Are you ready? Rate your own financial literacy
“The cost of a thing is the amount of what I will call life that must be exchanged for it, immediately or in the long run.”Henry David Thoreau, Walden, 1854.This page in the book: yourbitcoinbasics.com/ch8
Bitcoin, right now
No price chart here on purpose. Chapter 6 covers price.
By the end of Chapter 8
Do it on your phone or laptop
- Your money on one page. About 15 minutes.
- Rate your financial literacy: weak, moderate, or strong. Write it down and date it. This book will help you level up.
- List every place your money sits, one line each, with what each one is exposed to. Keep the page. This is the one-page list the rest of the chapter refers to.
- Answer the three questions economists use around the world to measure financial literacy, known as the Big Three.
- You have $100 in savings paying 2% a year and leave it for 5 years. At the end, do you have more than $110, exactly $110, or less?
- Your savings pays 1% a year, and prices rise 2% a year. After a year, can you buy more than today, the same, or less?
- True or false: putting all your money into one company’s stock is usually safer than spreading it across many.
- Answers are at yourbitcoinbasics.com/ch8. Roughly 3 out of 10 (30%) American adults got all three right in 2009.
Answer 1
More than $110. Interest is paid on the interest, so five years at 2% comes to about $110.41.
Answer 2
Less. Prices rose faster than the interest, so a year later your money buys a little less.
Answer 3
False. Spreading money across many companies is usually safer than putting it all in one.
Did it stick?
Rate yourself: yes, mostly, or not yet. Not yet means reread that section. It does not mean you failed.
- I can rate my own financial literacy and name two reasons a low score is not mainly my fault.
- I can say what a 401(k) is and how it differs from a pension.
- I can explain why a savings account can pay interest and still lose ground.
- I can explain present bias and say what the later marshmallow research found about trust.
Your brother-in-law says, “I’m just not a saver. Never have been. Some people have it, and some don’t.” What do you say?
Say your answer out loud first. Then open the model response.
Show the model response
The research disagrees. In a 2013 study, children who had just seen a promise kept waited about four times as long for a second marshmallow as children who had just seen a promise broken. Patience follows trust. If your paycheck was unreliable or your rent went up every year, grabbing what you could was a reasonable response, not a flaw. Saving is a habit, and it gets easier when the thing you save in keeps its promise. Start with one page: every place your money sits, and what each one is exposed to.
“You teach Bitcoin. Isn’t a chapter about how exposed my savings and my 401(k) are just a way to soften me up before the pitch?”
My answer
That is a fair take. I have no product to sell beyond this book, and no stake in any account, fund, or app named here; the copyright page says what I do hold. Weigh my words with that in view, the way Chapter 11 will ask you to weigh anyone who holds what they praise.
A related question comes up in almost every class: isn’t Bitcoin a Ponzi scheme, and aren’t I just recruiting? A Ponzi scheme has an operator who collects new investors’ money and uses it to pay earlier investors the returns he promised, until the new money stops. Bitcoin has no operator to collect anything, and it promises no return. When you buy, your dollars go to whoever sold, at a price you both agreed on, not to me or to anyone at the top. The price can still fall hard, and people who buy at a peak can lose a lot. That is a risky market, not a fraud. As for my own stake: for holders like me to gain anything that matters, millions of people around the world would have to choose bitcoin, not one reader of one book. Think of me as a chef who serves the healthy meal and hands you the recipe, not the tasty one that keeps you coming back. You decide whether to eat it.
Every exposure listed here is in the fine print of the account itself. None of it depends on Bitcoin being worth anything. If you closed the book now and took your 1-page list to a CPA, the chapter would have done its job.
Want a second opinion with sources? The Bitcoin Evidence Base answers claims like this one.
Watch, read, explore
CPI inflation calculator
Run your own 30 years, the way the chapter does.Bureau of Labor StatisticsRead · 5 minEx-spouse benefits
The Social Security Administration’s own explanation of the divorced spouse benefit.ssa.govProducts and services named are examples, not recommendations. I have no financial relationship with any of them.
The 24 notes for Chapter 8
- Klapper, Lusardi and van Oudheusden, Financial Literacy Around the World, S&P Global FinLit Survey, 2015.
- FINRA Investor Education Foundation, National Financial Capability Study, 2021 wave (respondents averaged 2.6 of 5 financial literacy quiz questions correct); figure reported in FINRA Foundation, “Why Is Measured Financial Literacy Declining?,” Insights: Financial Capability, 2024, finrafoundation.org, retrieved September 2026.
- Bucher-Koenen, Alessie, Lusardi and van Rooij, “Fearless Woman: Financial Literacy and Stock Market Participation,” NBER Working Paper 28723, 2021 (about one-third of the gender gap explained by lower confidence), nber.org, retrieved September 2026.
- Council for Economic Education, 2026 Survey of the States, and CEE release “Four New States Implement Personal Finance Courses,” March 18, 2026 (39 states require personal finance; 22 require economics, down from 26 in 2024), councilforeconed.org, retrieved September 2026.
- Council for Economic Education, “Supporters” (honor roll of 2022 donors), councilforeconed.org, retrieved September 2026; Federal Reserve Education, federalreserveeducation.org.
- FDIC, “Deposit Insurance FAQs,” fdic.gov, 2025.
- FDIC, National Rates and Rate Caps, September 2026 (national deposit rate for savings accounts of 0.37 to 0.38%), fdic.gov, as reported from FDIC data by Experian and The Motley Fool, retrieved September 2026.
- Internal Revenue Code section 401(k), Revenue Act of 1978.
- Pew Charitable Trusts, “State Pension Funding Levels Stayed Stable Despite Volatility,” October 29, 2025 (funding gap of $1.32 trillion for fiscal year 2023), pew.org, retrieved September 2026.
- Jerome Powell, interview with Scott Pelley, 60 Minutes, CBS News, aired February 4, 2024; full transcript at cbsnews.com, retrieved September 2026.
- Bloomberg US Aggregate Bond Index, 2022 total return of about minus 13%, the worst calendar year since the index’s 1976 inception; see Vanguard, “How 2026 May Set the Table for Stronger Bond Returns,” corporate.vanguard.com, 2026, retrieved September 2026.
- FDIC, 2023 FDIC National Survey of Unbanked and Underbanked Households, November 2024 (4.2% of households, about 5.6 million, unbanked in 2023), fdic.gov, retrieved September 2026.
- Thaler, “Some Empirical Evidence on Dynamic Inconsistency,” Economics Letters, 1981.
- O’Donoghue and Rabin, “Doing It Now or Later,” American Economic Review, 1999.
- Mischel, Ebbesen and Zeiss, Journal of Personality and Social Psychology, 1972.
- Shoda, Mischel and Peake, Developmental Psychology, 1990.
- Kidd, Palmeri and Aslin, “Rational Snacking: Young Children’s Decision-Making on the Marshmallow Task Is Moderated by Beliefs About Environmental Reliability,” Cognition 126, no. 1 (2013); 28 children, mean wait of 12 minutes 2 seconds in the reliable condition and 3 minutes 2 seconds in the unreliable condition.
- Watts, Duncan and Quan, “Revisiting the Marshmallow Test: A Conceptual Replication Investigating Links Between Early Delay of Gratification and Later Outcomes,” Psychological Science 29, no. 7 (2018); 918 children, the correlation with later achievement fell by two-thirds with controls for family background, early cognitive ability and home environment.
- Kahneman and Tversky, “Prospect Theory,” Econometrica, 1979.
- Lusardi and Mitchell, “The Economic Importance of Financial Literacy: Theory and Evidence,” Journal of Economic Literature 52, no. 1 (2014), Table 2 (30.2% of US adults answered all three correctly, 2009 National Financial Capability Study).
- Centers for Disease Control and Prevention, National Center for Health Statistics, “Mortality in the United States, 2023,” data brief 521 (December 2024): life expectancy 81.1 years for women and 75.8 for men.
- Bureau of Labor Statistics, CPI Inflation Calculator, bls.gov/data/inflation_calculator, comparing January 1996 and January 2026 (about $213), and January 2006 and January 2026 (about $1.66 per 2006 dollar); FDIC, National Rates and Rate Caps, monthly, savings account national average, retrieved September 2026.
- Online Etymology Dictionary, “bankrupt,” etymonline.com, retrieved October 2026: from Italian banca rotta, “broken bench”; the custom of breaking a failed banker’s bench is a traditional story, and the allusion is probably figurative.
- Social Security Administration, “Ex-Spouse Benefits” and the SSA blog post “Ex-Spouse Benefits and You,” ssa.gov (“The amount of benefits you get has no effect on the benefits your ex-spouse or their current spouse receives”); SSA, “Benefits for Spouses,” for the 50% rule at full retirement age (retrieved October 2026).
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