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    What Are The Five Core Competencies of Financial Literacy? Five Core Competencies

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    Maria Riza Valencia
    The five core competencies of financial literacy are: 1) Earning, 2) Saving and Investing, 3) Spending, 4) Borrowing, and 5) Protecting. Net income is determined by sales minus all expenses and is used to create personal budgets. Saving and investing is important because it protects against financial emergencies and helps achieve long-term goals like retirement. The basic principles of financial literacy include paying yourself first, starting to save early, comparing interest rates, avoiding debt you can't repay, budgeting, understanding risk-return tradeoffs, and purchasing insurance.

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    What Are The Five Core Competencies of Financial Literacy? Five Core Competencies

    Uploaded by

    Maria Riza Valencia
    47 views2 pages
    The five core competencies of financial literacy are: 1) Earning, 2) Saving and Investing, 3) Spending, 4) Borrowing, and 5) Protecting. Net income is determined by sales minus all expenses and is used to create personal budgets. Saving and investing is important because it protects against financial emergencies and helps achieve long-term goals like retirement. The basic principles of financial literacy include paying yourself first, starting to save early, comparing interest rates, avoiding debt you can't repay, budgeting, understanding risk-return tradeoffs, and purchasing insurance.

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    FinLiT

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    The five core competencies of financial literacy are: 1) Earning, 2) Saving and Investing, 3) Spending, 4) Borrowing, and 5) Protecting. Net income is determined by sales minus all expenses and is used to create personal budgets. Saving and investing is important because it protects against financial emergencies and helps achieve long-term goals like retirement. The basic principles of financial literacy include paying yourself first, starting to save early, comparing interest rates, avoiding debt you can't repay, budgeting, understanding risk-return tradeoffs, and purchasing insurance.

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    © All Rights Reserved
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    47 views2 pages

    What Are The Five Core Competencies of Financial Literacy? Five Core Competencies

    Uploaded by

    Maria Riza Valencia
    The five core competencies of financial literacy are: 1) Earning, 2) Saving and Investing, 3) Spending, 4) Borrowing, and 5) Protecting. Net income is determined by sales minus all expenses and is used to create personal budgets. Saving and investing is important because it protects against financial emergencies and helps achieve long-term goals like retirement. The basic principles of financial literacy include paying yourself first, starting to save early, comparing interest rates, avoiding debt you can't repay, budgeting, understanding risk-return tradeoffs, and purchasing insurance.

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    1. What are the five core competencies of financial literacy?

    Five Core Competencies


    1. Earning - The term "earning" refers to taking money home from a job, self-
    employment, or investment returns.
    2. Saving and Investing - "Saving" and "Investing" are terms that refer to the
    knowledge of financial institutions and services. To begin, you should open a
    savings and checking account to handle your personal finances. Start SAVING
    EARLY and PAY YOURSELF FIRST to help you understand the fact that
    money saved grows over time, leading you to consider long-term savings for
    your retirement planning.
    3. Spending - The most significant concept is "spending," which is a personal
    reflection of your values, lifestyle, and financial behavior. The basic principle of
    budgeting is to distinguish between NEEDS and WANTS. Budgeting is the most
    efficient and effective tool you can use to keep track of your spending to allow
    for saving and investing.
    4. Borrowing - "Borrowing" is acquiring debt to create assets.
    5. Protecting - "Protecting" deals with insurance, ID theft, and retirement planning.
    The goal is to stay safe on all levels of your life, including personal, health, and
    social. To master self and family financial security in life, you'll need to
    understand risk management, insurance coverage, identity theft protection, fraud,
    and scams.

    2. How is net income determined?

    Sales minus cost of goods sold, selling, general and administrative costs, operating expenses,
    depreciation, interest, taxes, and other expenses equals net income (NI), also known as net
    earnings. To figure out whether you made a profit or a loss, subtract total expenditures from total
    revenue. You have net income if the result is positive. . Net income is your take-home pay after
    taxes and other payroll deductions. Your net income, the amount on your paycheck, is what's
    used to make your budget. You have a net loss if it is negative. It is a valuable number for
    investors to determine how much income exceeds an organization's expenses

    3. Why saving and investing matters?

    We no longer live in a world where each day is taken as it comes. An unexpected financial
    emergency may occur at any time. It needs to be noted that getting a savings/investment portfolio
    is important. Money is both a means of trade and a means of preservation. Money is significant
    and necessary for survival. Saving and investing is frequently a wise plan for achieving long-
    term financial goals. Saving money is important because it protects you in the case of a financial
    crisis. Furthermore, saving money will assist you in making major purchases, avoiding debt,
    reducing financial stress, leaving a financial legacy, and gaining a greater sense of financial
    independence.

    4. What are the basic principles of financial literacy?

    6. Pay Yourself First - Before paying bills and other financial obligations, set
    aside an affordable amount each month in accounts designated for long-range
    goals and unexpected emergencies.
    7. Start Saving Young - Recognize that your total savings are determined both by
    the interest you earn on savings and the time period over which you save.
    8. Compare Interest Rates - Obtain rate information from multiple financial
    services firms to get the best value for your money.
    9. Don't Borrow What You Can't Repay - Be a responsible borrower who repays
    as promised, showing that you are worthy of getting credit in the future. Before
    you borrow, compare your total payment obligations with income that you will
    have available to make these payments.
    10. Budget Your Money - Create an annual budget to identify expected income and
    expenses. Including savings. This will serve as a guide to help you live within
    your income.
    11. High Returns Equal High Risks - Recognize that no one will pay you high
    interest rates on a sure thing. In most cases, the higher the interest rate offered,
    the higher the risk of losing some, or all, of the money you invest.
    Diversification is the best hedge against investment risk.
    12. Don't Expect Something for Nothing - Be leery of advertisements, sales
    people, or other sources of financial offers promising anything free or guaranteed
    investment returns. Like non-financial opportunities, “if it sounds too good to be
    true, it probably is.”
    13. Map Your Financial Future - Take time to list your financial goals, with a
    specific time deadline and dollar cost, and develop a realistic plan for achieving
    them.
    14. Stay Insured - Purchase insurance to avoid being wiped out by a financial loss,
    such as an illness or accident. An insurance plan should be part of every personal
    financial plan.

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