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[Fin Talk] Dissecting Financial Literacy

By Arlyn Tan

Did you ever join a financial literacy webinar during the pandemic ? You may wonder if learning stock investments and purchasing real estate or life insurance can already make you financially literate. You would also believe that having a budget and zero debt is a great situation to be in.


Financial literacy’s definition and impact are bigger than we think. Financial literacy is defined as 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 the range of financial contexts, to improve the financial well being of individuals and society, and to enable the participation in economic life. (OCED 2014, p.33)


The Philippine government realizes that it needs to develop financial education policies to increase consumer protection. It encourages teenagers to teach younger individuals to save. As citizens, we are left on our own to develop our financial literacy knowledge through the rising involvement of the banks and insurance companies. With our access to Google and the internet, the rich information about personal finance can jumpstart your journey to achieve complete confidence and knowledge about money management.


What are the domains of financial literacy?

  • Ability to budget

  • Healthy and Unhealthy Debt levels.

  • Assessment of purchases that will depreciate and appreciate.

  • Impact of interest rates on home, business loans and credit card, deposits, predatory loans.

  • Understanding the concept of risk and reward, allocation and diversification.

  • Advanced concepts: retirement and education planning.


How to develop financial literacy skills?

  • Math skills i.e. percentages, division, compounding interest

  • Knowledge of the concepts from economics, finance, financial products.

  • Application of real-life experiences in decision making.

  • Reading comprehension to understand the terms and conditions associated with the financial products.


Why is there a need to develop financial literacy?

  • In our personal and professional lives, we are required to make complex financial decisions like purchasing homes, committing to education and retirement funding, and investing in capital markets and businesses.

  • The responsibility to support unexpected and expected milestones are shifted to the individuals. By being less risk averse, one is able to maximize the benefits of the available financial products and programs to achieve personal financial goals.

  • By understanding the impact of national debt on government funded programs and taxation, one can assess the types of benefits that can be sourced from the government. Participation in the capital markets like stocks and bonds can also assist the government and private enterprises stimulate economic growth.




Banco Bilbao Vizcaya Argentaria (BBVA) , and Organisation for Economic Co-operation and Development (OECD) collaborated to support the Programme for International Student Assessment (PISA) which is administered every 3 years to test the financial literacy levels of students globally. In 2015, it assessed 10 countries and economies. It is interesting to find out that China students had a superior financial understanding where the scores of the 15 year old students were as high as 566 compared to the average which is 481.


The research group attributes the high scores to 6 key factors:

1. The Chinese government intentionally includes the measurement of the nation’s financial education through the review of its nations practices and targets.

2. The policy on financial literacy targets different age groups and markets.

3. Education starts from preschool to college.

4. The PISA report shows strong correlation between financial literacy and math / reading skills

5. Bank involvement is supported by the government.

6. The form of financial literacy content ranges from comics, film, videogames and digital.


While an ecosystem is still being built in the Philippines, we have the responsibility to study on our own. In the different hats that we wear in the family, organization and community, we are tasked to master and teach basic math skills and reading comprehension. We move forward by daily learning on financial literacy topics. The investment will reduce the possibility of making expensive and easily avoidable mistakes by the present and future generations.










Arlyn Tan is a Strategic Wealth Consultant. She helps individuals and organizations on how to maximize the value of their money through risk, health & wealth management. Her mission lies in making sure that clients achieve 3 things. First, they reach their milestones on time with sufficient resources. Second, they protect them from the impact of economic losses secondary to unexpected events. The third and most important is that they enjoy meaningful and balanced lives.


LinkedIn/Twitter: Arlyn Tan

FB/IG: @pinnaclefinlitcoachph

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