Financial Literacy

Categories: Education, Metrics

For most of us, once we bust out of high school, money actually matters, in a sorta fun but mostly scary way. You need financial literacy. Without it, you risk ending up as one of those TSA workers at the airport, stealing nail clippers and lotion from the suitcases of innocent travelers, believing you're doing something...of value.

What does it mean to be financially "literate"?

You know the difference between a stock and a bond, between ownership and debt obligations. It means that you understand the massive bias in financial reporting and don't blindly trust "facts" you read in The New York Times. (when they claim a CEO made $82 million this year but then conveniently ignore that the CEO worked at the company for 41 years, growing it to be worth billions from millions).

You'll learn to snarkily ask, "How'd you calculate that metric?" and "Where'd you get the data?" You'll know that trying to beat the market is almost always a way worse idea than just trying to be the market and earn money elsewhere. You'll understand the math of compounding and appreciate how much you, the would-be successful person, pays in taxes. And how much of that money goes to deadbeats who...just don't care. You'll respect the integrity of a promise to pay back borrowed money.

That's literacy a la Shmoop.

Find other enlightening terms in Shmoop Finance Genius Bar(f)