Posted by Mike Smith :: May 31, 2008 @ 10:35 am

Basic math skills are critical to personal finance success. Improving your math skills will have a positive impact on your financial situation.

For anyone who ever asked their math teacher when they would ever need to use the information they were learning, here's the answer: when you want to be in control of your personal finances. Nearly all aspects of personal finance require the use of basic math. Understanding percentages, multiplication and addition are really all that is required in most cases.

Even if you are planning to use tools, like software or calculators, to do the actual math for you, knowing what operations need to be done is still necessary. A calculator isn't going to help you if you don't know which buttons to push. The tools can do the work for you, but are only as good as the person controlling them.

The most common situation in personal finance requiring basic math skills is when you are comparing two options. If you are trying to decide between two different methods of borrowing money, without being able to calculate comparable costs, you won't know which option is the most affordable. Transitioning the terms of multiple offers into relevant numbers is very similar to the word problems we once encountered in math class.

Without math skills, you will be more likely to be persuaded by marketing that makes a product or service seem like a good deal. Taking the time to crunch the numbers and calculate the true costs for yourself is the best way to ensure that you are always getting the best deal.