1 Understanding graphs and charts

Skills you will gain: understanding numbers better and faster

Prerequisite: None, it’s really easy

Length: 20mn

Personal finance use case:

We all learned to read and count at school and cannot imagine our lives being illiterate. But how good are you at understanding numbers? There is a lot you are missing out on if you are not yet used to reading charts.

The good news is that you can become a master at chart analysis in just 20mn. That might be the best investment of your life!

In this chapter, you will learn what are the main types of graphs, their use case and how to read them. Feel free to skip the parts you are already familiar with.

Although some parts may seem easy, it never hurts to refresh your memory on information you may have forgotten since school.

Understanding charts is an invaluable skill that has many hidden benefits. Putting information into a chart allows us to ****visualise data a lot more clearly than just seeing the numbers themselves and the patterns in the data become more apparent. This is especially useful with tracking your savings as graphs can reveal many things that are difficult to find just by looking at bank statements.

To introduce these charts, we will be focusing on a character called Bob who is a bit weird and likes to create charts about his life.

1.3 Why not just look at raw numbers?

Here are the latest transactions of Bob, this list is similar to what you can see in your typical bank app. What can you say about it? Not much.

Untitled Database

The same numbers are plotted in a line chart below. It suddenly becomes obvious that Bob spent half his salary in just 2 days, and then spent an entire week on overdraft.

https://lh5.googleusercontent.com/S1MiMVCSCCkFXy22FX10hxdufQtIUH9puFDZM6iVmdNfoOIIbzZTd746j6Tf5x4qh-l628b_UQg77cOj5ZgdVFmaYmSRAwZbxIzv6hkvtwcYZAuobt0PMwu3OYk0xrGAGZuAekOk=s0

1.4 What are graphs?