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Financial Literacy of Professional and Pre-Service Teachers in the Philippines

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DOI: 10.4172/2375-4389.1000267

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DOI: 10.4172/2375-4389.1000267

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ISSN: 2375-4389 omics

Research Article Open

OpenAccess
Access

Financial Literacy of Professional and Pre-Service Teachers in the

Philippines
Imelda CM*, Angeline MP, Gwendelina AV and Genalen MP
Department of Economics, Cebu Normal University, Cebu, Philippines

Abstract
A financial literacy survey among one thousand, nine hundred twenty four (1924) professional and pre-service
teachers across different regions of the country is the basis of the study. With the permission standardized tool was
used to gather data from the randomly selected respondents from different public and private schools, colleges and
universities from Luzon, Visayas and Mindanao. The findings revealed that both professional and pre-service teachers
have very low basic and sophisticated financial literacy skills. Thus, financial illiteracy is common among educators
which reflect their students’ financial literacy skills and the economic condition of the majority of the Filipino people.
Curriculum inclusion of financial education to both basic and higher education is recommended to improve the financial
knowledge, behaviour and attitudes among teachers and students which, in turn, spells a better economic growth and
development of the country.

Keywords: Financial literacy; Professional teachers; Pre-service terms of financial behaviour are noted. Furthermore, World Bank [7]
teachers supports that the common assessment across countries on the level of
understanding of financial issues by individual is too low and associated
Introduction with behaviour that has consequences for individuals [8]. This global
In recent years, developed countries have become progressively scenario on financial illiteracy presents a barrier to economic growth
more concerned about the level of financial literacy of their citizens. and financial inclusion.
Strong interest in improving financial literacy has moved to the In the MasterCard Index of Financial Literacy Survey 2013,
forefront of public policy concerns worldwide. It has become a key Philippines has 68 overall financial literacy index with low levels
priority for global policymakers who realize the effect that individual of financial literacy from the demographic of 30-year-olds who are
financial decisions can have on national level as well as on global scale married. Such situation is evident with marriage and increasing family
[1]. obligations, such as household expenses, education and financial
Financial literacy is knowledge and understanding of financial commitments. Based on the Philippine Financial Literacy Advocacy
concepts and risks, motivation and confidence to apply such knowledge 2013 Report, most of the Filipinos have good knowledge on financial
and understanding in order to make effective decisions regarding the concept of investments, but they lack in understanding the concept
range of financial contexts and also to improve the financial well-being of healthy budget and inflation. More importantly, the study showed
of individuals and society, and to enable participation in the economic that only 49% of Filipinos put money in bank accounts every month.
life [2]. New evidence finds that financial illiteracy in the United States Among those who do, only save an average of 6% which is below the
population is widespread, particularly among vulnerable demographic minimum suggested 10%.
groups such as the least educated, women and minorities [3].
Financial literacy is now acknowledged globally as an important
The UK Financial Services Authority concluded that the younger element for economic and financial stability and development. Trends
people, those are in low social classes and the people who are with support the rising global interest in financial literacy as a key to life skill
low incomes were the least sophisticated financial consumers [4]. In [9]. Existing empirical evidence shows that adults in both developed
a Japanese Consumer Finance Survey, 71% of adults knew little about and emerging economies who have been exposed to financial education
equity and bonds, and more than 50% lacked any knowledge of financial are subsequently more likely than others to save and plan for retirement
products [5]. Financial knowledge is weak as evidenced in a German [3,10]. Those with higher financial literacy are better able to manage
survey conducted by Commerzbank AG in 2003. It found out that their money, participate in the stock market and more likely to invest
80% of the respondents were confident about understanding financial [11]. Moreover, those who have greater financial knowledge are more
issues, but only 42% could answer half of the financial survey questions.
Moreover, 2.5 billion adults in Africa, Asia, Latin America and Middle
East do not use formal financial services to save or borrow [6]. Many *Corresponding author: Imelda CM, Department of Economics, Cebu
remote and northern communities in Canada lack access to financial Normal University, Cebu, Philippines, Tel: +63322539611; E-mail:
services. Polish Financial Supervision Authority noted that Poles have gel i nempogoy@ gmail.com
sufficient numerical skills but limited knowledge and understanding of Received August 16, 2017; Accepted October 26, 2017; Published November
how financial markets work [6]. Such financial literacy reviews among 02, 2017
nations show that levels of financial knowledge are relatively low and they Citation: Imelda CM, Angeline MP, Gwendelina AV, Genalen MP (2017) Financial
are poorly informed about financial product and practices [3]. Similar Literacy of Professional and Pre-Service Teachers in the Philippines. J Glob Econ
5: 267. doi: 10.4172/2375-4389.1000267
findings were disclosed in the comparative study of Atkinson and Messy
[5] across countries surveyed wherein lack of financial knowledge was Copyright: © 2017 Imelda CM, et al. This is an open-access article distributed
under the terms of the Creative Commons Attribution License, which permits
highlighted among a sizeable proportion of the population, attitudes unrestricted use, distribution, and reproduction in any medium, provided the
on financial literacy vary and a considerable room for improvement in original author and source are credited.

J Glob Econ, an open access journal Volume 5 • Issue 3 • 1000267

ISSN: 2375-4389
Citation: Imelda CM, Angeline MP, Gwendelina AV, Genalen MP (2017) Financial Literacy of Professional and Pre-Service Teachers in the Philippines.
J Glob Econ 5: 267. doi: 10.4172/2375-4389.1000267

Page 2 of 8

likely to accumulate higher amounts of wealth [12]. Financially literate questions correctly. They were best informed on mortgages (81%
consumers can make more informed decisions and demand higher correct), saving patterns (67% correct), credit cards (65% correct), and
quality services which will encourage competition and innovation in general financial management (60% correct). Moreover, respondents
the market [2]. were less knowledgeable about mutual funds and stock market; only
one-half knew that mutual funds do not pay a guaranteed rate of return,
To date, no single study has ever been conducted in the Philippine
and 56% knew that “over the long-term, stocks have the highest rate of
setting to get the actual measure of financial literacy among educators,
return on money invested”.
whether and how this particular group of professionals are making
informed decisions around their finances. This study examines the The huge gap on financial knowledge and skill is manifested in 2005
level of financial literacy among pre-service teachers and professional Australian Financial Literacy Survey where 67% of the respondents
teachers in terms of numeracy, compound interest, inflation, time value indicated that they understood the concept on compound interest, yet
of money, money illusion and risk diversification. Evidence-based when they were asked to solve a problem using the concept, only 28%
findings of the study will be a basis for recommendation in addressing had a good level of understanding. Specific results of from third world
the need of pre-service teachers to include financial education as part country like South Africa showed that knowledge and understanding
of the national education curriculum, and the need of professional of mathematical concepts related to finance is quite low, with only 26%
teachers for the right training to provide financial education. of respondents showing basic understanding of the impact of inflation,
and high numbers reporting they do not know the answers for questions
This study examined the level of financial literacy of public and
about simple and compound interest [14].
private pre-service teachers and professional teachers in the Philippines.
Specifically it sought to measure their understanding on the basic Researchers also set out to measure budget, keeping track and
financial concepts in terms of numeracy, compound interest, inflation, choosing financial products and services. Outcomes indicated that 49%
time value of money, money illusion and functions of stock market. It of all Canadian adults do not have a budget at all, while 57% of Canadians
also sought to measure their understanding on sophisticated financial between the ages 18 and 29 do not have a budget. When asked how
knowledge on mutual funds, interest rates, stocks, bonds, mutual funds, they could cover a $500 expense, 45% say they would use credit or debt
long period return of money, fluctuations and risk diversifications. (FCAC-OECD, 2011). Most Canadians are reasonably okay in making
ends meet but they are not great at planning ahead or staying informed.
Review of Related Studies Lusardi and Mitchell [18] opined that lack of planning is tantamount to
Financial literacy is about understanding money and finances lack of saving. Moreover, other issues exist in other OECD countries,
and being able to confidently apply that knowledge to make effective where lack of access to financial services is a problem. Many remote
financial decisions [13]. However, Global OECD 2005 financial statistics and northern communities in Canada lack access to financial services,
shows huge gaps in the financial knowledge and skills of individuals with only 3 out of 25 communities had access to a bank branch in 2009.
across countries—gaps that make individuals vulnerable to making In Zambia and six other African countries, only 29% of adults have a
poor decisions about their money [14]. bank account and 50% use no financial products at all. Indeed, lack of
financial literacy if regularly tied to lack of access to financial services
Eighty-nine percent of the first year college students from the five or failure to use them even when they are available.
colleges and universities across United States scored poorly, equivalent
of a “C” or below in basic financial literacy [15]. Four in ten students There are some key differences between men and women when
did not know the definition of “net pay” and too many students could it comes to money-related choices. Lusardi and Mitchell [3] revealed
not correctly identify the kinds of items that appear on a pay check that gender differences in financial knowledge do exist based on
stub. This showed that students are not familiar with life skills that they survey questions on basic numeracy, interest rates, inflation and risk
need and don’t have a good knowledge base to work from. Likewise, diversification. She further explained that women tend to say they know
Department of Education in Poland noted that 46% of the Poles less or they also tend to be more cautious when answering test questions
respondents preferred to spend money rather than save it for [14]. than men, preferring to say that they don’t know the answer rather
Just 63% of them have a bank account, 25% have credit cards and only than taking a guess. Furthermore, she clarified that women without
18% have a saving account. Similarly, study of Ramasawmy et al. [16] the knowledge to make sound financial decisions are particularly
reports that the management students of Mauritius have a medium vulnerable and yet they play an important role in the financial sector as
level of knowledge and skills in savings and borrowings. This implies consumers and managers of household budgets. Hung and Yoong [11]
that poor savings is visible among respondents. Research in behaviour concluded that gender does matter when it comes to financial literacy,
finance suggests that many households do not make optimal savings because women with lower financial literacy levels are prone and could
end up participating less in financial markets, paying higher costs for
and this may lead to unacceptable standards of living and economic
services and putting higher risks for poverty. Additionally, financial
anxiety [11].
literacy declines rapidly with age, and is particularly low among older
National council of Economic Education (NCEE) periodically women [3].
surveys on economics, money, interest rates, inflation and personal Researchers are trying to link financial literacy and economic
finance among high school students and working-age adults in US behaviour. Lusardi and Mitchell [3] suggest that those who are more
population. Tallied results revealed that adults earned an average educated are much more likely to answer the questions correctly. They
score of C, while the high school population fared even worse, with further showed that financial literacy is highly correlated with school
most receiving failing marks [12], Such finding among American exposure to economics. Those who studied economics in high school,
population has been confirmed by Hilgert et al. [17] who investigates college or at higher levels were much more likely to display higher
respondents between 18 to 97 years old about their saving patterns, levels of financial literacy later in life [19]. Using the 2004 HR Survey,
credit, mortgages, and general financial management. The study it revealed that those who are more financially knowledgeable are also
discovered that respondents could answer only two-thirds of the much more likely to have thought about retirement [3]. Additionally,

J Glob Econ, an open access journal Volume 5 • Issue 3 • 1000267

ISSN: 2375-4389
Citation: Imelda CM, Angeline MP, Gwendelina AV, Genalen MP (2017) Financial Literacy of Professional and Pre-Service Teachers in the Philippines.
J Glob Econ 5: 267. doi: 10.4172/2375-4389.1000267

Page 3 of 8

the study of Calvert et al. [20] confirmed that more financially A total of one thousand nine hundred twenty-four (1,924)
sophisticated households are more likely to buy risky assets and invest respondents throughout the country were the respondents of this study.
more efficiently. There were one thousand one (1,001) professional teachers and nine
hundred twenty-three pre-service teachers (923) randomly selected
In low and middle income countries, gaps on financial literacy and
from the big island groups of the country such as Luzon, Visayas and
financial products have widened in the recent years due to the increase
Mindanao.
in access to financial products and services, while financial literacy,
financial education as well as skills enhancement is lagging well behind With the permission from the author, Lusardi and Mitchell [22],
[8]. In low income countries in particular, access to financial services is the instrument Financial Literacy Survey was used in this study. The
very limited for a very large share of the poor population living in the questions measured the understanding of basic and sophisticated
rural areas. financial literacy. Data were gathered through the responses of the
questionnaires and personal interviews of the respondents.
Strong and rising interest in the level of financial literacy worldwide
and in educational interventions to improve it have been seen in the Results and Discussion
recent years. In 2003, UK developed a National Capability Strategy to
establish a road map for delivering change in financial capability of Demographic profile
the UK population. USA, New Zealand, Australia and Canada follow Around 1,924 teachers from public and private schools of
suit in developing national strategies to improve financial literacy Luzon, Visayas and Mindanao of the Philippines took the Basic and
levels among their respective population. USA developed Jumpstart Sophisticated Financial Literacy Survey. There were 1,001 professional
Coalition for Personal Financial Literacy. According the National teachers and 923 pre-service teachers in which 599 of them are males
Council on Economic Education (2005), 38 states now have personal and 1,325 of them are females. The professional teachers whose ages
finance standards built into their state education systems, and 21 of range from 31-40 years old and have been in the teaching profession for
these states require clearly that the standards be implemented [21]. 5 to 25 years with an average monthly salary of Php20,000.00. On the
Particularly in Australia, effective integration of financial education into other hand, the pre-service teachers who are currently enrolled in the
school education is the cornerstone to bringing about the long-term student teaching program, have parents whose educational attainment
generational change in financial knowledge, attitudes and behaviour is college level with an average monthly income between Php11,000.00
[13]. In 2009, Canada established its Task Force on Financial Literacy to PhpP20,000.00.
with lifelong learning as a priority based on the unique needs of its
population [14]. The motivation behind is universal: through national Table 1 presents the number and percentages of professional and
leadership and collaboration across sectors, countries can develop pre-service teachers who passed the basic and sophisticated financial
sustainable and effective approaches in improving financial literacy literacy survey.
among the entire population [14].
Out of the 1001 professional teachers only 27% of them passed the
Research Methodology basic financial literacy survey. Among the 923 pre-service teachers, less
than one-fourth (1/4) of them passed the basic financial literacy survey.
The study made use of descriptive survey design to examine the Around 60% of the professional and pre-service teachers were able to
level of financial literacy of public and private pre-service teachers and read and compute correctly the basic numeracy problem, however,
professional teachers in the Philippines. they failed to understand, process and assess the given information

Professional Teachers
Basic Financial Literacy Sophisticated Financial Literacy
Male Female Total Male Female Total
f % f % f % f % f % F %
Luzon 38 32.75 44 23.40 82 26.97 18 15.51 8 4.25 26 8.55
(116) (188) (304) (116) (188) (304)
Visayas 34 29.31 67 30.18 101 29.88 15 12.93 7 3.15 22 6.51
(116) (222) (338) (116) (222) (338)
Mindanao 40 31.25 44 19.04 84 23.39 3 2.34 8 3.46 11 3.06
(128) (231) (359) (128) (231) (359)
Total 112 31.11 155 24.18 267 26.67 35 9.72 23 3.59 58 5.79
(360) (641) (1 001) (360) (641) (1 001)

Pre-service Teachers
Basic Financial Literacy Sophisticated Financial Literacy
Male Female Total Male Female Total
f % f % f % f % f % F %
Luzon 30 34.88 37 19.57 67 24.36 10 11.62 9 4.76 19 6.91
(86) (189) (275) (86) (189) (275)
Visayas 15 20.27 82 28.57 97 26.87 3 4.05 16 5.57 19 5.26
(74) (287) (361) (74) (287) (361)
Mindanao 9 11.39 44 21.15 53 18.47 6 7.59 5 2.40 11 3.83
(79) (208) (287) (79) (208) (287)
Total 54 22.59 163 23.83 217 23.51 19 7.95 30 4.39 49 5.31
(239) (684) (923) (239) (684) (923)
Table 1: Financial literacy of professional and pre-service teachers in the Philippines.

J Glob Econ, an open access journal Volume 5 • Issue 3 • 1000267

ISSN: 2375-4389
Citation: Imelda CM, Angeline MP, Gwendelina AV, Genalen MP (2017) Financial Literacy of Professional and Pre-Service Teachers in the Philippines.
J Glob Econ 5: 267. doi: 10.4172/2375-4389.1000267

Page 4 of 8

effectively. Most of the teachers have heard investment terms as stocks, alarmingly low passing percentage for both male and female groups
bonds, mutual funds, stock market and inflation, but they really do not simply revealed that they cannot identify and evaluate complex financial
know how these work. They were afraid of scams and untrustworthy products and services that are available in the market such as mutual
insurance providers. They lacked the ability to comprehend the funds, fluctuations and risk diversification and their functions in the
complexity of these financial products and evaluate and apply it stock market. Likewise, teachers do not have the ability to interpret
accordingly [23]. This means that they have limited knowledge and and apply the given information to their day-to-day experiences
understanding on basic financial ideas on numeracy, compound and therefore, they do not take risks. According to Willis [27] most
interest, inflation, time value of money, money illusion and functions of consumers have great difficulty dealing with and understanding
stock market, and how it is applied in the financial market. This implies numbers and terms when the amounts substantially exceed their daily
that their education and training didn’t equip them to understand experience. The teachers in the Philippines need greatest support
and apply basic financial computations. Similar findings are noted by to improve their abilities to fully understand this range of financial
Rychwalski [14] that overall level of financial literacy of Polish was quite services in order to fully participate in economic life. World Bank [8]
low and how financial markets work was not well understood. All these has conceptualized an important move from financial literacy (with its
findings confirmed the studies in psychology and marketing that many focus on knowledge and skills) to capability (with its focus on behavior
people are not numerate and have difficulty grasping percentages and and results) through financial education.
working with fractions [24,25].
Table 2 shows the mean scores and the category or level of
Almost one-third of the male professional teachers had passed the performance of the professional and pre-service teachers in the basic
basic financial literacy survey while only 24% of the female professional and sophisticated financial literacy survey.
teachers got the passing average score of 4. This showed that men had
Although, both professional and pre-service teachers assessed
better understanding on financial concepts than women. This means
themselves as average in their personal financial knowledge, they have
that women had inadequate information to make sound financial
mean scores of 2.79 and 2.62, which are below the baseline level of
decisions, yet they play an important role as managers in family budgets.
performance (average score of 4) in order to pass the basic financial
Lusardi and Mitchell [22] opined that women particularly older women
literacy survey. They have the skill on basic number numeracy, like
are vulnerable and at risk of poor financial outcomes. Women are saying
doing simple calculation related to compounding interest rates, but
they know less and do not take risk. Low literacy among women is
they lack the ability to apply their stored knowledge and skill to real-life
established in other surveys covering younger or representative groups
circumstances in the context of a simple financial decision.
of the US population [12,18]. Lusardi and Mitchell [12] revealed that
there is a financial knowledge gap between men and women when it This finding reveals that teachers are unskilled with the basic
comes to money-related choices [22]. economic concepts on numeracy and compound interest. They also
lack the capability to evaluate financial information which is essential in
In both professional and pre-service teachers, it is observed that
making decision on money, saving, spending, investing and credit. They
male groups from Luzon had the greatest number of passing percentage.
are under-informed on the meaning of inflation or deflation as well as
This means they received financial information and took full advantage
its causes and effects. These results are uncomfortable considering that
of the financial products and services offered in market considering
several teachers in the study have been in the profession for 15-20 years,
that they live in (Luzon) an urban area, the hub of banking products
thus must have made several financial decisions in life and are just few
and services in the country.
years from retirement which is very crucial in their economic capacity.
The fact that professional and pre-service teachers of Mindanao got Similar challenges are faced with Australian workers and retirees in
the lowest number of passing percentage is disturbing. This means that directing their complex financial products and services required for
many remote areas in Mindanao lack access to financial services. Such retirement planning [28].
problems exist in many low-income countries where access to financial
In Sophisticated Literacy Survey, both professional and pre-service
services is very limited, and poverty is prevailing for a large share of
teachers have very low financial literacy with the scores of about 33%
the population living in the rural areas [8]. Moreover, lack of access is
below the passing mean score of 6. This is expected since they got 50%
not only an inconvenience, it is also a significant barrier to financial
below the expected passing score for basic financial literacy. They have
inclusion [26].
very limited knowledge on company stocks and bonds. They cannot tell
Only 6% of the professional teachers and 5% of the pre-service the relationship between interest rates and bonds as well as identify the
teachers passed the Sophisticated Financial Literacy Survey. This high returns of these funds. The fact that teachers can’t explain financial

Professional Teachers Pre-Service Teachers

Basic Financial Category Sophisticated Category Basic Financial Sophisticated Category
Literacy Financial Literacy Literacy Financial Literacy
Mean Mean Mean Mean
Luzon 2.83 Low 2.84 Very Low 2.42 Low 2.76 Very Low
Visayas 2.88 Low 2.88 Very Low 2.85 Low 2.79 Very Low
Mindanao 2.67 Low 2.80 Very Low 2.58 Low 2.69 Very Low
Total 2.79 Low 2.84 Very Low 2.62 Low 2.75 Very Low
Basic Financial Literacy: Sophisticated Financial Literacy:
Very High=5 Very High=8
Average= 4 (passing score) Average=6 (passing score)
Low=2-3 Low=4-5
Very Low=0.1 Very Low=0-3
Table 2: Financial literacy mean scores of the professional and pre-service teachers.

J Glob Econ, an open access journal Volume 5 • Issue 3 • 1000267

ISSN: 2375-4389
Citation: Imelda CM, Angeline MP, Gwendelina AV, Genalen MP (2017) Financial Literacy of Professional and Pre-Service Teachers in the Philippines.
J Glob Econ 5: 267. doi: 10.4172/2375-4389.1000267

Page 5 of 8

risk is evident that they haven’t taken a risk in investing their money in Global policymakers have realized that low financial literacy is
stocks or bonds. In other words, majority of the professional and pre- a barrier to national economic growth due to rising debt levels as a
service teachers are not financially sophisticated. result of poor decision-making of individuals, and its impact to the
global scale [14]. Thus, efforts are in progress to fill these gaps with
The result proved that the respondents are unaware with the
specific programs to “identify individuals who are most in need of
growing range of financial products and services available in the market.
financial education and the best ways to improve that education”
They failed to maximize the uses of these financial services in making
[26]. The best intervention for low-income countries is to facilitate
good financial decisions and plan for their future. This means that the
and increase the use of financial services in order to avoid scams and
present curricula in basic education and higher education do not equip
unscrupulous providers by providing basic financial education [8].
the teachers as well as the students’ financial knowledge and skills to
Therefore, a recommendation for the inclusion of financial education
prepare them for life. This financial illiteracy has critical implications
in the curriculum is a good strategy in improving financial knowledge,
on the way teachers manage their income, use credit effectively, secure
behavior and attitudes among students, by emphasizing on financial
their financial wellbeing and make good financial decisions in life. This
concepts and critical thinking skills and making it relevant to their
will also predict the behaviour and attitude of their students.
modern lives. It is a long-term approach to financial literacy among
In the Philippine setting, it has become a culture that after teachers. In the long run, they make the most of opportunities, meet
graduation, students seek for a job. The employability of most of the their goals and secure their financial wellbeing, as well as contribute to
graduates is more acceptable and practiced in the country rather than the economic health of society [13].
employer ability or engaging into entrepreneurship after graduation. As
The percentage of correct answers in the basic financial literacy
reported by Philippine Statistics Authority [29], the country has a high
survey and the corresponding rank of the basic financial literacy skill
poverty incidence of 26% and great income gap between the rich and
of the professional and pre-service teachers are presented in Table 3.
the poor at 29%. Majority of the population belongs to the low economic
The data present the five (5) basic questions which aims to measure the
level, thus do not have the capacity to invest their money. Such growing
basic but fundamental concepts relating to financial literacy, such as
gap is making economic growth of the country less sustainable (World
number numeracy, the working of compound interest rates, effects of
Economic Forum, 2014).
inflation, time value of money and money illusion.
These findings merit for a policy recommendation for inclusion
Professional teachers and pre-service teacher’s results show that
of financial education for basic and higher education. Almost all of
they performed better in number numeracy skills. This means that they
the professional teachers in the survey recommended for trainings,
can perform simple interest calculation which is a basic mathematical
seminars and conferences on financial literacy to advance their financial
ability. However, pre-service teachers performed better than professional
knowledge and skills. According to Mitchell and Lusardi [12], schools
teachers at 67%. This means that they readily demonstrated such
and workplaces obviously offer convenient training grounds. Inclusion
computational skills since the topic is still fresh from their basic math
of financial literacy courses in all curricula is suggested, thus students
and economics courses while the professional teachers are teaching
must be exposed to basic economics and finance in order to improve
their field of expertise forgetting their basic knowledge on numeracy.
their level of financial knowledge at a young age [16]. Young children
This implies that students and teachers could be competent enough in
increased their financial capability when they have access to financial
using their mathematical ability if provided with appropriate programs
education and it is accompanied by participation in meaningful
and trainings related to improving financial literacy. We strongly agree
financial services [30].
Basic Financial Locale Professional Teachers Pre- service Teachers
Literacy Items Correct Answers Rank Correct Answers Rank
(Percentage-%) (Percentage-%)
Number Numeracy Luzon 57.24 58.18
Visayas 59.47 74.24
Mindanao 61 67.24
Total 59.34 1 67.28 1
Compound Interest Luzon 28.89 31.27
Visayas 28.70 35.46
Mindanao 30.92 32.05
Total 29.57 3 33.15 4
Inflation Luzon 28.62 30.91
Visayas 34.02 37.95
Mindanao 25.06 33.10
Total 29.17 5 34.34 3
Time Value of Money Luzon 22.37 26.18
Visayas 29.29 29.92
Mindanao 35.38 32.40
Total 29.37 4 29.58 5
Money Illusion Luzon 44.74 46.91
Visayas 44.08 64.82
Mindanao 36.21 48.08
Total 41.46 2 54.28 2
Table 3: Basic financial literacy skills of professional and pre-service teachers.

J Glob Econ, an open access journal Volume 5 • Issue 3 • 1000267

ISSN: 2375-4389
Citation: Imelda CM, Angeline MP, Gwendelina AV, Genalen MP (2017) Financial Literacy of Professional and Pre-Service Teachers in the Philippines.
J Glob Econ 5: 267. doi: 10.4172/2375-4389.1000267

Page 6 of 8

that schools have an important role in the attainment of financial compound interest, but a mere 28% were rated as having good level of
literacy among students Furthermore, experts believed that there is a comprehension when faced with an actual problem to solve. Lusardi
place for the development of skill, knowledge and attitudes necessary and Mitchell [22] opined that students without understanding of the
for sound financial literacy within the school curriculum(ASIC, 2003). actual mathematics underlying interest compounding would find
it difficult to explain the importance of starting to save early or how
The concept on money illusion ranked second to number
quickly debt grows when borrowing at the interest rates charged by
numeracy for both groups. This means that both teachers and students
credit cards companies or by payday lenders.
failed to understand that the general increase in prices reduces the real
purchasing power of the meager wages of teachers. Almost 50% of the Theory on time value of money ranked fourth for professional
teachers, whose wages were not as high with the other professions in the teachers and ranked fifth for pre-service teachers. Both groups of
Philippines, did not comprehend the meaning of inflation when making respondents did not recognize the greater benefit of receiving money
financial decisions. The UK Financial Services Authority as mentioned now rather than later which is the time value of money. Applying this
by Hugo [31] concluded that people in low social classes and those with concept to investment implies that teachers have not fully participated
low incomes were the least sophisticated financial consumers. in investing process because they could not fully grasp the core principle
of time value of money. Thus, they miss the opportunity of a favorable
Third in rank, is the concept on compound interest for professional return of investments [22].
teachers and fourth in rank among the pre-service teachers. Both groups
have difficulty calculating interest of money compounded through the To sum, both professional and pre-service teachers are deficient in
years. Though this topic is part of the curriculum in basic mathematics knowledge and skills of basic financial literacy. The lack of basic financial
offered in school, however, they lack the knowledge and skill in information and how to appropriately use these resources deduces ones
applying this in concrete financial situation. This finding is alarming financial choices which may result to poor financial decision making.
considering that teachers usually access to credit by borrowing money Sophisticated financial literacy of professional and pre-service
from family or friends when their income does not quite cover their teachers’ survey results with their corresponding rank is shown in
living costs. Similar finding is revealed by Australia and New Zealand Table 4. The table presents the eight (8) sophisticated financial literacy
Banking Group (2005) when 67% of respondents said they understood questions which aims to measure advance concepts relating financial

Sophisticated Financial Professional Teachers Pre- service Teachers

Literacy Correct Answers Correct Answers
Locale (Percentage-%) Rank (Percentage-%) Rank
Function of Stock Market Luzon 27.96 31.72
Visayas 27.51 45.15
Mindanao 23.96 49.13
Total 26.37 2 42.25 2
Luzon 18.42 26.91
Knowledge of Mutual Funds Visayas 24.55 39.89
Mindanao 21.17 28.92
Total 21.48 5 32.61 4
Relationship between Interest Rates & Bond Luzon 16.77 26.18
Visayas 9.47 26.32
Mindanao 0 39.02
Total 8.29 7 30.23 5
Safer: Company Stock Or Mutual Funds Luzon 25.33 31.64
Visayas 3.25 47.09
Mindanao 33.70 54.35
Total 20.88 6 44.74 1
Riskier: Stocks or Bonds Luzon 0 1.09
Visayas 0 0.55
Mindanao 0 1.04
Total 0. 00 8 0.86 8
Luzon 21.83 25.45
Long Periods Returns Visayas 30.77 28.53
Mindanao 25.63 15.68
Total 25.87 3 23.62 7
Highest Fluctuations Luzon 28.29 35.64
Visayas 33.14 34.63
Mindanao 25.91 28.57
Total 29.07 1 33.04 3
Risk Diversifications Luzon 21.71 19.64
Visayas 23.08 28.53
Mindanao 22.84 23.69
Total 22.58 4 24.38 6
Table 4: Sophisticated financial literacy of professional and pre-service teachers in the Philippines.

J Glob Econ, an open access journal Volume 5 • Issue 3 • 1000267

ISSN: 2375-4389
Citation: Imelda CM, Angeline MP, Gwendelina AV, Genalen MP (2017) Financial Literacy of Professional and Pre-Service Teachers in the Philippines.
J Glob Econ 5: 267. doi: 10.4172/2375-4389.1000267

Page 7 of 8

literacy, such as function of the stock market, knowledge of mutual Conclusion

funds, relationship between interest rates and bond prices, safer
returns of company stock or mutual fund, the risk of having stocks or Financial literacy of professional and pre-service teachers in the
bonds, long period return of money, effects of fluctuations and risk Philippines is very low. Thus, financial illiteracy is common among
diversification. educators which reflect their students’ financial literacy skills and the
economic condition of the majority of the Filipino people. Curriculum
In totality, the professional and pre-service teachers exhibited a inclusion of financial education to both basic and higher education
very low sophisticated financial literacy. This means that they have not is recommended to improve the financial knowledge, behaviour and
fully understood the effects of interest rates on one’s saving and loans, attitudes among teachers, students which, in turn, spells a better
and its direct impact on some people’s income. This describes that they economic growth and development of the country.
have not fully comprehend the role of stock market in investments and
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J Glob Econ, an open access journal Volume 5 • Issue 3 • 1000267

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Citation: Imelda CM, Angeline MP, Gwendelina AV, Genalen MP (2017) Financial Literacy of Professional and Pre-Service Teachers in the Philippines.
J Glob Econ 5: 267. doi: 10.4172/2375-4389.1000267

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Citation: Imelda CM, Angeline MP, Gwendelina AV, Genalen MP (2017)

Financial Literacy of Professional and Pre-Service Teachers in the Philippines.
J Glob Econ 5: 267. doi: 10.4172/2375-4389.1000267

J Glob Econ, an open access journal Volume 5 • Issue 3 • 1000267

ISSN: 2375-4389

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