oo Module 8: Financial Literacy 119 Mod ule 8: FINANCIAL LITERACY LEARNING OUTCOMES - Define financial iteracy ~ Distinguish among financial plan, budgeting, Saving, spending and investing Present ways on how to avoid financial crises and scams : Demonstrate unde and taxes . Describe a financially stable person Determine ways on how to integrate financial literacy in the curriculum + Draw relevant iife lessons and significant Values from personal experiences on ff financial crises and scams . Analyze research abstract on financial literacy and its implications to the teaching- learning process . Make a personal financial plan based on short-term and long-term goals ITERACTIVE PRESENTATION is is an it ive acti d from a TV game eal.or No Deal. This is an interactive activity adapte n , 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. standing of insurance Procedure: y : ey The teacher will choose 10 students who will Prepare different amounts written in 10 folders that will serve as briefcases. 2. During the game, the class will choose a player. i 5 : ‘ ” with background music ile playing the “Deal or No Deal” wit 2 cowie ‘rom 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. Then, the teacher will say, “The banker has an offer’. ; : , fe will be bidding of amount offered by the banker in lieu of a ing the remaining briefcases by the player. . wa briefcase will be opened and find out if the banker's offer % Aetrsd than the amount in the chosen last briefcase. is fion in the class by asking “What will you do a There emu of money”. The teacher will generate if banl answers from the students.120. Mt BULOWG AW Ennancms New Literacies Across THe CURRICUL (Fas CONCEPT EXPLORATION eT ted with issues ang In some instances, teachers are confron er related concems on financial debt, being victimized by feud a teachers scams, both personal and electronic ways. More nexpected debt are drowned. by emergent financial needs and ul sartaeieeland especialy in affcul times, sickness and inevitable circum en calamities. Others do not prepare for ther retirement that ee, ond up highly frustrated. This is the réason why financial | ee been a subject in many faculty development Pere schvate si and even becomes a topic for researches, while many ve 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. 4 The importance of starting financial literacy National surveys show that: yourig’ adults have financial literacy as reflected in their inability financial products and lack of 'Y while still young. the lowest levels of to choose thé right 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 fecent financial crisis, financial litera y cy Is very crucial and t . advantageous jf introduced in the renlnten 1 the very early years as, Preschool years. mM process. and incorporating it into the children to acquire t and skills while building responsible financial behavior ee stage of their education (OECD, 2008), hroughout each Likewise, financial literacy is the Capability of g eI his/her assets, especially. cash more efficiently While He to ee how money works in the real world, lerstandingModule’8; Financial Literacy: 124 Financial Plan Teachers n formulate their ce f2,h3¥° @ deeper understanding and capacity to the moment they fea plan. It is wise to consider starting to plan bonuses and ex, fand in their first salary, including the incentives, Kagan ies ra remunerations that they receive. statement of on Wh soines @ financial plan as a comprehensive being and detaiiey duals long-term objectives for security. and well objectives. It bogs 9S and investing strategy for achieving the current financial ans, With @ thorough evaluation of the individual's nancial 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 ‘ash, 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 fisk tolerance profile; and (4) Tax reduction strategy for minimizing taxes on persohal income allowed by the tax code. (https:/wwm.investopedia.com/terms/tfinancial_plan.asp) “Five Financial Improvement Strategies it ji |e view and handle money. i Financial literacy shapes the way peopl ) “The following are, financial improvements suggested by Investopedia “a a joumey to financial literacy. ee ently your starting point. Calculating the net worth is pore oer Nay 0 determine both current financial status and the loess over time to avoid financial trouble by spending too orth on wants and nothing enough for the needs. ; wir priorities. Making a list of rated needs and wants _ 2 Set your re financial priorities. Neods are things one must heh aie to survive (i.e. food, shelter, clothing, healthcare pee ition); while wants are things one would like to Ant. but are not necessary for survival.| 122 Buvoie ano Exancive New Lrenacies Across He CuaricuLun 3. Document your Spending. One of the best ways " ene out ash flow or what comes in and what goes out is cor budget or a personal spending plan. A budget lists down ay 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 peopig 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 [oved one that may lead to an unplanned retirement. Therefore, knowing more about retirement options is an essential Part of Securing financial future. i , 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, q A. Time horizon. It indicates the time when the money will be Needed. To note, the longer the time horizon, the more tisky (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 tisk averse); while others are. more willing to take the chance of a large | Possibility of a large gain (they are time horizon can affect risk tolerance, C. Liquidity needs, Liquidity refers to how quickly an investment can be conyerted into cash (or the equivalent Of cash). The liquidity needs Usually affect the type of chosen investment to considering any investment, think terms of three key investment goals: 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 i investment income and can be spent or reinvested; and (3) Stability, or known as capital Preservation ‘or Protection of principal. about what it offers in (1) Growth (also known ‘iit iin ait a: ¢8 —— An in Module 8: Financial Literacy 123 An investme; on increasing te oa focuses on stability concentrates Iéss ensure that it nu@u® of investment and more on trying Needed (httosyzang "(OSS Value and can be taken when investment-goals), lexscore.com/eamingcenter/setting-financial-and pudget and Budgeting A budget is aa specified future pened ernton of revenue and expenses over @ meuated On a pores, rete and is usualy compiled and ro- evividual oF business nena, Budgets can be made for a variety of and spends mone #, Needs or just about anything else that_ makes a ing @. plan te ee getns. on the other hand, s the process of one to determine in e ore noney. Greaing this spending plan allows ; ‘whether i todo the things he/she needs er kes toda eve enough money Thus, budgeting ensures t ! z s 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. Sot clear priorities and the decisions become easier to make by identifying wisely those that are really needed or just wanted. Design your budget. Make sure to avold spending more than what is eared. Balance budget to accommodate everything needed to De paid for. Step 5: Put your plan into action. Match spending with income time. Decide ahead of time what you will use each 7eNon-reliance to credit for the living expenses ct one from debt. = i . asonal expenses. Sel money aside to pay Step 6: Plan fr nod expenses s0 {0 avoid going into cob Step 7: took ahead. Having a stable budget can take a month retwo so, ask for help if things are not getting well. Step 4: ae serve as a financial wish list, a spending plan is a if budget goals Sa reality. Tur them into an action plan. The way to make those Wt etratagies in eatin ‘and prioritizing budget goals lowing are P' and spending plan:9124 BuLoine ano Ennancrns New Literacies Across THE CURRICULUM 1. 2 budget goals requires Start by listing your goals. Set org dreams with the forecasting and ‘discussing future needs family. Divide your goals according t meet each goal ie | Classify your budget goals into three brea ire me goals (less than a year), medium-term goals aan years), and. long-term goals (more than five year), eer goals are usually the immediate needs and wan a aia ® term goals are things that you and your family want to ax a ie during the next five years; and long-term goals extend well into the future, such as planning for retirement. Estimate the cost of each goal and find out how much it tosts. 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. : 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. 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 eacit period to meet all the goals. 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, . ‘Create a schedule for meeting your goals. It is important to’ lay down all, thegoals” 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://wwwflexscore.com/learning: prioritizing-your-budget-goals) 10. how long it will take to jcenter/the-spending-plan-setting-and- 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 eam 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? 2. How much money do you expect 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 ji +t i raaaney In the long-term? (Risk 4. What types of investment interest you (Investment Type) (Time Horizon) your investment to earnWw Module 8: Financial Literacy 125 savings * In order to et aside and put it foe Of debt, it is important to set some money wil l80 help in buying Wi9S account on a regular basis. Savings rowing. 9 things that are needed or wanted without bol 9. eed Emergency sg, money for omergern N95 Fund. Start as early, seting aside a lite an income tax re Fe Savings fund, If you receive a bonus from work, them as an emergency fnomines from additional or side jobs, use 10 Reasons Why Save Money With credit so eas) js important to save know. 1. To become finan is not having to d asid 'y to get, here are ten practical reasons why it Money that everyone, including teachers, must sah independent. Financial independence lepend on receiving a certain pay but setting * @ aN amount to have savings that can be tailed on, . To save on evérything you buy. With savings, you can buy things when they are on sale ant can Paka titer spending choices without being compromised on credit card interest charges. e 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. E ‘ 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, od life. Putting aside some money to spend a ean reed, ven bring about quality and worry-free life at all times.126 BULDING AND EnnaNcine New Literacies Across THe CURRICULUM Common Financial Scams to Avoid a nsltsccherde Financial fraud can happen to anyone, including the teac 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 pul data from your card when you swipe it. Before you use an ATM or swipe your card, look for suspicious devices attached to the card reader. that may be E, Identity Theft. Depending on the amount of i i scammer is able to obtain, identity theft may infor rat unauthorized charges on a debit or credit card, If Rammer ecurity num it and other persona information, they may bo abe a ae accounts in your name without your knowledge, Be [ of. an information you share and with whom, and always shred sensitive information before disposing it, ‘ eeModule &: Financial Literacy 127 By taking re ju can minimise het Measures and being aware of scams, banking accounts ej'Sk® Of fraud. Monitoring your online or mobile quickly. htpsAmmy. rc, 2" also help you see fraudulent charges acovryeommon-tnanca scam oan ane HaraninOiesier 10 Tips to Avoid Com: mon Fi Every year, fraud inancial Scams victims in trouble and d Cases are getting worse, leaving countless ir langer through data breaches, identity theft and line scams. oaeters an eae nately, new and improved technology only gives fancial data fron aking it easier than ever for scam artists to nab hoe unsuspecting consumers (Bell, 2019). cage nae Money to a stranger. Although it is one of the ti met scams, there are still consumers who fall for this ip-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 a 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 website that asks for your Social Security number, ignore it. 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 2 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 r computer is unsafe. If you click on the link in the pop-up oe rt the “system scan” or some other programs, malicious uate known as “malware” could damage your operating - system.<9 ‘ 928. BULONG AND Entancina New Liveracies Across He Cureicutum 8. Make sure the websites you visit are safe. Before yoy | 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 the web address which means it is safe and protected agains, hackers, 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. (httos:/www.investopedia. com/articles/personal-finance/041515/10-tips-avoig. common-) 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 common financial scams that students should watch out for, and Jearn 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 chéck scholarship sources before applying to verify legitimacy. Never apply for a scholarship that asks for money in return. B. Diploma mills. There are. schools that offer fake 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 oma 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. Chtpsiwewmadt.com/resourcesffinancial-scam-safety) Insurance and Taxes Insurance is a contract (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ee cee Module 8: Financial Literacy 129 acertain sum of 1 Insurance is the best 45 now" 28 Premiums to the insurance company. ‘here ate various ™ of risk management against uncertain loss. insurance, health ae Of insurance to choose from, such as life pusiness insurance, etc, bellied motor insurance, property insurance, insurance entails tax boner sides, the financial protection derived from The following are claim on the paid premiums. teacher should know. iMoee related to insurance and taxes that every recaly examine mer ee onever_helshe should carefully analyze and 1. ingioper, before pursuing any deal with them. * with paioh Rane bee Insurance. If working in a company ceuiede ek jull-ime employees, the employer is required to Stanin’ oie insurance that meets minimum guidelines. 1e plan offered, but do not pay over 9.66 percent of household income in premiums. 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 lowest premiums, while go/d plans provide the most coverage at the highest price. Life. insurance. Life insurance 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.” “Depending on the type of insurance one may have, these events can be anything from retirement, to major injuries, to critical illness or even to death. * The following are common risk categories: 4. Preferred Plus —The' policyholder is in excellent health, with normal weight, no history of smoking, chronic illnesses, or family history of any life-threatening disease. 2. Preferred — The policyholder is in excellent health but may F have minor issues on cholesterol or blood pressure but under control. id Plus - The policyholder is in very good health but t SE ite like high blood. pressure or being overweight impede a better ra ders belong tots category, as they _ Most policyholders belong to this c I, $ egret ot PReathy and have @ normal life expectancy eitnough they may have a family history of life-threatening Giseases or few minor health Issues. : bs! tandard ~ Those with serious health issues, like 8. Substand@re + disease are placed on a table rating system, sdlabet% mm highest to lowest. ‘On average, the premiums will reno oto Standard with an ‘additional 25% lower claim on table ratings.OS — — — —x———<—_ ae 130 Burowa avo Ensanono New Lirenacis Acnoss THe CURRULUM 6. Smokers — Due to an added risk of smoking, the policyholders this category are guaranteed to pay more. Aside from health clay age is also a critical factor in determining premiums. Therefo, 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 sob the incurred expenses for medical and funeral services to less, the grief among family and relatives for being unprepared. 2. For financial support. Life insurance can become a source temporary income during the difficult period of adjusting ar coping with the loss of a loved one, especially: if he/she is tt breadwinner. 3. For funding various financial goals. Life insurance offe additional benefits through: the form of fund accumulation f ‘specific future financial goals. 4. Acts as a retirement secured conform. Modern life insuranc also serves as a tool that principal holders can use to get in better financial position in the future. 5. It covers costs incurred from taxes and debt. Life insurance ca serve as protection since the premium.can. be used to pay fc unsettled debts and taxes. i Types of Life insurance, The table below shows a comparative analysis of different types of lif insurance along characteristics, advantages and disadvantages that may serv as a reference. ~ Characteristic Disadvantage 1. Endowment | It grants a lump sum after | It allows for saving up for _| itrequires higher 2 Fetes oe a ‘specific purposes. premiums than policy owneris required | ySyrracgoce,"otums freee to pay thé premium fora Z ° predetermined number of | It offers some form of —_ it ig not the best years or until a specific | insurance coverage, option for those age is reached, looking at full life protection. This the simplest form of. | It entails low premium fife insurance to obtain, | requirements, i ee ve beet ‘of which on ee Itis a strong option for _| oultlives the term beneficiaries in policyholders who need _| period set. with the benefit insurance but cannot afford whole life or Premium usually endowment, gets higher upon Itis easy to understang, _| "enewal of terms.