Oftentimes finance sounds intimidating. The broad term can certainly sound scary, but it's incredibly important that you understand the basics of financial literacy — even as a teenager — not just the aspiring future finance bros.
Knowing before deciding
Financial literacy is having the knowledge, skills and ability to make informed financial decisions. Compare it to choosing which university to apply to: it would be crazy to make such a life-changing decision without knowing about the university, tuition fees, campus life, and what other universities offer. Without that knowledge, deciding is harder and the risk of regret is higher.
In finance terms, it's the knowledge you need before making financial decisions — budgeting, saving, investing, interest and credit. One big factor you control now is saving or investing for future goals. Instead of blowing all your birthday money on something you don't really need, part of it could go into a savings account or an investment that benefits you later. The reward comes later, but it's worth it.
Credit matters more than ever
Did you know that only around 11% of transactions in 2025 were made with cash? The dramatic shift to paying by card makes understanding credit even more important. Credit score is built by regularly using a card, paying on time, and spending only a small share of the card's total limit. A higher credit score can later unlock loans, renting a car, and buying a house — and some employers even consider credit score when reviewing job applications.
The cost of financial illiteracy
Being financially illiterate increases the chance of falling into debt, through poor spending and saving habits or a lack of long-term planning. For perspective, the average millennial carries roughly $27,000 in consumer debt. And if a financial emergency hits — like losing a job — an emergency fund and basic investment skills make the obstacle far less daunting.
The takeaway
Financial literacy is for everyone, and it matters before you go into the world as an adult. With the access we have to the internet, learning can be as simple as a quick search or a YouTube video!