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Module 4 Lesson 4.3

don't!

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39 views

Module 4 Lesson 4.3

don't!

Uploaded by

Angelou Montebon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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DEPARTMENT OF TEACHER

EDUCATION
Visca, Baybay City, Leyte, PHILIPPINES
Telefax: 563-7527
Email: [email protected]
Website: www.vsu.edu.ph

Module 4: Financial Literacy

Lesson 4.3: Savings and Investments

Lesson Summary
Besides anticipating and monitoring one's expenses concerning one's income,
another helpful skill to be financially literate is saving money. Commonly associated with
thriftiness, saving money usually allows one to cut expenses and to have an "emergency" or
"back-up" fund in unexpected situations, as well as in providing.

Learning Outcomes
After the lesson, you are expected to:
1. Discuss the importance of saving.
2. Implement ways to save.

Motivation Question

If you won P80M right now, what will you do with it? Would
you think it is going to be enough to help you the entire life?

Discussion
WHY ONE SHOULD SAVE?
DEPARTMENT OF TEACHER
EDUCATION
Visca, Baybay City, Leyte, PHILIPPINES
Telefax: 563-7527
Email: [email protected]
Website: www.vsu.edu.ph

Here are ten reasons why one should save:


1. Become Financially Independent
The reference point for being productive is dependent mainly on whom one is talking.
Nonetheless, the one thing that the idea of "being wealthy or poorer" means for most people
is getting financial freedom and savings to count on. Calling one's shots, economically
speaking, means having the freedom to make decisions without earning a paycheck.
It could mean taking a break whenever one wants, leaving work and going back to
school to switch jobs, starting one's own company or investing in someone else's startup,
supporting members of the family, taking a low paid job that is more emotionally rewarding
than financially advantageous, or a major one this days-retiring when one wants to rather
than continuing to work because one has an obligation.
2. Save 50 percent on everything one buys + 24 percent on food.
If one regularly charges all of one's payments on one's credit card, then one does not
have to pay off one's loans or credit card in full every month, one is likely to pay at least 50
percent more for all of one's purchases due to additional interest charges. When one relies
on one's credit cards to afford one's lifestyle, break one's extravagant spending habit by
saving one's transactions ahead of schedule. With earnings, one can purchase items when
they are on sale and take the time to make better financial decisions. Those with savings
can also store food when they are on a discount (things that are non-perishable or stored in
a freezer). One author suggests that people who do this may skip one grocery store a month
and save 24 percent a year on their food budget.
3. Buy a Home
The bank does not lend one money for a house unless one has a down payment, and
one is not allowed to borrow a deposit. One has to save every money or get someone to
give it to one— and not borrow it to oneself. One's payment in advance has to be it would
have to be at five percent of the house purchase price, and then the bank will accept one is
borrowing the remaining 95 percent. There are all kinds of other charges that one needs to
pay when one purchases a home, and one will need an extra 5% just for those expenses.
Savings is what opens the door to purchasing a property.
4. Buy a Car
If one wants or needs a brand-new car, one will need a deposit to get a car loan at a
low-interest rate. One might, of course, "borrow" the money from your credit card, but at 20 +
percent, how will you get you back on track? Zero percent financing is limited for wonderful
clients, so a car loan is bound to cost one something— and it could be much money. The
wisest choice one can do is end up saving as much down payment as one can buy and then
take into account one's choices. Perhaps buying a quality used car instead of a new one will
be what it takes to get the car one desire.
5. Get Out of Debt
If one would like to get out of loans, one has to save some cash. It sounds sad, isn't
it? Nevertheless, credit cards will not get paid off if one has to keep using them for each
"emergency" that did come through again. Even if one is a terrific planner, statistics show
that half of us experience at least one unexpected expense every year (and half of that will
be unexpected car problems). Before one start paying off one's credit cards aggressively,
one may as well save up a cash reserve. Instead, when unforeseen things come up, one can
DEPARTMENT OF TEACHER
EDUCATION
Visca, Baybay City, Leyte, PHILIPPINES
Telefax: 563-7527
Email: [email protected]
Website: www.vsu.edu.ph

pay them out of their savings fund instead of placing them on one's credit cards. Sustaining
a "reserve fund" will also help you note if your spending is getting out of control.
6. Annual Expenses
When one wants to have a healthy, reasonably stress-free financial life, one needs to
save on monthly costs. It may include cash for gifts, holidays, maintenance of vehicles,
minor house maintenance, fixing of appliances, income tax, and possibly real estate taxes.
The best way to treat all forms of costs is to plan them ahead of time.
7. Unforeseen Expenses
What is one going to do if one's car needs some repair works? Has one got enough
cash? What if one's house needs some maintenance or discovered that one is living in a
leaky building? One likely will not always depend on the bank to lend one the money for all
this stuff. It is so much smarter to predict the very worst-case scenario and save some
money.
8. Emergencies
Much as we hope there will not be an emergency, we all understand that they will do.
A family member may have a health condition, one may need to perform an emergency trip,
one may have a car wreck or breakdown, extreme weather may flood one's basement or split
one's pipes, or one may have to fly to a loved one's memorial service. Every such emergency
may be costly, and we all know that we are likely to experience some sort of emergency from
periodically. Furthermore, why not be prepared instead of possibly being another victim in a
crisis.
9. One could lose one's job, or one could get hurt.
In high times, everyone feels their job is safe, but in hard times, many begin to
understand that bad things can happen to anyone. One might suddenly lose one's job, one's
business might get dry, one might get hurt physically and mentally, or one will get too proud
to ask for help.
Anything can happen. Does one have sufficient earnings to tie one up, or are one
going to live on loans? Drowning in debt during a time like this may make a bad situation
worse quickly. Minimum payments will be higher and higher until they are unsustainable, and
credit limits will no longer allow that to happen. Once one gets some money, which used to
be enough, does not get one through because one has got all these new debt payments to
make monthly. Now that one needs more income than before because one will have to pay
off these debts and finally work to get them paid.

10. To Have a Good Life


There are significant emotional, psychological, and physical implications of living
stressful work, from hand to mouth, paying a check to pay a check. Individuals who do not
plan for their future seem to run from "disaster" to "disaster."
There is a little-known truth that joy can be the product of becoming orderly. To be
organized does not make all of one happy on one's own, but it can help tremendously. There
is so much of one's future that one does not have leverage over it, and setting aside any
money to invest when one needs it is only planning and taking care of one's future and
DEPARTMENT OF TEACHER
EDUCATION
Visca, Baybay City, Leyte, PHILIPPINES
Telefax: 563-7527
Email: [email protected]
Website: www.vsu.edu.ph

personal finances. One has got nothing to lose by saving-and only a happy and prosperous
future to obtain.
Start One's Emergency Savings Fund Right Away
Begin by establishing away a little money for each paycheck until one has an
emergency contingency budget.
If one obtains a work bonus or income tax refund, use it to get one started or add to what
one has allocated. As life is going to happen, and one needs to dip into one's fund, start
rebuilding back. It will take a bit of work, but it is a routine worth taking in.

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