Lately, I’ve been reading the very enjoyable book Stop Getting Ripped Off by Bob Sullivan of The Red Tape Chronicles (a full review will come in a week or two).
The first section of the book discusses at length how people are often stymied at personal finance due to basic math skills. Here’s a quote, from page 7, discussing a simple math problem that involved pulling two numbers off of a list, adding them together, and figuring out what a 10% tip would be:
If you answered this question correctly, consider yourself part of an elite group, because when the U.S. Department of Education asked U.S. adults to answer it as part of a nationwide study, 42% answered correctly. Less than half of American adults were able to pick two numbers from a list, add them, then perform the most basic of all percentage calculations – simply moving the decimal point one column to the left to calculate 10 percent.
You might be surprised by this abysmal performance. But then, if you think about your last dinner with a group of friends, perhaps you won’t be. Remember that dreaded moment when the bill came, and the splitting began? Cell phones and calculators were whipped out. Shrugs swept around the table. Finally, most of you gave up and threw down $20 bills or credit cards.
Sullivan goes on to point out that a dollop of very basic math can keep people out of a lot of financial trouble.
I know from my own experience that many people out there are extremely math-phobic. When they see numbers, they shut down.
Why is this? Some of it is in brain chemistry, I’m sure. Some people simply don’t do well in terms of numbers. On the other hand, I also believe that some of the problem comes from our educational system. I have always enjoyed math, but I had at least one elementary school teacher who was so abysmal at teaching the ideas that I just read the book on my own and asked my father for help. Many of my classmates, later on, who were confused by math recalled being baffled in this teacher’s class and always feeling lost thereafter.
The solution isn’t to just yell at everyone to learn math. Yes, it would be great if we were all very good at such basic math, but the dream doesn’t match the reality.
Instead, I think one solution is to simply have a repertoire of very basic math techniques that help in many situations.
I’m going to point out six of them that I’ve collected over the years, intending to use them in a post like this. If one (or all) of these seem obvious or too easy to you, congratulations – you’re pretty good at math. But each one of these situations has stymied someone I know at least once, so there are certainly a lot of people who could use some tactics like these to help them out.
Please, if you have more simple tactics like these, leave them in the comments.
Figuring out a 10% tip
This is the easiest tip of all and is exactly as described …