Benlac - Layosa

Name of reporter: Daisy Rose G.
Layosa
BEED -1A
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 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 a deeper understanding and capacity to formulate their own financial plan.
It is wise to consider starting to plan 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- wing 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 is 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 al 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 less on increasing the value of
investment and more on trying to ensure that it never loses value and can be taken when
needed (https://www.flexscore.com/leamingcenter/setting-financial-and (investment-
goals)

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Name of reporter: Daisy Rose G.

Five Financial Improvement Strategies

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