Evaluate

affect how you save, spend, and invest today. Do you behave similarly or differently from your parents about handling money?

There are six major characteristic types in how people view money (Incharge, 2017).

Frugal: Frugal people seek financial security by living below their means and saving money. They rarely buy luxurious items; they save money instead. They save money because they believe that money will offer protection from unprecedented events and expenses.

Pleasure: Pleasure seekers use money to bring pleasure to themselves and to others. They are more likely to spend than to save. They often live beyond their means and spend more than they earn. If they are not careful and do not change, they may fall into deep debt.

Status: Some people use money to express their social status. They like to purchase and “show off” their branded items.

Indifference: Some people place very little importance on having money and would rather grow their own food and craft their own clothes. It is as if having too much money makes them nervous and uncomfortable.

Powerful: Powerful people use money to express power or control over others.

Self-worth: People who spend money for self-worth value how much they accumulate and tend to judge others based on the amount of money they have.

Which characteristic closely resembles your attitude about money?. Explain your answer.

Spending Patterns

Are you prudent>or have you been accused of spending money lavishly? Or are you somewhere in between? Individuals have different spending patterns. Before one can come up with a financial improvement, plan,, one needs to analyze his/her spending habits. There are two common spending patterns: habitual spending and impulsive spending. Habitual spending occurs when one spends out of a habit, when one buys the same item daily, weekly, or monthly. Daily items may include water, rice, and cup of coffee. Week items may be grocery items. Monthly items are the electricity and Internet bills. Impulsive spending occurs when one mindlessly purchases items that he or she does not need. Many people are often enticed by monthly sales at the malls with the attitude that they may lose the items the following day.

Fixed vs. Variable Expenses

Fixed expenses remain the same year-round. Car payment is an example. Variable expenses occur regularly but the amount you pay varies. Electric and gas bills are examples of these.

Food Clothing Gas Medicine Internet

Monthly total Fixed Variable

Needs vs. Wants

Financial discipline starts with an ability to recognize whether expenses are needs or wants, and followed by ability to prioritize needs over wants. Needs are essential to our survival. Wants are things that you would like to have but you can live without, such as new clothes or a new cell phone model. You want them but do not necessarily need them. Too many wants can ruin a budget.

Use the table below to list down all the expenses that belong to the needs and those that belong to the wants.

Needs Wants

Here are practical steps you can undertake to enhance your financial literacy.

Setting Financial Goals

Setting financial goals is the first step to managing one's financial life. Goals may be short, medium, and long-term. Short-term goals can be measured in weeks and can provide instant gratification and feedback. “I will ride on the LRT instead of taxi” and “I will bring lunch every day” are examples of short-term goals. Medium-term goals should be accomplished within one to six months. These goals provide opportunity for reflection and feedback and require discipline and consistency. Long-term financial goals can take years