MODULE 8: FINANCIAL LITERACY

PRIOR LEARNING WORKSHEET:

This is a pre-test of your understanding of the concepts and principles that are covered in this
module. Based on your prior learning, do the following learning tasks:

Define Financial Literacy.

Financial literacy is the ability to understand and effectively use various financial skills, including
personal financial management, budgeting, and investing. Financial literacy is the foundation of
your relationship with money, and it is a lifelong journey of learning. The earlier you start, the
better off you will be because education is the key to success when it comes to money.
Differentiate budgeting, saving, spending and investing.

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

time and is utilized by governments, businesses, and individuals. A budget is basically a
financial plan for a defined period, normally a year that is known to greatly enhance the
success of any financial undertaking.
 Saving is the portion of income not spent on current expenditures. In other words, it is
the money set aside for future use and not spent immediately.
 Spending includes all types of expenses an individual incurs related to buying goods and
services or anything that is consumable
 Investing is the process of buying assets that increase in value over time and provide
returns in the form of income payments or capital gains. In a larger sense, investing can
also be about spending time or money to improve your own life or the lives of others.
But in the world of finance, investing is the purchase of securities, real estate and other
items of value in the pursuit of capital gains or income.

POST SELF-GUIDED LEARNING WORKSHEET

Now that you are finished studying the material above, do the following learning tasks:
How do you understand insurance and what type do you want to avail of?

Insurance is a way to manage your risk. When you buy insurance, you purchase protection against
When can we say that a person is financial literate?
unexpected financial losses. The insurance company pays you or someone you choose if something
bad happens to you.
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Financially literate people are able to organize the money they have to meet future goals you - regardless of
when you retire and you are no longer insured by your employer.
what these goals may be - through effective money management .

What are ways of avoiding financial scams?

To avoid financial scams you should not use difficult passwords, never wire money to strangers, never click
hyperlinks in email, don’t give up out financial information, never give your social security number, don’t download
software from pop-up windows and make sure the websites you visit are safe. Other ways to avoid scams you must
install Antivirus and Spyware protection, don’t shop with unfamiliar online retailers, and donate to known charities
 REFLECTION WORKSHEET
Directions: Fill-in the following coins with concepts on financial literacy related to budgeting,
spending, investing and saving. Then, cite the reasons why we need to have them and also ways
in applying or practicing them. You may write explanations on the spaces below the coins inside
the box.

Budgeting Investing Spending Saving

WHY WHY WHY WHY

HOW HOW HOW HOW

EXPLANATION
Budgeting
A budget helps create financial stability. By tracking expenses and following a plan, a budget makes it
easier to pay bills on time, build an emergency fund, and save for major expenses such as a car or home.
Overall, a budget puts a person on stronger financial footing for both the day-to-day and the long term.
To practice or apply budgeting, you should make a list of your values, set goals, determine your income,
determine your expenses, create your budget, be careful with your budget card and be sure to review
your budget regularly.
Investing
Investing ensures present and future financial security. It allows you to grow your wealth and at the same
time generate inflation-beating returns. You also benefit from the power of compounding. There are
seven steps on how to practicing investing. First is begin by defining your destination, then plan your
investment journey accordingly, know what works in the market, know your investment strategies, know
your friends and enemies, find right investing path, be in it for the long term and be willing to learn.
 Spending
Using money to buy the things that make your life easier and bring convenience. Money to support a
cause you care about. Money to build wealth and do more in the future. If you want to control your
spending, set a weekly allowance, take it out in cash and leave the cards at home. In order to practice
better spending habits, you should set a monthly budget, reduce credit card spending, reduce impulse
buying, take advantages of better pricing, think of your future and focus on goals.
Saving
Saving money is important because it allows you to build wealth. Wealth, in turn, helps you make more
money. Saving provides a cushion for emergencies that come up with regularity. And finally, saving
money is one of the factors that determines how wealthy you are or will become. To practice successful
saving in the future you must keep track of your spending, separate wants to needs, avoid using credit to
pay your bills, save regularly, be careful about spending a significant amount of money on periodic
purchases, try lowering your energy bill, and cut or downgrade your services.

RESEARCH ANALYSIS WORKSHEET

Direction: Analyze the following research abstract and cite its implications on teachinglearning. You may
download the full paper of his research on the website given below.

Research Title: Financial Literacy and Financial Planning among Teachers of Higher Education: A Study
on Critical Factors of Select Variables/Authors: Surendar and Subramanya Sarya (2018)

Question 1: What are the critical factors in personal financial planning among higher
education teachers?
Study found that the majority of teachers of higher education have a high level of financial
literacy, aware of various aspects of personal financial planning and able to plan on their own
irrespective their subject. It found that major factors such as Retirement Planning, Tax Planning
& Control, Financial planning, Financial Capacity & Inflation are critical factors in personal
financial planning.
Question 2: What is the impact of each of the factors of financial literacy and planning among
teachers?
Teachers are one of the most influential people in our society. By having financial literacy and
managing personal finance properly, they can become a role model to their students and help
them to develop as fiscally and socially responsible citizens. Unfortunately, many teachers do
not know how to manage their finances. There is a belief that teachers of technical education
do not have sufficient financial literacy levels as compared to teachers of non-technical
education. In this connection, an attempt is made to find out the levels of knowledge about
financial literacy, personal financial planning among the technical and non-technical higher
education teachers. This study is conducted as a sample study in historically reputed district i.e.,
Warangal of Telangana State with the help of structured schedule. The study found that the
level of financial literacy among the teachers of higher education is satisfactory. Further, no
significant difference is found in the perception of Technical and Non-Technical teachers
towards the financial literacy and financial planning.

CURRICULUM APPLICATION TASK

Direction: Make a personal financial plan based on short-term and long-term goals. Use the template
sample provided below.

Short Target Target SAVINGS PLAN

Term Cost Date
Goal Value Month Month Month Mont Month Total
1 2 3 h4 5 Savings
Loan/ 3,500 March 3,500 3,500 3,500 3,500 3,500 17,500
credit card
payment
Travel 2,000 April 2,000 2,000 2,000 2,000 2,000 10,000
Household 2,000 June 2,000 2,000 2,000 2,000 2,000 10,000
appliances
Insurance 5,000 July 5,000 5,000 5,000 5,000 5,000 25,000
payments
Rent or 3,000 August 3,000 3,000 3,000 3,000 3,000 15,000
mortgage
payments
Long Target Target Year 1 Year 2 Year 3 Year 4 Year 5 Total
Term Cost Date Savings
Goal Value

Paying off 16,000 January 16,000 16,000 16,000 16,00 16,000 80,000
mortgage 0
College 30,000 March 30,000 30,000 30,000 30,00 30,000 150,00
funds 0 0
Starting a 20,000 April 20,000 20,000 20,000 20,00 20,000 100,00
business 0 0
Retiremen 100,00 July 100,00 100,00 100,00 0,000 100,00 500,00
t savings 0 0 0 0 0 0
Purchasing 60,000 Septembe 60,000 60,000 60,000 60,00 60,000 300,00
a home r 0 0

BUDGET PLAN
Outstanding Cash Income: 115,000
EXPENSES AMOUNT
1. Electric Bill 10,000
2. Water Bill 5,000
3. Rent or mortgage payments 30,000
4. Insurance payments 15,000
5. Loan/credit card payment 20,000
6. Household appliances 15,000
Total 95,000
Remaining cash 30,000

BUDGET PLAN
Outstanding Cash Income: 115,000

Rank BUDGET ITEMS AMOUNT

1 General Expenses, Payables and House Share 30,000
2 Allowance 10,000
3 Bank Savings 15,000
4 Emergency Fund (Cash available anytime) 10,000
5 Insurance 15,000
6 Investment (i.e. Cooperatives, shares, business, etc.) 30,000
TOTAL 110,000