What is “financial literacy” and how does one become “financially literate”?
Wikipedia has a nice definition of financial literacy (emphasis below is mine): [...] refers to an   individual's ability to make informed   judgments and effective decisions   about the use and management of their   money. Raising interest in personal   finance is now a focus of state-run   programs in countries including   Australia, Japan, the United States   and the UK. [...]  As for how you can become financially literate, here are some suggestions: Learn about how basic financial products works: bank accounts, mortgages, credit cards, investment accounts, insurance (home, car, life, disability, medical.) Free printed & online materials should be available from your existing financial service providers to help you with your existing products.  In particular, learn about the fees, interest, or other charges you may incur with these products.  Becoming fee-aware is a step towards financial literacy, since financially literate people compare costs.  Seek out additional information on each type of product from unbiased sources (i.e. sources not trying to sell you something.) Get out of debt and stay out of debt. This may take a while. Focus on your highest-interest loans first. Learn the difference between good debt and bad debt.   Learn about compound interest.  Once you understand compound interest, you'll understand why being in debt is bad for your financial well-being. If you aren't already saving money for retirement, start now.  Investigate whether your employer offers an advantageous matched 401(k) plan (or group RRSP/DC plan for Canadians) or a pension plan.  If your employer offers a good plan, sign up.  If you get to choose your own investments, keep it simple and favor low-cost balanced index funds until you understand the different types of investments.  Read the material provided by the plan sponsor, try online tools provided, and seek out additional information from unbiased sources. If your employer doesn't offer an advantageous retirement plan, open an individual retirement account or IRA (or personal RRSP for Canadians.)  If your employer does offer a plan, you can set one of these up to save even more.  You could start with access to a family of low-cost mutual funds (examples: Vanguard for Americans, or TD eFunds for Canadians) or earn advanced credit by learning about discount brokers and self-directed accounts. Understand how income taxes and other taxes work.  If you have an accountant prepare your taxes, ask questions.  If you prepare your taxes yourself, understand what you're doing and don't file blind.  Seek help if necessary.  There are many good books on how income tax works.  Software packages that help you self-file often have online help worth reading – read it. Learn about life insurance, medical insurance, disability insurance, wills, living wills & powers of attorney, and estate planning.  Death and illness can derail your family's finances.  Learn how these things can help. Seek out and read key books on personal finance topics.  e.g. Your Money Or Your Life, Why Smart People Make Big Money Mistakes, The Four Pillars of Investing, The Random Walk Guide to Investing, and many more. Seek out and read good personal finance blogs.  There's a wealth of information available for free on the Internet, but do check facts and assumptions. Here are some suggested blogs for American readers and some suggested blogs for Canadian readers. Subscribe to a personal finance periodical and read it.  Good ones to start with are Kiplinger's Personal Finance Magazine in the U.S. and MoneySense Magazine in Canada.  The business section in your local newspaper may sometimes have personal finance articles worth reading, too. Shameless plug: Ask more questions on this site. The Personal Finance & Money Stack Exchange is here to help you learn about money & finance, so you can make better financial decisions.  We're all here to learn and help others learn about money. Keep learning! Financial Literacy is about learning about finance and money and how to use and manage them to give you better outcomes in life. Just like the more books you read and the more writing you do will improve your literacy, the more financial books you read, the more questions you ask and the more you participate in this forum and others like it, the more you will improve your financial literacy.  The more financial literate you are the more you will be able to make informed decisions regarding your finances and the more you will be able to avoid financial scams.
My reading list for someone just getting into personal finance would include the following I know it's a bunch but I'm trying to cover a few specific things. Yeah it's a bit of reading, but lets face it, nobody is going to care as much about your money as YOU do, and at the very least this kind of knowledge can help fend off a 'shark attack' by someone trying to sell you something not because it's best for you, but because it earns them a fat commission check. Once you've covered those, you have a good foundation, and oh lord there's so many other good books that you could read to help understand more about money, markets etc..  Personally I'd say hit this list, and just about anything on it, is worth your time to read. I've used publishers websites where I could find them, and Amazon otherwise. I used to think this exact same way. But there are something that transcend general topics and are common throughout every part of life just due to general human nature. You may be surprised in how you can draw parallels from these fiction books to the real world including finance. "Anything by Frank Fabozzi - the de facto authority on financial education.  Most of the stuff will be textbook ($$$) so get ready for sticker shock.  Hopefully you can find a used copy of something.  Quick search on Amazon yielded ""The Basics of Finance"" for about $150." Are you sure the question even makes sense? In the present-day world economy, it's unlikely that someone young who just started working has the means to put away any significant amount of money as savings, and attempting to do so might actually preclude making the financial choices that actually lead to stability - things like purchasing [the right types and amounts of] insurance, buying outright rather than using credit to compensate for the fact that you committed to keep some portion of your income as savings, spending money in ways that enrich your experience and expand your professional opportunities, etc. There's also the ethical question of how viable/sustainable saving is. The mechanism by which saving ensures financial stability is by everyone hoarding enough resources to deal with some level of worst-case scenario that might happen in their future. This worked for past generations in the US because we had massive amounts (relative to the population) of (stolen) natural resources, infrastructure built on enslaved labor, etc. It doesn't scale with modern changes the world is undergoing and it inherently only works for some people when it's not working for others. From my perspective, much more valuable financial skills for the next generation are: I'm a college student with a technical and math background but I'm looking to apply to some jobs in financial tech because I find it to be an interesting industry. What are some good must-read finance books that can help me acquainted with finance for someone who has little to no experience/knowledge? You don't need a finance degree, no, but what you do need is evidence. Mind linking some of your sources? Can you flesh it out in detail for us? If not, why are you crusading for a cause you have no domain knowledge of? Economics without math is a tall order, since it seems that one of the things economists love to do is try and reduce everything down to mathematical formulas.  OTOH you are asking about a lot of topics besides economics. A few books I might suggest would be those three should do a good job of introductory info and helping you understand the basics and vocabulary. If you want more, one of the better 'recommended reading lists' for things financial that I've ever found is here You are smart to read books to better inform yourself of the investment process.  I recommend reading some of the passive investment classics before focusing on active investment books: If you still feel like you can generate after-tax / after-expenses alpha (returns in excess of the market returns), take a shot at some active investing.  If you actively invest, I recommend the Core & Satellite approach: invest most of your money in a well diversified basket of stocks via index funds and actively manage a small portion of your account.  Carefully track the expenses and returns of the active portion of your account and see if you are one of the lucky few that can generate excess returns. To truly understand a text like The Intelligent Investor, you need to understand finance and accounting.  For example, the price to earnings ratio is the equity value of an enterprise (total shares outstanding times price per share) divided by the earnings of the business.  At a high level, earnings are just revenue, less COGS, less operating expenses, less taxes and interest.  Earnings depend on a company's revenue recognition, inventory accounting methods (FIFO, LIFO), purchase price allocations from acquisitions, etc.  If you don't have a business degree / business background, I don't think books are going to provide you with the requisite knowledge (unless you have the discipline to read textbooks).  I learned these concepts by completing the Chartered Financial Analyst program. "Taking ""literature"" in a slightly more literal sense, if you like fiction and have a lot of time, Neal Stephenson's trilogy *The Baroque Cycle*, set around 1700, has as one of its main storylines the development of a modern currency and economical system in Europe. In particular, in the second book, *The Confusion*, one of the main characters does a role-playing exercise in finance (page 357) that covers similar ground to otherwiseyep's posts." I'm in the same position as you. I've found YouTube to be a great resource, as well as reading things from outlets like the WSJ. Having a close friend in a target school studying finance also helps a ton, as I have someone to talk to casually about things, as well as ask questions.  Check out [this](https://www.youtube.com/playlist?list=PLUl4u3cNGP63B2lDhyKOsImI7FjCf6eDW) playlist on YouTube. I've seen the professor (Lo) mentioned more than once in articles in the WSJ. He's written some books too that I'd like to read. I haven't watched that whole playlist, but the first few videos are helpful.  Martin Shkreli's YouTube channel is a great resource. It's mentioned constantly on this sub. His finance lessons as well as his weekly podcast are great. I also like to listen to (via YouTube Red) talks given by execs like Ackman, Gray, Simons, Dalio, etc. [this](https://www.youtube.com/channel/UCVJalJNQWimC2zWrIHR_bSQ) channel uploads tons of interviews and talks that I find interesting. They can get repetitive, but I find it fun to listen to these guys.   You can also get a student membership to the American Finance Association for free. Academic papers are still way above my level, but if you really get into it, those could be fun.  You can subscribe to email newsletters for some free content. Almost Daily Grant's is a good one, the normal journal costs like 2k a year.   Feel free to message me. "Excellent questions!  Asking such questions indicates something special about yourself.  The desire to learn and adjust your beliefs will increase your chance of success in your life.  I would use a wide variety of authors to increase your education.  Myself I prefer Dave Ramsey to Clark Howard, but I think Clark is very good. The first thing you should focus on is learning how to do and live by a budget.  Often times, adults will assume that you are on a budget because you are broke.  It happens with my friends and my youngest child is older than you.  Nothing could be further from the truth.  A budget is simply a plan on how you will spend your income so you don't run out of money before you run out of month. Along with budgeting I would also focus on goal setting.  This is the type of ""investing"" you should be doing at your age.  For example if your primary goal was to become an engineer, my recommendation is to hold off buying stocks/mutual funds and using your current income to get through school with little or no student loans.   Another example might be to open your own HVAC business.  Your best bet might be to learn the trade, working for someone else, and take night classes for business management. Most 18 year olds have very little earning power.  Your focus at this point should be increasing your income and learning how to manage the income you have.   Please keep in mind that most debt is bad.  It robs you of your income which is your greatest wealth building tool.  Car loans and credit card debt is just plain stupid.  Often times a business case can be made for reasonable student loans.  However, why not challenge yourself to take none.  How much further ahead could you be if you graduate, with a degree, when your peers are strapped with a 40K loan? Keep up the good work and keep asking questions." Wealth is something that we as a whole need, yet the question is how? Making wealth is not something that is troublesome but rather it is something that you need to think emphatically, as it is said negative considerations can give you negative outcomes. So right off the bat, you should simply begin thinking emphatically and for this, your psyche needs to imagine that way. Wealth is something that can guarantee a superior future. Having a huge amount of wealth is not something you will get in a matter of seconds. This can be a convenient procedure and a great deal of hazard is included in accomplishing it.  We, at Wealth Generators, help you in getting your dream of being rich completed in a very professional way. We through proper guidance given by the financial experts, enable you to generate handsome wealth in a very short span of time. Our financial experts will guide you throughout the wealth generation procedures in accordance with the latest market trends and the ups and downs. Our step by step guide will help you in making decisive decisions in a very effective way. We provide financial education through our newsletters either on the weekly, monthly and yearly basis to let the readers understand the insights of the capital market and its derivatives.  We use the latest financial technologies and tools to bring the best to the forefront of the readers. Our wealth generator newsletters are the essential guide in this competitive market scenario to help the smart investors or people willing to earn huge profits in real time. "As foundational material, read ""The Intelligent Investor"" by Benjamin Graham.  It will help prepare you to digest and critically evaluate other investing advice as you form your strategy." "There are many paths to success, but they all begin with education. You made the first big step just by visiting here. We have 17,000 questions, arranged by tag so you can view those on a given topic. You can sort by votes to see the ones that have the best member acceptance.  I'll agree with Ben that one of the best ones is ""The correct order of investing."" We both offered answers there, and that helps address a big chunk of your issue.  The book recommendations are fine, you'll quickly find that each author has his/her own slant or focus on a certain approach. For example, one financial celebrity (note - in the US, there are private advisors, usually with credentials of some sort, there are those who work for brokers and also offers help, there are financial bloggers (I am one), and there are those who are on the radio or TV who may or may not have any credentials) suggests that credit cards are to be avoided. The line in another answer here, ""You're not going to get rich earning 1% on a credit card,"" is a direct quote of one such celebrity. I disputed that in my post ""I got rich on credit card points!"" The article is nearly 2 years old, the account accumulating the rewards has recently passed $34,000. This sum of money is more wealth than 81% of people in the world have.  The article was a bit tongue in cheek (sarcastic) but it made a point. A young person should get a credit card, a good one, with no fee, and generous rewards. Use the card to buy only what you can pay back that month. At year end, I can download all my spending. The use of the card helps, not hinders, the budgeting process, and provides a bit of safety with its guarantees and theft protection.  Your question really has multiple facets. If these answers aren't helpful enough, I suggest you ask a new question, but focus on one narrow issue. ""Paying off debt"" ""Getting organized"" ""Saving"" ""Budgeting"" all seem to be part of your one question here." I rather like The Ascent of Money, by Niall Ferguson. This comes in several formats. There's a video version, a written version (ISBN-13: 978-1594201929), and an audio version. This book covers the history of financial instruments. It covers the rise of money, the history of bonds and stocks, insurance and hedge funds, real-estate, and the spread of finance across the world. It is a great introduction to finance, though its focus is very definitely on the history. It does not cover more advanced topics, and will not leave you with any sort of financial plan, but it's a great way to get a broad overview and historical understanding of money and markets. I strongly recommend both the video and the written or audio version.