For most Americans, math class seems less than useful. Trust me though, math is very useful. You just have to know how to use it to make money!
Whether we are talking about how long it’s going to take you to pay off a debt or how to figure out how much an investment is going to make by the time you’re ready to buy that Maserati – math is a requirement.
Not Revenge of the Nerds math. Not rocket scientist math. We’re talking basic 7th and 8th grade math here.
The good news, you also don’t need a lot of math. As little as 12 to 15 simple – but key – math concepts/equations are all that most people require for good personal finance practices.
If you learn this dozen or so math techniques, you’ll be better off than most Americans. You’ll be able to make far better financial decisions. You’ll be able to get far better advice when asking experts for help, because you’ll be already talking their language.
In other words, math is the language of money. You need to learn it if you want to communicate with people who have it, and to try and get some yourself.
Here’s my list of the most fundamental math problems every person needs to be able to solve.
- Time Value of Money
- Average
- Geometric Average
- Media
- Percent change/increase
- Simple Interest Calculation
- Compound Interest calculation
- Rule of 72
- Amortization Calculation
- Future Valu
- Present value
- Specific principal payment
- Specific interest payment
I’m sure I can, and likely will, be convinced my list needs some tinkering. This, however, is the list I’d give the young man just starting out on their personal finance journey or the middle-aged woman who never had to deal with money but is just now attempting to learn.
What do you think? Let me know in the comments what I got wrong, what I missed, or what I put in there that is not needed. I’m curious what other’s think.
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