“Americans are not financially literate.”
I have a love/hate relationship with Freakonomics. It can be very holier-than-thou in its perscriptions & discussions of economics. This episode falls closer to the love end of that spectrum. The discussions are all centered around financial literacy for normal people, and they discuss the now-famous 9 rules for finanacial success:
The podcast discusses each other them in greater detail, but I definitely feel that all of these apply to me, even though I’m fairly young. Understanding as little about personal finance as I do, this was a welcome episode. If I had to pick just one rule to focus on, I would pick 2. It is so easy to get crushed by credit card debt. Each month, the balance you carry accrues 15% interest: take your balance and multiple it by 1.15 to get your new interest. Some credit cards have even higher interest; it’s not uncommon to see 20% & 30% rates for carrying a balance on a credit card. Even if you barely (or don’t) save, starting from 0 is a heck of a lot easier than starting from -$3,000 (next month, it’ll be -$4,025!).
There was a cursory discussion of index funds in this episode but if you want to listen to the full discussion, listen to the full episode.