What is Financial Literacy?

What is Financial Literacy?

Financial literacy is like having a superpower that you know how to use well.  If you’ve seen any Avenger movies, you’ll see how each member acquired their skill.

Spiderman got bit by a spider.  He also built web throwers and had to learn how to use his tools.  But, he ran into the side of a lot of buildings on his quest to get better.  He fell, took a punch, but continued to hone his skills to be awesome. 

Captain America got his powers from a serum, and he had his share of trials and tribulations to figure out how to use his powers.  Plus, when he picked up Thor’s hammer, I don’t think anyone is really sure how big his powers really are!!

What is Financial Literacy?


The point is that with any tool you have to understand how to use them.  It takes practice.  For the Avengers, it didn’t come out of a book.  (Yes, I know they’re not real.)  They had to get out there and “mix it up”.  They would fall on their face, get back up, and try again. 

That’s life!!!!

But, along the way they learned how to use those skills.  They had to search for help and get support from others (and practice).  Even the super-genius Dr. Strange (which you have to admit is crazy awesome when he makes those sparking holes in the air) got help from some guy in some mythical land!

Anyway, the definition from Investopedia is as follows:  

“Financial literacy is the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. Financial literacy is the foundation of your relationship with money, and it is a lifelong journey of learning. The earlier you start, the better off you will be because education is the key to success when it comes to money.”

Thank you, thank you, thank you, Investopedia for supporting my point! (I added the underline for emphasis in the last sentence for a reason.)  The earlier you start, the better, because education is key.  Let’s talk about sports, to make the point.

What if Financial Literacy was a sport?

Sports are an obsession and most Americans understand something about baseball, football, or basketball. 

I believe most of us will agree that if you want to be good, it’s extremely important to start early.  You get the muscle memory going, coordination, muscle growth, a feel for the game, understand the rules, know different strategies, and more. 

If you put in the work, you’ll gain insights into the game, as well as foster good habits when doing drills.  These actions propel an athlete to success.  It requires focusing on the goal, active training, time, coaching, study, and more. 

However, for most parents, other than their “Highschool glory days”, there isn’t much emotional confusion when dealing with a sport because it’s fun.  Money can be very different.  It can have all kinds of emotional aspects to it. 

Quite a while ago, I read an article about software programmers becoming rich in Silicon Valley.  These guys were very young who received ownership in the companies they were helping to build.  Once they were acquired or had an IPO, they instantly became multi-millionaires. 

At one point, there was a surge in the number of these programmers seeking counseling. Counseling!!! They didn’t feel they were worthy of all the money, and it was very confusing for them.  It sounds weird, right?  Lots of money sounds pretty awesome.  But, I don’t want to judge, because money can be very emotional.  

Sports aren’t taboo, but money often is for many of us.  We’ve all heard the saying “Money is the root of all evil”.  But, I’ve never heard that “Football is the root of evil”, though I have had my bad days cursing the results of a Colts game.  What if money was actually like football?  

What if your family was your favorite team in the National Family League (NFL)? People would enthusiastically talk about their favorite team and know all the stats of the players on the team (mom saved $5,000 in 3 months, invested in three unicorns and has a lifetime investing return of 11.6% per year).  That would create discussions on earning, saving, and investing money.  People would argue about who was the greatest of all time.

A money “touchdown” might be putting away $15,000 in your 401(k) over the year.  Or a “pick-6” would be turning around your budget, and instead of creating debt from overspending, you create an emergency fund and some positive cash flow to go into your savings. 

You wouldn’t be mad on Monday because your team lost over the weekend.  You’d be happy you made progress on your financial goals and were moving forward in a positive direction.  It would also be based on you, and your family’s actions. Not a team of people you don’t even know.

For someone like me who came from a big family, my parents never seemed to “get their fair share” (what does that even mean?).  We never had a nice car, clothes, house or “things”.  Put another way, it always felt like a “zero-sum game”.

That means there is only so much wealth to go around. If you get more, that means I get less.  If you get two million more, I get two million less, so the sum of those transactions is zero.   It always felt like the deck was stacked against me.

I went out and put in the effort to build my financial literacy, through accumulating knowledge and putting it into action.  That means using your tools.  If you don’t understand what a hammer can do and then practice using it (hammer in nails), it’s just a piece of metal with a handle. Financial literacy is important. It needs to be learned and utilized.  Here is some basic knowledge from a video we did:


My journey will be quite different from yours, because I was obsessed with learning about money.  I wanted the knowledge, I wanted the practice and I wanted to be financially literate.  It was overkill.

For me, it meant:

  1. Acquiring an undergraduate degree in accounting
  2. Studying and passing my CPA exam
  3. Working in the profession
  4. Studying and passing my CFA exam
  5. Studying and passing my CFP exam
  6. Working in the profession
  7. Studying and passing my MBA coursework
  8. And once again more work in the profession. 

I’m officially nuts.  But, we all need to have a basic level of financial literacy.  It takes a little effort and practice.  Did I fully get over those insecurities about money?

I’d say “No”.  I definitely have the toolset without a doubt.  But, some of my “rich friends” have jumped out ahead of me by at least a decade before my financial journey even started.

These friends weren’t afraid of money.  They spoke about it in their household, just as easy as discussing the weather.  It wasn’t taboo.  They understood the concept that you have to spend less than you earn.  They understood what were good jobs and how to get them. They understood the stock market by discussing the economy while buying (and selling) stocks.  They asked for advice from their parents when buying a car (finance, lease, or other).  And, they got financial help during college as well as after it. That’s because they knew how to manage money over time, and could be trusted to make solid money decisions (financial literacy=knowledge plus practice).

If you’ve ever read about high school athletes who attempt to make it into professional sports, you are probably well aware that it’s incredibly difficult.  I’ve read one article that said 1 in 2,500 high school players make it professionally.  You’re supposedly more likely to be hit by lightning. However, for those high school athletes who have parents who played professional sports, you’ll find that they are many times more likely to make it as well.  They know:

  1. What it takes to get there. 
  2. The mental game. 
  3. The work required. 
  4. The skillset needed. 
  5. The path. 

Sports can teach you a lot to help you with life.  But, what if you spent some of that time, early on, and focus on learning how to “play” the financial game.  Imagine how that work could help your kids win at the game called “life”.

We started this website, podcast, and YouTube (EduCounting YouTube) channel to start the conversation for those who need to build their financial literacy.

Check out our podcast on “What is Financial Literacy” :

My hope is to provide insights about money that you would get from a money mentor if you had one.  I didn’t find one until much later in life. If you know someone that you feel comfortable speaking to, then speak to them.  If they’re successful and willing to spend the time to teach you, ask them questions.  Learn what you can and use that knowledge to be financially healthy and successful. Just get started. If you need help that you can’t find elsewhere or want to simply learn more, take a look at our stuff.


The earlier you start to help your kids get comfortable with money concepts, the better.  It means the faster they can start learning good habits.  You’ll then be able to set them off into the world with the right tools to make great financial decisions that will make their lives better, and you can stop worrying.


That’s financial literacy.


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