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financial literacy: knowledge and understanding of financial language and concepts, especially when this helps you make important decisions about your financial situation
'Fin-lit survey results 'disheartening' … About 41% of adults say they'd give themselves a C, D or F on financial literacy, according to the 2009 Consumer Financial Literacy Survey.'Cornerstone CU (blog) 28th April 2009
APR 35.9%, capped, base rate, total amount re-payable, fixed term, tracker, variable rate, endowment, interest-only … This is just a small selection of the plethora of financial words and phrases encountered by anyone wanting to take out a mortgage or other kind of loan. Taking some of the most important decisions of our lives, we're often confronted with a bewildering amount of jargon, and if we want to navigate our way through the paperwork effectively, then we'll need a good dose of finlit.
ironically, the financial industry's capacity to make profit largely hinges on the idea that our finlit is not always that great
Finlit is a new abbreviation of the expression financial literacy, the ability to understand language and issues relating to finance so that you can make informed and effective decisions about your financial situation. In the last decade, raising the profile of financial literacy has been the goal of state-run programs in the USA, Australia, Japan and the UK. Such initiatives were kick-started in 2003 by the Organization for Economic Cooperation and Development, who launched an inter-governmental project aimed at improving financial literacy through the development of common principles.
Though the goal of boosting financial literacy is of course generally regarded as a very worthwhile thing and would never be openly criticized, the concept has become spattered with controversy for one obvious reason: the financial industry can often benefit from our financial incompetence, or in other words, our lack of finlit. For instance, do credit card companies really want people to understand that only paying off the minimum amount each month means they'll be worse off in the long run? Isn't this in fact the very thing they want to encourage customers to do? The fact is that, ironically, the financial industry's capacity to make profit largely hinges on the idea that our finlit is not always that great.
It is in the context of such a debate that the word finlit has come into the spotlight, often used with mildly sarcastic overtones as an alternative to financial literacy. The term recently hit the headlines in the Canadian Press, when it was revealed that the government's Financial Literacy Task Force was made up of prominent figures in the financial industry. Questioning their objectivity, commentators likened the situation to 'putting the foxes in charge of the hen house'.
The word finlit is of course formed from a blend of abbreviated (or, in linguistic terminology, clipped) words financial and literacy. It appears to take inspiration from words such as chicklit (also spelled chick lit), which first appeared in the early nineties to refer to a literary genre for women, and is a blend of chick (US slang for 'young woman') and lit as an abbreviated form of literature. Lit refers to literacy in finlit and literature in chicklit, and so their core meanings are quite different, but both words follow a pattern of informal use; finlit is often a little bit tongue-in-cheek, and chicklit is mildly derogatory.
Though there are no hard and fast rules for the formation of blends, examples like finlit buck the prevailing trend in that both elements of the blend are taken from the beginning of the component words. More commonly, the second part of a blend is formed from the end of one of the words, e.g.: brunch (breakfast + lunch), webinar (web + seminar), podcast (ipod + broadcast). That said, it seems that when one element of a word is particularly salient, especially if it is already a recognizable abbreviation of the word, then this is the element that language innovators are more likely to adopt. Twitpic (Twitter + picture, a photo/image sent via Twitter) is another recent example.
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This article was first published on 3rd May 2010.