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Apr 20, 2021

Clip & Save: Your Financial Literacy Checklist

By Team Stash

Brush up on your financial knowledge.

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Feeling clueless when it comes to money? You’re not alone.

Just over half of Americans have difficulty passing a basic financial literacy test, according to industry data. What’s more, roughly 40% of respondents to a Stash survey¹ lacked an understanding of basic economic terms, like compounding and inflation.

While you can always bone up on your money-related vocabulary words, cultivating a deeper understanding of financial basics can help you reach your long-term goals. That can include buying a car or house, starting a family, or even retiring one day.

What does it mean to be financially literate?

Financial literacy, or a basic understanding of principles concerning money, is essential if you want the ability to honestly consider your financial situation, map out realistic goals, and develop a strategy to achieve them.

That can include making smart daily choices for spending, saving, and investing, as well as getting yourself out of debt, and avoiding unnecessary risks.

If you’re one of the millions of Americans wondering why financial basics weren’t covered during your high school years, it’s never too late to learn.

Here’s a quick rundown of some basic personal finance principles that can help you get caught up.

Learn to make a budget

Building a budget is step one on your path to understanding your own personal finances. A budget is a blueprint for your money, accounting for your income and spending, which should help you establish a plan going forward. 

Read How to Use a Budget to Stay on Track to get started. 

Get smarter about banking fees

You probably have a bank account, and you probably have a general idea of how a bank works. But not all banks are the same, and some will nickel and dime you with fees.

Are you paying too much in bank fees? Find out here: Bank Fees to Avoid

Be savvier about your saving

Saving is critical. If you’re in a tight spot, you’ll want to have a little extra cash you can use. And if you have goals such as buying a house, you can save for them over time. 

At Stash, we commend having a rainy day fund with $500 to $1,000 for surprise expenses, as well as an emergency fund with three to six months worth of expenses. Saving is part of our financial philosophy, the Stash Way. 

It can be difficult to start saving. But as of April 2020, Americans were saving a record amount as a result of the Covid-19 pandemic. If you have extra cash right now—maybe from a stimulus check or your tax return, if you got one—consider putting a chunk of that money into an emergency fund now before you spend it.

Good to know: Many people often conflate saving with investing. They can both be used for financial planning, but there are some differences. We won’t get all preachy and tell you that you need to save more, but more than half of Americans regret not saving more, according to a Bankrate survey

You may want to consider reviewing concepts like compounding and inflation while tackling your savings goals.

Read Saving vs. Investing: What’s the Difference?

Learn investing vocabulary

You can quickly go down a rabbit hole when you start digging into the world of investing. The basic premise, of course, is that you’re trading your money for a share in an asset such as a stock, bond, or ETF. The hope is that your investment may grow and benefit you in the future. Or, in other words, you’re putting your money to work. Keep in mind, however, that the market is not predictable and that your investment is subject to volatility, meaning that it can gain or lose value over time. 

Get your education started with Investing for Beginners: a How-to Guide. Our glossary of financial terms might also help you.

Overcome performance anxiety

A portfolio is an investing term that means your assets, including stocks, bonds, and cash. Your portfolio’s performance and return refers to how the assets in your portfolio gain or lose value over time.

Learn more about investment performance. Read: What is Investment Performance?

You may also want to consider Stash’s Smart Portfolios.² They are personalized portfolios, created by Stash’s investment team of financial experts³, that can help take some of the guesswork out of building a diversified portfolio.

It’s all in your hands

This checklist can help you start building your financial foundation by budgeting, saving, and investing. With Stash, you can do all of these things in one place.4 You can save for your goals with Goals5 pay your bills automatically with Bill Pay6, and invest in fractional shares of stocks, bonds, and ETFs. 

Also, remember to check out the Stash Way, our financial wellness guide for saving, investing, and planning.

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Written by

Team Stash

1 This survey was conducted online within the United States by STASH using SurveyMonkey technology in February 2018. This material has been distributed for informational purposes only, and is not intended as investment, legal, or tax advice.
2 This is a Discretionary Managed Account whereby Stash has full authority to manage according to a specific investment mandate. Diversification and asset allocation do not guarantee a profit, nor do they eliminate the risk of loss of principal. Stash does not guarantee any level of performance or that any client will avoid losses in the client’s account.
3 The investment team at Stash built these portfolios with the goal of optimizing risk-adjusted returns. This is achieved by utilizing the diversification benefits highlighted by modern portfolio theory. The portfolios aim to optimize returns given a user’s overall risk profile. Stash does not guarantee any level of performance or that any client will avoid losses in the client’s account.
4 Stash offers access to investment and banking accounts under each subscription plan. Each type of account is subject to different regulations and limitations. See the Advisory Agreement and the Deposit Account Agreement for more information.
5 Money moved into a Goal must be moved back to the bank account available balance to be used and does not earn interest.
6 Not all payees are provisioned to accept electronic payments. Please see the Bill Pay Terms and Conditions.

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