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Math and Money

February 5th, 2015 at 01:05 pm

I saw a great article about teaching children about finances:

The Smart Way to Teach Children About Money


"We focus on teaching finance in school when regular math is much more effective at helping children manage money."

"“A lot of decisions in finance are just easier if you’re more comfortable with numbers and making numeric comparisons,” says Mr. Cole.

Without strong math skills, he says, people tend to use more emotional ways to invest, spend or save their money. What’s more, people with less math experience make worse financial mistakes with issues like compounding or underestimating how quickly interest accumulates."

I can see that it would be hard to make better financial decisions without math skills.

Both my kids are (very) strong at math and I try to apply that to the real world however I can. Which has led me to comment over the years that like my 8yo had more money sense than most adults. Anyway, when I discuss credit cards with them they look incredulous. You know, like why would anyone pay 30% interest on a purchase?? I always thought it was somewhat genetic or learned, but it is interesting to think that maybe their math skills are also a LOT of it. That an 8-year-old might be horrified by the idea of high-interest credit card debt simply because they understand the math.

The above article basically said that the personal finance education just isn't working. Really interesting.

8 Responses to “Math and Money”

  1. Ima saver Says:

    Gosh, it makes me wonder if most of us on this forum, who are interested in saving money, were good in math in school? I always got straight A's in math (algebra, etc.) in both high school and in college. I loved it. Did you?

  2. doingitallwrong Says:

    When did they start teaching personal finance in school again? They weren't teaching it when I was a kid, for which I blame most of my money issues. I love math and am good at it, I took Calculus in high school, but money management? Nope, I had no idea how to do that.

  3. michdado Says:

    My sophomore twins are taking a finance class next year. And they know from mom that credit cards are evil. Ive told them already that mom and dad will not bail themout financially. Is that mean? I know i would maybe loan them money once and if they didn't pay me back no more. Is that mean?

  4. Nika Says:

    Personal finance is mostly really really simple math. You hardly even need that!

    There is Excel, there is a calculator on any phone or computer, and anything like compound interest or amortization calculations are a simple google search away. With current availability of free tools that will instantly run any calculation you need, I don't think lack of advance math stills is at the root of this problem.

  5. Ima saver Says:

    Michdado, I don't think that is mean at all.

  6. MonkeyMama Says:

    It's certainly not about advanced math skills. But there is a real problem in our country with a lack of basic math skills. Personal finance math is pretty basic - I agree. I think if you actually understand how the math works is very different than letting a computer do it for you.

  7. FrugalTexan75 Says:

    I was okay at math up til Algebra ... I had a personal finance class my senior year of high school. It apparently didn't do me much good back then ... My dad told me years ago about how when he and I were driving across the country (from TX to CA) in my rented Penske, he remembered how I was spending a good bit of the drive working on my budget. (1st teaching job) I really thought I had it all figured out. He told me that he wasn't so sure I was accounting for everything or being very realistic, but didn't want to kill my enthusiasm. Several years later with lots of credit card debt (mostly due to spending on classroom) I realized how unrealistic both my budget and financial sense really was.

    I'm just glad I woke up when I did ...

  8. chloe Says:

    I think so much of a person's personal finance skill is related to how he/she was raised. I still turn to my dad when I have questions about financial things because I learned so much from him growing up. (Also still seeking approval, probably Smile) Other people I know have reacted against parents with bad financial skills by learning to never be in the same boat as their parents. So I think it is environment more than math skills. Although having basic math skills certainly helps. And liking numbers helps, too. I just don't think that's most of the reason for a person's personal finance outlook.

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