GROUP 5- FINANCIAL LITERACY Flashcards
It is the ability to make informed judgments and make effective decisions regarding the use and management of money.
financial literacy
cnu sabi nito
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.
akdag (2013)
A comprehensive statement of an individual’s long-term objectives fore security and well-being and detailed savings and investing strategy for achieving the objectives (Kagan, 2019)
financial plan
what are the steps in creating a financial plan
(cdc)
- calculating net worth
- determining cash flow
- considering priorities
this includes (1) assets that entail one’s cash,
property, investments, savings, jewelry and wealth: and (2) liabilities that include credit card debt, loans and mortgage.
calculating net worth
entail one’s cash, property, investments, savings, jewelry and wealth
assets
include credit card debt, loans and mortgage.
liabilities
what is the formula for current net worth
total assets - total liabilities
this is knowing where the money
goes every month.
determining cash flow
this is a person’s clearly defined goals that include:
(1) Retirement strategy;
(2) Comprehensive risk management plan;
(3) Long-term investment plan;
(4) Task reduction strategy.
considering the priorities
what are the goals that are included in one’e priorities in a financial plan
(rclt)
- retirement strategy
- comprehensive risk management plan
- long-term investment plan
- task reduction strategy
what are the key areas in setting investment goals?
(trli)
- time horizon
- risk tolerance
- liquidity needs
- investment goals: growth, income, and stability
Indicates the time when the money will be needed.
time horizon
Investors may let go of the possibility of a large gain if they knew there was also a possibility of a large loss (risk averse); while others are more willing to take the chance of a large loss if there were also a possibility of large gain (risk seekers).
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
risk averse
it is when investors are more willing to take the chance of a large loss if there were also a
possibility of large gain
risk seekers
It refers to how quickly an investment can be converted into cash.
liquidity needs
When considering any investment, think about what it offers in terms of three key investment goals: (1) Growth or capital appreciation; (2) Income; (3) Stability or capital preservation or protection of principal.
investment goals: growth, income, and stability
involves predicting income and expenditures
for a defined future timeframe and is typically
compiled and reassessed regularly.
budget
the process of creating a plan to manage
and allocate financial resources. It involves estimating income, setting financial goals, and outlining a spending plan to meet those goals.
budgeting
what are teh 7 steps to good budgeting
(sisd ppl)
- set realistic goals
- identify income and expenses
- separate needs from wants
- design your budget
- put your plan into action
- plan for seasonal expenses
- look ahead
what are the 3 importance of budgeting
(feg)
- financial discipline
- goal setting
- emergency preparedness
what are some considerations in budgetting
(vgd)
- digital tools
- variable income
- global perspective
refers to the use of money to purchase
goods and services. It involves making conscious choices about how to allocate financial resources to meet various needs and wants.
spending
what are the practical strategies in setting budget goals and spending plan
(lde pcpc)
- list your goals
- divide your goals according to how long it will take to achieve it
- estimate the cost of each goal and find out how much it actually costs
- project future cost
- calculate how much you need to set aside each period
- prioritize your goals
- create a schedule for meeting your goals
what are the 3 importance of setting up spending plan
(leq)
- lifestyle maintenance
- economic stimulus
- quality of life
what are some considerations in making spending plan
(ose)
- online purchases
- subscription economy
- environmental impact
this means to allocate money or resources
with the expectation of generating a return or
profit over time, often through the purchase of assets such as stocks, bonds, or real estate. It involves a strategic commitment to achieve
long-term financial growth and wealth
accumulation.
investment
what are the 4 aspects to consider when investing money
(teri)
- time horizon
- expectation of return
- risk tolerance
- investment type
what are the 3 importance of investment
(wir)
- wealth accumulation
- retirement planning
- inflation hedge
what are some considerations in making investments
- digital assets
- diversification
a financial institution that is licensed to accept checking and savings deposits and make loans.
bank
an industry that handles cash, credit, and
other financial transactions, it provides a safe
place to store extra cash and credit.
banking
regulates all banks in the Philippines. It
shall oversee the payment and settlement
systems in the Philippines and to maintain
price stability conducive to a balanced and
sustainable growth of the economy and
employment.
bangko sentral ng pilipinas or central bank
what are basic bank services
(csl)
- checking accounts
- saving accounts
- loan services
are deposits used by consumers and businesses to pay their bills and make cash
withdrawals. They pay little or no interest and
typically come with monthly fees, usage fees, or both.
checking accounts
these pay interest to the depositor. Depending on how long account holders hope to keep their money in the bank, they can open a regular savings account that pays a little interest or a certificate of deposit (CD) that pays a little more interest. The CDs can earn interest for as little as a few months or as long as five years or more.
savings account
Banks make loans to consumers and businesses. The cash that is deposited by their customers is lent out to other customers at a higher rate of interest than the depositor is paid. This is the process that keeps the economy humming and the bank running.
loan services
- the amount of money left over after spending and other obligations are deducted from earnings.
- represent money that is otherwise idle and not being put at risk with investments or spent on consumption.
savings
an interest-bearing deposit account held at a bank or other financial institution. Though these accounts typically pay only a modest
interest rate, their safety and reliability make them a good option for parking cash that you want available for short-term needs.
savings account
what are the 10 reasons why save money
- to become financially independent
- to save on everything you buy
- to buy a home or a car
- to get out of debt
- to augment annual expenses
- to settle unforseen expenses
- to respond to emergencies
- to mitigate losing your job or getting hurt
- to have a good life
on the benefits of saving money
Financial independence is not having to
depend on receiving a certain pay but
setting aside an amount to have savings
that can be relied on.
to become financially independent
on the benefits of saving
With savings, you can buy things when
they are on sale and can make better
spending choices without being
compromised on credit card interest
charges
to save on everything you buy
on the benefits of saving
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.
to buy a home or a car
on the benefits of saving
To get out of debt, you have to have some money saved. Sounds ironic, doesn’t it? However, the credit cards are never going to get paid off if you have to keep using them for every “emergency” that comes along. If you want to get out of debt, you have to save money.
to get out of debt
on the benefits of saving
In order to attain a good, stress-free financial life, there is a need, to save for annual expenses in advance. This will not only save you money, but it will give you peace of mind.
to augment annual expenses
on the benefits of saving
Savings can respond to unforeseen expenses in times of need. It is much better to anticipate a worst case scenario and have some money saved than have a mental breakdown due to an unexpected event.
to settle unforseen expenses
on the benefits of saving
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.
to respond to emergencies
on the benefits of saving
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.
to mitigate losing your job or getting hurt
on the benefits of saving
There is a little known truth that happiness
can come from being organized. Being
organized isn’t going to make you happy all
by itself, but it can sure help. Putting aside
some money to spend when needed can
bring about quality and worry-free life at all
times.
You have nothing to lose by saving - and
only a happier future to gain.
to have a good life
what are examples of financial scams
(pspsi)
- phishing
- social media scams
- phone scams
- stolen credit card numbers
- identity theft
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.
phishing
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 bugos links that allow them to keep your money.
social media 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.
phone scams
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 data from your card when you swipe it. Before you use an ATM or swipe your card, look for suspicious devices that may be attached to the card reader.
stolen credit card numbers
Depending on the amount of information a
scammer is able to obtain, identity theft may
extend beyond unauthorized charges on a debit or credit card. If scammers are able to obtain your Social Security number, date of birth, and other personal information, they may be able to open new accounts in your name without your knowledge.
identity theft
what are the 10 tips to avoid financial scams
- never wire money to a stranger
- do not give out financial information
- never click on hyperlinks in emails
- use difficult passwords
- never give your social security number
- install antivirus and spyware protection
- do not shop with unfamiliar online retailers
- do not download software from pop-up windows
- make sure the websites you visit are safe
- donate to known charities only
what are some financial scams among students
(fdoc)
- fake scholarships
- diploma mills
- online book scams
- credit card scams
a financial arrangement that provides protection against financial loss or risk. It is a contract between an individual or an entity (the policyholder) and an insurance company. In exchange for regular premium payments, the insurance company agrees to provide financial compensation or coverage for specific events outlined in the insurance policy.
insurance
If working in a company with 50 or more
full-time employees, the employer is required to provide employee-only insurance that meets minimum guidelines Examine the plan offered, but do not pay over 9.66 percent of household income in premiums.
employer-sponsored insurance
are available based on an area of residence and income upon meeting minimum coverage requirements.
they come in three tiers: bronze, silver and gold. Generally, bronze plans offer the least coverage at the lowest premiums, while gold
plans provide the most coverage at the highest price.
marketplace plans
these are insurance concepts that teachers must be aware of
- employer-sponsored insurance
- marketplace plans
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.
life insurance
what are the common risk categories of insurance
- preferred plus
- preferred
- standard plus
- standard
- substandard
The policyholder is in excellent health, with normal weight, no history of smoking, chronic illnesses, or family history of any life- threatening disease.
preferred plus
The policyholder is in excellent health but
may have minor issues on cholesterol or blood pressure but under control
preferred
The policyholder is in very good health
but some factors, like high blood pressure or being overweight impede a better rating.
standard plus
The policyholder belong to this category, as
they deemed to be healthy and have a normal life expectancy although, they may have a family history of life-threatening diseases or few minor health issues.
standard
Those with serious health issues, like diabetes or heart disease are placed on a table rating
system ranked from highest to lowest. On average, the premium will be similar to Standard with an additional 25% lower clam on table ratings.
substandard
are mandatory financial charges imposed by the government on individuals, businesses, or other entities to fund public expenditures and government activities.
taxes
what are types of taxes
(is pcep)
- income tax
- sales tax
- property tax
- corporate tax
- excise tax
- payroll tax
key aspects of taxes include these:
(trpt)
- taxation process
- redistribution of wealth
- public services
- tax planning
The process of taxation typically involves
several steps, including tax assessment, collection, and enforcement. Taxpayers are required to report their income and other relevant financial information to tax authorities, and they may be subject to penalties if they fail to comply with tax laws.
taxation process
Taxes can be used as a tool for redistributing wealth within a society. Progressive tax systems, for example, impose higher tax rates on higher income levels, aiming to reduce income inequality.
redistribution of wealth
The revenue generated from taxes is used to
fund a wide range of public services and government functions. These services can include education, healthcare, infrastructure
development, national defense, and social welfare programs.
public services
Individuals and businesses often engage in tax
planning to optimize their financial situation within the framework of existing tax laws. This may involve deductions, credits, and other strategies to minimize tax liability.
tax planning
this means having a solid financial foundation that allows individuals, families, or businesses to meet their financial obligations, handle unexpected expenses, and pursue their financial goals without experiencing
undue stress or hardship.
financial stability/financially stable
what are tips to becoming financially stable
(ces lmrc rnn)
- create a budget
- emergency fund
- save and invest
- live below your means
- manage debt
- retirement planning
- continuous learning
- review and adjust
- negotiate and shop smart
- network and seek professional advice
on being financially stable
- Develop a realistic budget that outlines your income, expenses, and savings goals.
- Categorize your spending to identify areas where you can cut back or save more.
create a budget
on being financially stable
- Build and maintain an emergency fund to cover unexpected expenses like medical bills or car repairs.
- Aim for 3-6 months’ worth of living expenses in your emergency
fund.
emergency fund
on being financially stable
- Save consistently for short-term and long-term goals, such as a home, education, or retirement.
- Consider investing for long-term growth. Diversify your investments to manage risk.
save and invest
on being financially stable
- Avoid unnecessary debt and live within or below your means.
- Differentiate between wants and needs, and prioritize spending on essentials.
live below your means
on being financially stable
- Pay off high-interest debt as quickly as possible.
- Consolidate and refinance loans to reduce interest rates if feasible.
manage debt
on being financially stable
- Contribute regularly to retirement accounts such as 401(k) or IRA.
- Take advantage of employer-sponsored retirement plans and any available matching contributions.
retirement planning
on being financially stable
- Stay informed about personal finance and investment strategies.
- Continuously educate yourself on financial matters to make informed decisions.
continuous learning
on being financially stable
- Regularly review your financial goals and adjust your budget and strategies as needed.
- Be flexible and adapt to changes in your personal or financial situation.
review and adjust
on being financially stable
- Negotiate bills and seek discounts when possible.
- Shop smartly, compare prices, and look for deals to get the most value for your money.
negotiate and shop smart
on being financially stable
- Build a network of financial advisors, mentors, or knowledgeable peers.
- Consider seeking professional advice for complex financial decisions, such as tax planning or investment strategies.
network and seek professional advice
what are the 5 financial improvement strategies
- identify your starting point
- set your priorities
- document your spending
- lay down your debt
- secure your financial future
