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Financial Literacy

The document discusses financial literacy, defining it as the knowledge and skills needed to make informed financial decisions that enhance individual and societal well-being. It highlights the benefits of financial literacy, including improved money management, reduced debt levels, better credit scores, and wise investing. Additionally, it outlines the scope of financial literacy, covering personal finance management, debt management, investing, retirement planning, and tax planning.

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jmiloulaut
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4 views

Financial Literacy

The document discusses financial literacy, defining it as the knowledge and skills needed to make informed financial decisions that enhance individual and societal well-being. It highlights the benefits of financial literacy, including improved money management, reduced debt levels, better credit scores, and wise investing. Additionally, it outlines the scope of financial literacy, covering personal finance management, debt management, investing, retirement planning, and tax planning.

Uploaded by

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

Literacy
Personal Finance

Laut, J.
Deramas, E.
Belda, M.
Macapugay, A. Financial
BSBA - FM2 Literacy
DEFINITION
Organization for Bangko Sentral ng Metro Bank
Economic Cooperation Pilipinas
and Development'
The Organization for Economic Financial literacy allows a Financial literacy is being
Cooperation and Development's person to make better and able to manage your money
Programme for International more informed financial wisely. Financial literacy
Student Assessment (PISA) in decisions (e.g., savings and involves knowing and using
2018 published a definition in investment, retirement the basic concepts of
two parts. The first part refers to planning). Consequently, financial literacy. As
kinds of thinking and behaviour, these decisions contribute mentioned above, these
while the second part refers to to improving the overall include saving, investing,
the purposes for developing the welfare of individuals and budgeting, and borrowing.
particular literacy. "Financial their respective households.
literacy is the knowledge and
understanding of financial
concepts and risks, and the
skills, motivation and confidence
to apply such knowledge and
understanding in order to make
effective decisions across a Financial
range of financial contexts, to Literacy
improve the financial well-being
of individuals and society, and to
enable participation in economic
Financial literacy is a stepping
stone toward achieving
financial independence.
Hopefully, its benefits will
encourage individuals to give
it the attention it deserves.
The following are some of the Financial
Literacy
benefits of financial literacy.
B E N E F I T S / I M P O RTA N C E

Improved Money Management Skills


Knowing when to save or splurge takes a lot of discipline, self-
control, and financial knowledge. With improved money
management skills, you can make informed decisions about
your finances and better control your spending.
You can budget your money, track spending, and understand
the importance of saving money for future goals Financial
Literacy
B E N E F I T S / I M P O RTA N C E

Reduced Debt Levels


Debt management is crucial because it enables you to know
how to use credit wisely.
With financial literacy, you can practice using credit
responsibly and taking out loans only when necessary. You
only spend what you can afford to pay back and make
payments on time. Financial
Literacy
B E N E F I T S / I M P O RTA N C E

Improved Credit Score

Credit scores are typically influenced by factors such as credit utilization,

payment history, and length of credit history. Financial literacy can help you

improve your credit score by teaching you how to use credit responsibly and

Increased
make timelySavings
payments.

For many people, saving is not a priority because they do not understand its

importance. Financial literacy can help you see the value in saving money for

emergencies, retirement, and other long-term goals.


B E N E F I T S / I M P O RTA N C E

Better Financial Decisions

You can create a balance between present living conditions and future

financial goals. You weigh the pros and cons in both the short-term and long-

term perspective in making financial decisions.

Wise Investing

When you understand matters like risk and return, you are able to make

informed investment decisions. This can help you grow your wealth over time

and reach your financial goals sooner. Financial


Literacy
B E N E F I T S / I M P O RTA N C E

Structured Budget

Financial literacy teaches you how to create and stick to a structured

budget to help track spending, set financial goals, and make better

decisions about where to allocate your money.

Creating a budget can be daunting, but many resources are available

to help you get started. You can find budget templates online or in

personal finance books and magazines. Financial


Literacy
B E N E F I T S / I M P O RTA N C E

Reduces Financial Stress


You are less stressed about money because you know how to
manage it effectively. Thus, you can lead a higher quality of
life.

Financial
Literacy
The scope of financial literacy
is extensive such as budget
education, understanding
available banking tools, and
economic concepts. It
includes but is not limited to
the following: Financial
Literacy
SCOPE

Understanding Personal Finances

A clear picture of your current financial situation entails knowing how

much money you have, your assets, and your liabilities. It also

involves knowing if you are spending your money in a way that

Setting Financial
meets your financialGoals
goals.

Determine what you want your money to perform for you, whether

saving for a house down payment or being able to have an early


Financial
Literacy
retirement.
SCOPE

Managing Debt
Not all debts are bad. A general rule of thumb is that if debt
generates income, increases your net worth, or has future
value, it is considered good debt. However, when debt
becomes too much, that is when it becomes a burden.
If you have debt, learn how to manage it properly by creating
a budget and payment plan. Financial
Literacy
SCOPE

Investing
When you understand financial concepts like the time value of
money, you realize that it is never too early to start investing.
Investing allows you to grow your money by understanding
the risks and rewards associated with each investment option
before engaging in one.
Financial
Literacy
SCOPE

Retirement Planning
Retirement is one of the most important financial goals that
you will ever set. The earlier you start, the more time your
money has to grow.
With the proper understanding of finances, you will be able to
gauge how much money you will need to save to retire
Financial
comfortably. It will also help you decide which retirement
Literacy

accounts to get that will best fit your needs.


SCOPE

Tax Planning
Taxes are inevitable but knowing their ins and outs can aid in
understanding the tax implications of different financial
decisions. It also teaches you how to maximize deductions
and minimize tax liability.

Financial
Literacy
KEY COMPONENTS
Thank you!
Personal Finance

Laut, J.
Deramas, E.
Belda, M.
Macapugay, A. Financial
BSBA - FM2 Literacy

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