## TL;DR

Financial literacy is understanding how money works: earning, spending, saving, investing, borrowing, protecting. Key concepts: compound interest, diversification, inflation, risk vs. return, tax-advantaged accounts. Financially literate individuals make informed decisions, avoid predatory lending, and build long-term wealth.

## Core Explanation

Compound interest formula: A = P(1 + r/n)^(nt). Credit score (FICO): payment history (35%), amounts owed (30%), length (15%), new credit (10%), mix (10%). Insurance: protect against catastrophic loss — health, life, disability, property. Tax: understand marginal brackets, tax-advantaged accounts (401k, IRA, HSA). Inflation: ~2-3% annually — cash loses purchasing power.

## Further Reading

- [Your Money or Your Life (Vicki Robin, Joe Dominguez)](https://www.penguinrandomhouse.com/books/180511/your-money-or-your-life-by-vicki-robin/)