Financial literacy intended for Overseas Filipino Workers

1. FINANCIAL
LITERACY
Anne A. Alban
Family Welfare Officer
Albanne_10

2. REALITY CHECK

3.  ANG PERA, PARATING PA LANG…
PAALIS NA!

4. NABUBUHAY A-KINSE,
A- TRIENTA

5. RASON:
“Culprit” Instant Gratification

6. PERSONAL FINANCE & FINANCIAL LITERACY
Is nothing but knowing How to keep what
YOU earn and do More with what you Keep
FINANCIAL LITERACY
is understanding how you can build
your personal wealth

7. What is Financial Independence?
What do you mean by “financially literate?”
What is Wealth?
Kailan ba maituturing na “mayaman”
na ang isang tao?

8. Where does your
Money come from?

9. CASHFLOW QUADRANT
(Four ways that money may come your way)
Work for somebody else Go into business
Work for yourself Make your money
work for you
RAT RACE
ROBERT KIYOSAKI
Author, “Rich Dad, Poor Dad”

10. CASHFLOW QUADRANT
(Four ways that money may come your way)
Work for somebody else Go into business
Work for yourself Make your money
work for you
FAST TRACK

11. CASHFLOW QUADRANT
(Four ways that money may come your way)
Work for somebody else Go into business
Work for yourself Make your money
work for you
ROBERT KIYOSAKI
Author, “Rich Dad, Poor Dad”

12. CASHFLOW QUADRANT
(Four ways that money may come your way)
Work for somebody else Go into business
Work for yourself Make your money
work for you
ROBERT KIYOSAKI
Author, “Rich Dad, Poor Dad”

13. CASHFLOW QUADRANT
(Four ways that money may come your way)
Work for somebody else Go into business
Work for yourself Make your money
work for you
ROBERT KIYOSAKI
Author, “Rich Dad, Poor Dad”

14. CASHFLOW QUADRANT
(Four ways that money may come your way)
Work for somebody else Go into business
Work for yourself Make your money
work for you
ROBERT KIYOSAKI
Author, “Rich Dad, Poor Dad”

15. Where does your Money go?
Accounts
payable/ INCOME
Others
Savings
Support for
Parents, Re Insurance
latives Premiums
Your
Children’s Household
Education Expenses

16. FACING THE REALITIES

17. Where are you now?
 Prepare your Personal Financial
Statements or Statement of Assets &
Liabilities (SAL)

18. Personal Income/Expenses
Statement
Salary
Interest Income from Savings and Time deposits
Income from Investments in Government Securities & stocks
Income from Other Assets
Less: Expenses
Food
Rent
Monthly Amortization for housing, car & other loans
Utilities
Insurance Premiums
Allowance of children
tuition fees
Other expenses
Net Income
Less: Personal Income Tax
Net Income after tax

19. FINANCIAL PLANNING
 The benefits of having a sound financial plan:
• It can help you avoid
mistakes/ sidetracks
• Helps you make smarter
decisions
• Can insulate you from the
turbulence in the economy
• Makes money work for
you!

20. INCOME EXPENDITURES CAN BE
CLASSIFIED AS FOLLOWS :
 Consumption
 Protection
 Savings
 Taxes

21. Statement of Assets &
Liabilities
ASSETS
Cash (Cash on hand, bank deposits,Coop deposits, etc)
Properties that you own (House, land, car, jewelry, etc)
Receivables (mga pautang)
Investments (T-bills, T-bonds, shares of stock, Coop Capital, etc.)
Insurance & pension and academic plans.
LIABILITIES
Loans you owe your relatives & friends
Housing loan
car loan
credit card debt
all payables & other loans
Total Assets – Total Liabilities = Net Worth

22. The CASHFLOW GAME
INCOME
EXPENSES
ASSETS LIABILITIES

23. CASHFLOW 1
Job or
Profession INCOME
EXPENSES
ASSETS LIABILITIES
- Larry Gamboa
Think Rich, Pinoy!

24. CASHFLOW 2
Job or
Profession INCOME
EXPENSES
ASSETS LIABILITIES
- Larry Gamboa
Think Rich, Pinoy!

25. CASHFLOW of the RICH
Job or
Profession INCOME
EXPENSES
ASSETS LIABILITIES
- Larry Gamboa
Think Rich, Pinoy!

26. FINANCIAL LIFE PHASE
4
Retirement
3
Fine tuning
2
Build-up Where are you now?
1 Where do you want
to be in the future?
Start-up

27. KALAYAAN
SA
KAKAPUSAN
(KsK)
RULES

28. SIMPLE RULES IN FINANCIAL
FREEDOM
Rule 1: Pay yourself first. „YOU” is your
first source of Capital
SAVINGS

29. SAVE!!!

30. Redefining Savings
It must be defined as
an EXPENSE.
It is an expense that
BUYS your FUTURE.

31. SAVINGS
Saving is a conscious
and deliberate way of
setting aside a portion of
the personal income.

32. EQUATION
Y- Income
_
S - Savings
______________________
C – Consumption

33. EQUATION
Y- Income
_
C – Consumption
______________________
= S - Savings

34. KsK Rule #2
 Define your Financial Target @ each Life
phase

35. RULES IN SETTING
GOALS
Set
State it
Put it specific
in Monitor
into timetable
positive progress
writing for each
terms
goal

36. OBSTACLES TO SAVINGS
Procrastination - delaying savings
or putting savings off for another
time;
Poor Spending Habits –
includes spending on
unnecessary items;
Impulse buying;
hedonistic lifestyle

37. OBSTACLES TO SAVINGS
Culture of Dependency -- Being
overly dependent on others
Lack of Financial Literacy –
spending on liabilities or items
that decrease in value over
time; not knowing how your
money will grow or work for
you.
Culture of Dependency

38. Stop spending on things that
diminish in value
Know the difference between Assets & Liabilities
Poor Spending Habits –
*Impulse buying
•Uso kasi
•Too much
entertainment

39. Know the difference
Your Your
NEEDS WANTS

40. Protect your greatest Income
Generating Asset, Yourself
ALERT #1 Health is Wealth
Health and Protection are very much
interrelated. If you are not healthy and you do
not take care of yourself, you can get sick, meet
an accident, get disabled, or die.

41. GOD HELPS ONLY THOSE
WHO HELP THEMSELVES

42. GROW WITH THE
ECONOMY AND BEAT
INFLATION

43. An Illustrative Formula of 80/20
43

44. Trust the Power of Time and Compounding
Period 1 Period 2 Period 3
Your
Money
Your +
Money Interest
Earning
Your
Your Money
Money +
Interest Your
Your
Earning Interest
Interest
Earning Earning
+
Interest
Earning

45. Power of Compounding
Simple
Interest Compound
Year Principal Total Principal interest Total
End of 1 yr 1000 100 1100 1000 100 1100
End of 2 yr 1000 100 1200 1100 110 1210
End of 3 yr 1000 100 1300 1210 121 1331
End of 4yr 1000 100 1400 1331 133 1464
End of 5 yr 1000 100 1500 1464 146 1611
End of 6yr 1000 100 1600 1611 161 1772
End of 7yr 1000 100 1700 1772 177 1949
End of 8 yr 1000 100 1800 1949 195 2144
End of 9 yr 1000 100 1900 2144 214 2358
End of 10 yr 1000 100 2000 2358 236 2594
Difference 594

46. Rule of 72
(DOUBLE YOUR MONEY)
For example, you are being invited to invest in a financial
transaction that offers a 20% return per year.
Simply divide 72 by the rate of return, or 20%, and you will
get the number of years it would take to DOUBLE your money.
That is, if you do not withdraw the earnings.
72
No. of years = = 3.6 years
20 %

47. INVESTING & INFLATION
 INFLATION
◦ Is the economic condition of sustained
price increases. Money is an asset that
continuesly losses its value.

48. Rule of 72
(DOUBLE YOUR MONEY)
On the other hand, if you want to DOUBLE your money in
three (3) years, at what rate of return should you invest your
money?
Simply divide 72 by the number of years within which you
would want to double your money, or 3 years, and you will get
the required rate of return to DOUBLE your money within the
specified period. That is, if you do not withdraw the earnings.
72
No. of years = = 24 %
3 yrs.

49. ASSESS RISK & OPTION
 Note: The higher the risk, the higher
the return. Always investigate 1st before
believing
UNDERSTANDING
LOAN INVESTMENT
VS

50. When do banks or lenders lend?
 The ability of the  The borrower has
more than enough
borrower to prove sustainable income
that he will use the to pay for the loan
proceeds of the plus interest;
loan in an activity  The lender does
that will produce not mind
sufficient income to foreclosing on or
repay the loan. taking over the
collateral

51. Make Money work for you: the
Power of leverage
 Borrowing – leverage in finance
(Analyzing Good Debt)
 People leverage

52. INVESTMENTS
Investment is the
commitment of funds made
in expectation of some
positive rate of return.
If the investment is properly
undertaken, the return will
be commensurate with the
risk it assumes.

53. INVEST & DIVERSIFY
INVEST
MAKE YOUR
MONEY GROW
Invest your savings in
money-making assets. MAKE
YOUR MONEY WORK FOR
YOU.
Don’t put all your eggs in 1
basket

54. Evaluate Investment
Return/Yield
Liquidity Safety/Risk

55. Eight Simple Ways to Invest
 Invest in debt and
gambling reduction
 Lending investments:
◦ Gov’t/corporate Bonds
◦ Banks
◦ Pension Plans

56. Eight Simple Ways to Invest
 Real Estate
 Stock Market
 Mutual funds
 Engage in
Business

57. ALERT #2 When Buying Real
Estate Property
 Do a canvass on the location, area, total cost, down
payment and monthly installments for house and lot and get
information for several houses from which your family can
choose your desired home; Take your time; Don’t be in a
hurry;
 Make sure the property you are buying is properly titled and
has no claimants “clean title” other than the owner. Check
with the registry of deeds where the property is located;
 If the property is newly developed, check with the HLURB if
the seller is accredited and has license to sell property;
 Get a document in exchange for every payment you
make, whether it is an official receipt, a contract to buy and
sell, deed of absolute sale or the original title itself;
 If you can easily afford to pay in cash, ask for a big discount
because you are doing the owner a big favor.

58. INVESTING IN YOUR OWN
BUSINESS
 Remember that not everyone has what it takes to
run a successful business;
 If you think that you have what it takes to become a
successful business person, then its time to plan
your business;
 Think about what business you can engage in;
 Look around you and identify business
opportunities and evaluate each options;
 Do a situational analysis; identify the
strengths, weaknesses, opportunities and threats
to your proposed business.

59. Negative Mindsets
 “I do not have enough money”
 “I do not have good enough
ideas”
 Distrust of people – “mandaraya
silang lahat”
 Fear of failure

60. The case for Would-be
Entrepreneurs
 They lacked the business & management
skills
 They may have had enough money in the
beginning but miscalculated the working
capital requirements & were thus unable to
raise the correct financing when they needed
it
 They seriously mismanaged the operations of
the business.
 They did not see the value of competent staff
or of consulting advisors in the areas of
marketing, production, technology, legal
aspects, personnel & importantly leadership

61. Make use of the Power of One:
Strength in Numbers
Saving together provides more & varied
opportunities to earn higher returns as
well as secure better benefits for all.
 Cooperatives are a good way to avail
of the power of many.

63. Learning to say NO! is
part of Discipline
In good or bad times,
Never give up!
Remember,
Winning is a habit
Make it yours!

64. THE IMPORTANCE OF SHARING
Walang sino
man ay
nabubuhay
para sa sarili
lamang.
Tayong lahat
ay may
pananagutan
sa isa’t isa.
Sharing always brings more
blessings

65. “ You have not lived a perfect
day,
even though you have earned
your money, unless you have
done something for someone
who will never be able to repay
you”
-Ruth Smeltzer

66. Albanne_10