Recently, I was reminiscing about my financial education. Or maybe I should put that in quotes: “financial education.” In 10th grade, we created a budget based on what we guessed our salary would be for our dream job, breaking it up in a spreadsheet for everything from rent to entertainment. Never mind that a 15-year-old is a pretty poor judge of what a twenty-something would actually be buying (not to mention that, in 2005, I had no way of knowing how much of my future budget would go to Uber) — the exercise was too simple. There were no spaces on the spreadsheet for retirement accounts, emergency funds, stock options…you know, the real stuff that you need to learn about as soon as you open your own bank account.
And while I’ve picked up a lot of useful financial knowledge and habits in the decade since that class — still waiting on my merit badge for contributing 20% of every paycheck to savings — there are plenty of terms I’m still hazy on. And the worst part of that knowledge gap? It’s costing me money.
I asked Priya Malani, Refinery29’s resident financial expert, what common terms millennials often misunderstand in ways that hit them where it hurts (their wallets). Ahead, we’ve provided definitions on everything from interest to stock options — no confusing jargon in sight.