Financial Literacy Month Series: Let’s Break Down Buzzwords – What You Own, What You Owe, and Why It Matters

Before college, I thought I had it all figured out—full ride to study computer science, future software engineer in the making. But life happened, and I switched to economics… mostly just to graduate faster.

Then came my first Wall Street job, and I realized I had no idea what anyone was talking about. Terms like “net worth” and “liabilities” were flying, and I was nodding along while secretly Googling under the desk.

In honor of Financial Literacy Month, we’re kicking off a 4-part series to break down the financial buzzwords everyone hears—but few actually understand.

Nearly 1 in 3 Americans don’t know what terms like credit score or net worth really mean.

So this week, we’re starting with the basics.

Assets & Liabilities

Let’s keep it simple:
Assets are what you own.
Liabilities are what you owe.

Why it matters:
Ever feel like you should have more money than you do? This might be why. It’s not just about what’s in your bank account (assets)—it’s also about what you still need to pay off (liabilities).

Real-life example:
You’ve got $2,000 in savings, but $1,500 in credit card debt. Once those bills are paid, you really only have $500.

Pro Tip:
Write down everything you own and everything you owe. Seeing it all in one place gives you a clearer picture—and it’s the first step toward feeling more in control.

Net Worth

What you own, minus what you owe. That’s your net worth.

Why it matters:
It gives you a big-picture view of your finances. Think of it like your financial scorecard—it tells you where you really stand.

Real-life example:
You’ve got $1,000 in checking, $500 in savings, and $800 on a credit card. Your net worth? $700.

Pro Tip:
It’s not about having a huge number—it’s about making progress. Track it every few months to see if you’re moving in the right direction.

Credit Score

Let’s break it down:
Your credit score is a 3-digit number that tells lenders how trustworthy you are with money.

Why it matters:
A higher score makes it easier (and cheaper) to borrow money. It can also help when you’re applying for an apartment or even a job.

Real-life example:
If you always pay your credit card on time and don’t rack up a huge balance, your score will usually stay in good shape. But if you miss a few payments or max out your cards, it might take a hit.

Pro Tip:
You can check your score for free through apps like Credit Karma or even your credit card provider. Keeping tabs on it now saves you headaches later.

Final Thoughts: One Lesson In, and You’re Already Smarter Than 1 in 3 Americans

If these terms felt confusing before, I hope they’re feeling a little more manageable now. You don’t need to know everything to take control of your money—but understanding the basics is a powerful first step.

These are the building blocks of real financial confidence—and we’re just getting started.

Stay tuned: Next week, we’ll break down the true cost of borrowing—things like APR, compound interest, and how to tell if your money is actually working for you.

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