Be Financially & Economically Literate
Main goal: Develop financial and economic know-how
If money is the reason to start your business or not, it will be a major part of your adventure. If you’re thinking about getting a loan from a bank, go through a Kickstarter campaign or want to attract investors, you will need to understand how money works. Spending some time to learn about the history of money and how our banking and monetary systems work is a must for every entrepreneur.
But even more important is the ability to understand what value is and how it relates to money. As an entrepreneur, your main task will be to create value for your customers, but you also need to learn how to turn this value into real money. Taking financial decisions is what you will do all the time during your career and getting this right is important for the future of your business.
In short, financial and economic literacy is about:
- Estimating the cost of turning an idea into a value-creating activity
- Planning, putting in place and evaluating financial decisions over time
- Managing finances to make sure your value-creating activity can last over the long term
Understand Economic And Financial Concepts
| Level | Ability |
| 1 | I can recall basic terminology and symbols related to money. |
| 2 | I can explain simple economic concepts (for example, supply and demand, market price, and trade). |
| 3 | I can use the concept of opportunity costs and comparative advantage to explain why exchanges happen between individuals, regions and nations. |
| 4 | I can read income statements and balance sheets. |
| 5 | I can explain the difference between a balance sheet and a profit-and-loss account. |
| 6 | I can build financial indicators (for example, return on investment). |
| 7 | I can use financial indicators to assess the financial health of a value-creating activity. |
| 8 | I can use financial indicators to compare the financial health of my value-creating activity with that of competitors |
Understand Budget
| Level | Ability |
| 1 | I can judge what to use my money for. |
| 2 | I can draw up a simple household budget in a responsible manner. |
| 3 | I can draw up a budget for a value-creating activity. |
| 4 | I can judge the cash-flow needs of a value-creating activity. |
| 5 | I can apply the financial planning and forecasting concepts that I need to turn ideas into action (for example, profit or not for profit). |
| 6 | I can judge the cash-flow needs of a complex project. |
| 7 | I can judge the cash-flow needs of an organisation that handles many value-creating activities that depend on each other. |
| 8 | I can create a plan for the financial and economic long-term sustainability of my (or my team’s) value-creating activity. |
Find Funding
| Level | Ability |
| 1 | I can identify the main types of income for families, businesses, nonprofit organisations and the state. |
| 2 | I can describe the main role of banks in the economy and society. |
| 3 | I can explain that value-creating activities can take different forms (a business, a social enterprise, a nonprofit organisation and so on) and can have different structures of ownership (individual company, limited company, cooperative and so on). |
| 4 | I can identify public and private sources of funding for my value-creating activity (for example, prizes, crowdfunding, and shares). |
| 5 | I can choose the most appropriate sources of funding to start up or expand a value-creating activity. |
| 6 | I can apply for public or private business support programmes, financing schemes, public subsidies or calls for tender. |
| 7 | I can raise funds and secure revenue from different sources, and manage the diversity of those sources. |
| 8 | I can judge an opportunity as a possible investor. |
Understand Taxation
| Level | Ability |
| 1 | I can outline the purpose of taxation. |
| 2 | I can explain how taxation finances the activities of a country and its part in providing public goods and services. |
| 3 | I can estimate the main accountancy and tax obligations I need to fulfil to meet the tax requirements for my activities. |
| 4 | N/A |
| 5 | I can estimate how my financial decisions (investments, buying assets, goods and so on) affect my tax. |
| 6 | I can make financial decisions based on current taxation schemes. |
| 7 | I can make financial decisions based on taxation schemes of different countries and territories. |
| 8 | N/A |
Note
If you are interested in learning and practising this skill group, please use the form on this page and tell us about it. We use this info for our planning for future programs and we will keep you up-to-date about it.
