I watched something on TikTok that made a good point. The premise is that Finance is the language of the elite. It sounds presumptuous and elitist, but it could be true! Have a watch or a listen and see if you agree.
Here’s what he says:
Most people are financially illiterate. You know what the biggest issue is between the elite and people that make no money? Financial literacy. And it’s a language.
Finance is a language of the elite, just like Latin used to be the language prior to the peasants being able to have access to read the Bible. They would have to go to the elite – the Popes, the Deacons of the Church, or whoever was in charge – in order to get what? In order to get the wisdom because they couldn’t read it.
Nowadays, most people are financially illiterate and it’s in that financial lack of illiteracy that people get f*cked!
Why do you need a lawyer? Because you don’t know the law. Why do you need a tax attorney? Because you don’t know tax. Yeah you don’t need to know all of it, but if you don’t know the basics, anybody can finesse you.
Finance Is A Hard Language To Understand
I agree that Finance is a language that is hard to understand well. I certainly don’t want people to be finessed or scammed!
Maybe Finance is a language of the elite. However, it doesn’t have to be because we can all read personal finance sites written by finance experts, subscribe to finance newsletters, and listen to finance podcasts.
If something is elite, like a university that doesn’t expand its class size to keep up with demand, most people won’t be able to gain access. Elite universities purposefully keep their admissions rate low and tuition rates high, despite claiming they want to help people from all socioeconomic backgrounds, because they desire to stay exclusive.
However, anybody who is able to read and listen should be able to get a better understanding of Finance over time. Everything on Financial Samurai is free. Therefore, Finance is only the language of the elite if the majority don’t have access to financial education.
Since most people do have access to financial education, Finance only becomes an elite language if most people don’t bother to learn it!
The Language Of Finance Comes Easier Over Time
As a public school student with middle-class parents, I have never considered myself as part of the elite. My SAT scores were mediocre and I stopped math at Trigonometry / Math Analysis, one level before Calculus. With the number of rejections I’ve experienced, there’s no way I will ever be considered elite.
However, my understanding of Finance got better after majoring in Economics and getting my MBA. Working in banking for 13 years and writing over 2,500 finance posts on Financial Samurai since 2009 further improved my financial knowledge.
Today, I have no problem talking to anybody about almost any financial topic. Therefore, I believe anybody with enough desire, time, and practice can also learn the language of Finance. Nobody gets fluent in a language over night.
I get finance, but I sometimes wrongly assume that everybody does too. As a result, I sometimes end up writing over people’s heads, which is not beneficial.
Part of my realization came after I was reminded about how little savings many people have in retirement versus what they expect. After writing about the importance of savings for more than 14 years, I had expected to see a lot more financial progress by age in America. Alas, except for a small percentage, I haven’t made much of a dent.
Maybe understanding the language of Finance is hard for most people. If so, I need to really work on making my content easier to understand.
An Example Of A Financial Term I Did Not Understand
Although I’ve invested in private commercial real estate since 2016, I’m not in the trenches sourcing the deals, lending money, and setting up terms.
That’s why when I interviewed Ben Miller, CEO of Fundrise in an hour-long podcast, I got a little lost starting at the 52:37-minute mark when he was going through a lending example.
There was one term Ben mentioned I did not understand. Here’s what he said when I asked him about why there’s an opportunity to be a lender today.
“Nobody wants to perm loan out their loan yet. They want to wait.”
Huh? I immediately thought of folks getting a perm at a beauty salon when he said perm loan.
Then Ben went on to say,
“The borrowers, sponsors, real estate companies, are waiting for interest rates to fall before they put permanent financing on it. And when they do, they will have to raise more money. That’s their thinking, and if they just kick the can, they think they are better off.”
The added context gave an idea of what a perm loan is. But I had to look up the exact definition anyway.
Definition Of A Perm Loan
A permanent loan is any loan with a longer-than-normal term, though it’s not actually permanent. These loans are usually taken out for commercial real estate through a bank, credit union, or life insurance company and amortized over 25 years. The perm loan is used to cover development costs, interim loans, construction loans, and financing expenses.
Constant Learning Is Involved In Finance
Without a decent understanding of finance, you may have gotten lost for 10-20 percent of the podcast episode with Ben Miller. But hopefully, you also looked up things you didn’t understand and became more knowledgeable in the process.
Reading personal finance sites and listening to personal finance podcasts will inevitably help your financial literacy.
It’s just like watching TV shows in another language. Watch long enough and you will gradually start to get the gist of what the characters are saying. For terms that agitate you the most, you’ll look them up.
Put in the time and observe your financial literacy grow! And if finance doesn’t interest you, then befriend or marry someone who loves finance.
Understanding Finance Is Also An Insurance Policy
Finally, one of the goals of learning the language of Finance is to feel financially secure. Once you feel financially secure, you feel calmer and more confident to take on the world.
Due to my financial literacy, I know that if I lose all my money, I can claw my way back. If I was financially illiterate, I would likely be much more conservative with my life decisions.
Due to the fear of not being able to recover financially, I may have decided to work at a job I disliked for the rest of my life. Instead, after 13 years in finance and getting an MBA, I took a leap of faith in 2012 to pursue new interests.
Financial literacy gave me the courage to leave. As a result, I decided to share the wisdom I garnered from getting a severance package in my book, How To Engineer Your Layoff. Now everybody has a guide to learn how to exit a job they dislike and do something new with money in their pocket.
Understanding The Language Of Finance Is Up To You
The longer I learn about Finance, the more I realize its importance. The more I also realize how little people know about wealth management, investing, real estate, alternative investments, derivatives, economics, and the pitfalls that come with putting capital at risk.
Even if you don’t have an interest in learning about finance, you probably should, just like how you probably should eat more vegetables. The more you learn about finance, the easier it will get to learn new financial terms and concepts.
Or, you can do what most people do and not read any personal finance books, not subscribe to any personal finance newsletters, and not listen to any finance podcasts. Most folks wing it when it comes to their finances. Then they wonder why they aren’t richer when they are older.
I’m confident that if you learn the “language of the elite,” you will become much wealthier than those who do not bother. Over time, you might accumulate generational wealth so that you no longer have to worry about money at all.
If you can’t bother to learn another spoken language, like every European or Asian person I know, then at least learn the language of Finance! The choice is yours!
Reader Questions and Suggestions
Do you think Finance is a language of the elite? If not, why don’t more people spend time learning Finance if so many people want to get rich and experience financial freedom? Why isn’t more finance and personal finance taught in schools?
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