year to year.
17. You have substantial equity in your home.
18. You consistently live beneath your means.
19. You could survive for months without a paycheck.
20. You feel in control of your finances and never dominated by them.
Integrating Financial Literacy into the Curriculum
Financial education in schools should be part of a collaborative national strategy to
ensure relevance and long-term sustainability. The education system and profession
should be involved in the development of the strategy. In support, Barry (2013)
underscored that financial literacy has a wide repercussion outside the family circle
and more precisely, the school. Hence, administrators and professors need to
develop a curriculum that would provide students insights on having the value of
financial literacy including the effect it can bring.
Moreover, there should be a learning framework, which sets out goals, learning
outcomes, content, pedagogical approaches, resources and evaluation plans. The
content should cover knowledge, skills, attitudes and values. A sustainable source of
funding should be identified at the outset.Financial education should ideally be a
core part of the curriculum. It can be integrated into other subjects like mathematics,
economics, social studies, technology and home economics, values, education and
others. Finacial education can give a range of ‘real-life’ contexts across a range of
subjects.
Teachers should be adequately trained and resourced, made aware of tge
importance of financial literacy and relevant pedagogical methods and they should
recieve continuous support to teach it or integrate in their lesson. More so, there
should be easily accessible, objective, highquality and effective learning ftools and
pedagogical resources available to schools and teachers that are appropriate to the
level of study. Students' progress should also be assessed through various high
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