8 ms·

Some of the skills tested in the study seem more like arithmetics rather than financial skills: - "About a quarter could not work out how much change they shou

by volgo 9y ago

Some of the skills tested in the study seem more like arithmetics rather than financial skills: - "About a quarter could not work out how much change they should receive from a shop..." - "About one in three adults struggled to work out the price they had to pay.. per litre or per kilo" - "About half could not read a simple financial line graph" - "Most struggled to calculate discounts involving more complex calculations" I mean.. people can't do math in their head. Who cares? In my opinion, the most important financial skills are simple things like monitoring your credit, your spending, creating a budget, pay off credit card in full, pay down high interest debt ASAP, avoid pay day loans, don't spend money on stupid things, invest in high quality index funds, etc. These skills are mostly psychological and will help your financial health WAY more than calculate price of chicken per pound in your head.

hammock 9y ago
How are you supposed to monitor your spending if you cannot figure out how much you paid for chicken?
- Kuiper 9y ago
  You don't need to "figure out" how much you paid for chicken; it's printed on the receipt. The only thing to "figure out" is "what's the cost per pound if I paid $7 for a 2.3 pound chicken" and maybe you want to do that arithmetic, but for a lot of people, "this chicken cost $7 and I estimate that it will feed me and my partner for maybe 2-3 meals" is the only 'calculation' that needs to happen. Larger calculations like "how much did I spend last month on groceries" are easily assessed simply by looking at a credit card statement. Being financially responsible does not necessarily entail knowing the exact dollar-to-calorie or dollar-to-weight ratio of every item in your shopping cart.
  - sambe 9y ago
    If you can't make basic calculations with ratio and percentages, it seems unlikely that you can compare different costs per unit weight/volume or do the maths to figure out how much food you need without waste. Yes, you can look at a chicken and say "that's enough for 3 people". Yes - in the UK - it's quite likely (legally required?) that all products are labelled per 100g or per kg (although I'd contest people failing these tests are likely not to be understand or care for that labelling). It's a tough argument to make that these skills have no impact on on budgeting at all.
- MaulingMonkey 9y ago
  Not by counting pennies. Estimate, get a rough order of magnitude - things you can actually keep in your head and get an intuition for instead of math to maybe forget in a checkbook somewhere if you record the calculation at all. Check your balances. Savings going up is good, savings going down is bad. If you need to get detailed, or your estimates don't line up with what your savings account is actually doing, you can also harness the power of online banking records do half the work for you. I semi-recently went over three quarters worth of transactions and aggregated them by category: "Food", "Home Expenses", "Car Expenses", "Food", "Health", "Shopping", "Subscriptions", "Charity", "Unknown". (Not well covered by this exercise alone but easy enough to add to account: taxes.) This already was overkill for me. I did nothing but fact check my gut (which was wrong on some details but right on all the macro points that actually mattered - rent, living expenses, and entertainment - exactly as you'd expect with estimates.) Monitoring total spending already tells me I'm where I need to be - with a good rainy day fund, a good savings fund growing at a good rate. Chicken? Don't know don't care. Food totaled bellow my estimates, which were already low enough I didn't feel them worth the opportunity cost of trying to optimize. That time would be better spent learning how to better negotiate raises and hiring, or learning new career skills. Unknown? Ditto. I happened to subdivide "Food" a little when initially categorizing out of ease and curiosity into "Groceries", "Caffeine", and "Eating Out". Could've saved $633.45 between 1/1/2017 and 8/16/2017 by not buying caffeine, didn't use a lick of manual arithmetic to figure that out. Computers did it for me, and it probably wasn't worth the electrons to even do that.
  - smallnamespace 9y ago
    > If you need to get detailed, or your estimates don't line up with what your savings account is actually doing I think the point is that the ability to count pennies when called upon is part of what keeps your rough intuitions properly calibrated. If one literally cannot do exact arithmetic when necessary (whether mentally, manually, or with a calculator), then how does the gut learn what to pay attention to, and when it might be wrong?
- scarface74 9y ago
  This reminds me of the myth of the "Latte Factor". http://www.slate.com/articles/business/the_united_states_of_debt/2016/05/the_latte_is_a_lie_and_buying_coffee_has_nothing_to_do_with_debt_an_excerpt.html http://www.slate.com/articles/business/the_united_states_of_...
  - sokoloff 9y ago
    It's an exaggeration more than a myth, IMO. It's directionally correct, meaning no re good would be done by people considering it than ignoring it.
    - scarface74 9y ago
      What instead of the "Latte Factor", they said... - buy a house that is well below your means or even move some place where your cost of living compared to your money earning potential is favorable. -Get a degree in something that can make money instead of a BS in Ancient Chinese Art History. -Don't go into debt getting a degree from a prestigious college to be a high school teacher. Go to a cheap state school. -Buy a car and keep it for longer. My family spends money on a lot of little things that some people would think was frivolous but we also bought a house in the burbs that had a mortgage that was less than 20% of our monthly net income, we don't drive expensive cars, or try to keep up with the Joneses. My wife still brags about how much money she saves shopping at the thrift store and I'm always looking for a bargain because I don't care about the brand of clothes. On the other hand, I'm very aggressive about my salary and told my (step) kids to pursue careers (or trades) that had income potential. In other words, it's not the little decisions you make that make a difference it's the big ones. You can only by definition, cut spending by so much, but you can make choices to make more money. After we got married about six years ago, my wife and I by working together have increased our income by 33% by her taking a job that has good benefits but low pay (that she enjoys) that gave me the flexibility of aggressively changing jobs for higher salaries without worrying about benefits.
      - watwut 9y ago
        Majority of students go for practical or practically sounding degrees. And those who dont are clustered among students from more rich families. The "students are choosing impractical degrees" is just a way to ignore actual economy problems and blaming result on students.
Kuiper 9y ago
Especially when you consider that most supermarket labels will also include the "price per unit weight" or "price per unit volume" on the shelf with a smaller font, it becomes trivially easy to compare which bottle of soap is going to get you the most for your money. Or maybe you neglect to do this (simply opting for the container that looks the most appealing rather than optimizing for the amount of liquid per dollar you'll receive) and as a result you have to suffer the catastrophic consequences of spending $9 per month on dish soap when you could have spent $7.20 instead. The funny thing is that some of the asked are all arithmetic are constructed in such a way that you will get a "wrong" answer if you treat them as practical financial questions as opposed to purely arithmetic ones. For example, one of the sample questions in the article is "If a litre of cola costs $3.15, how much will you pay for a third of a litre?" This seems to be asking you to take $3.15 and divide it by three, but as a practical matter, it would be folly for me to take the price of a 20 oz soda bottle and then assume that I could calculate the cost of a 12 oz can simply by multiplying by 0.6. This question isn't a test of practical or financial literacy; it's purely arithmetic.
- _ah 9y ago
  I've started noticing some sneaky math in my local supermarket. When comparing two items, both list the unit price, but they list the price in different units. Example: A 1.4-lb package lists the price per oz, while the 0.8-lb package lists the price per lb. In every case, the intent seems too be an attempt to induce math errors and cause someone to accidentally purchase the package with the higher true unit price.
  - fnord123 9y ago
    Just multiply or divide by 10s or 100s or whatever. It's not hard. Oh.. oh yeah. ;)
    - walshemj 9y ago
      That's not going to work with imperial units :-)
sergioisidoro 9y ago
This! I'm horrible at mental arithmetics and I have a degree in engineering. Everyone has access to a calculator in their pocket anyway, and ... Who's going to pay with cash within a couple of years? To add to what you said: I think explaining basic concepts is the way to go: Explain compound interest, how much 1$ today will be worth in their retirement at a fixed rate. How does money devalue with inflation, and other basic personal finance aspects. But above all, give people the intuition rather than just say "you should invest your savings"
grondilu 9y ago
> I mean.. people can't do math in their head. Who cares? I kind of agree. I guess I can answer to the first question : "If you bought four packs of tea: chamomile ($4.60), green ($4.15), black ($3.35) and lemon ($1.80) with a $20 note, how much change would you get?" but to be honest, it would take me an embarrassing long time to do it, and in the end I could very well have made a mistake. Don't get me wrong : mental calculus is an awesome skill and it so happens that I have lately been trying to improve in this regard. But the fact that not everybody masters this art should not be a surprise.
- gknoy 9y ago
  My reply would be "around five dollars, and if you want more let me whip out my phone's calculator". :D Now that I use a calculator, the tea adds up to just under $14, lower than my estimate of 15, but the taxes we non-Oregonians pay end up bringing it to a bit over $15. `sum(ceiling(price))` seems to be a useful way to estimate when the prices are small.
  - antisthenes 9y ago
    Hah, the tax calculation almost certainly would mean that I would get it wrong! I would have given the plain arithmetic answer.
mbesto 9y ago
> like monitoring your credit, your spending, creating a budget, pay off credit card in full, pay down high interest debt ASAP, avoid pay day loans, don't spend money on stupid things, invest in high quality index funds, etc. IMHO this all starts with the fact that many people I've encountered simply do not understand the difference between income and assets. In fact, I run into this all of the time on HN with people here who say "I can't believe that's a billion dollar business". I would love for them to do this experiment and ask the common person what the Time Value of Money is. I bet the results are way worse. I'm convinced that there are serious externalities to all of the financial innovation that has happened in the last 40 years that we simply choose to ignore and it hurts the common man.
- pge 9y ago
  I think the Time Value of Money is one of the most important concepts any lay person should understand but most don't. I came out of college (an Ivy league school) as a physics major with zero understanding of finance. At my first job, one of the first things my boss asked me was, "What would you pay me today in exchange for me paying you $100 in one year?" That, of course, led to a lesson on the time value of money. Not a difficult concept to grasp, but despite a great education, I had never had an occasion to think about it and understand it. Once you get that concept, everything else about finance and investing is pretty straightforward. I wish every high schooler had a basic finance course that started with that same question. Then moved on to personal finance basics like understanding interest (credit cards, car loans, mortgages, etc) and net worth (assets) v. income.
  - toomuchtodo 9y ago
    There is a great set of Khan Academy videos on the subject. https://www.khanacademy.org/economics-finance-domain/core-finance/interest-tutorial/present-value/v/time-value-of-money https://www.khanacademy.org/economics-finance-domain/core-fi...
- candu 9y ago
  In the US, at least, this is possibly because a not-insignificant number of people have zero or even negative net assets: https://en.wikipedia.org/wiki/Wealth_in_the_United_States https://en.wikipedia.org/wiki/Wealth_in_the_United_States It's hard to comprehend something you've never had (or, in some cases, even imagined you could have). I have friends who live paycheck to paycheck. For them, budgeting, saving, investing, long-term financial planning, etc. are completely foreign ideas. Part of this is an intergenerational legacy of poverty: their parents weren't in a position to think about these things either, so they were never raised to think about it - and so, like many North Americans, they spend money they don't have on things they don't need, work punishing hours at close to minimum wage to make up the difference, and are left with no time / energy afterwards to learn better. To compound the issue: even if they did have the time / energy to learn better, they can't secure the kind of credit that would enable them to quickly pay off their high-interest debts. It's deeply frustrating to watch, but this is what one step above abject poverty looks like. You have a lot of (well-meaning!) people telling you "just do X", without realizing that X often requires you have up-front capital, good credit, spare time, or any of the other things people in more stable financial situations take for granted. (I've been that person a few times, advising them to do things that to me are common sense - only to find out that, for them, those "common sense" steps are impossible.) In that sort of environment, it's meaningless to ask someone what the time value of money is; they have more serious structural problems with their finances that no amount of high-level philosophizing will solve.
noufalibrahim 9y ago
While your point is literally true, having basic arithmetic proficiency does go some way in making sense of the world. Quick mental calculations to see when you'll reach a certain place, ability to compare things when they're in different units etc. It's not only the skills but the overall mental model that they help create. The world starts to become a little more rational and sensible when you can do this.
- stagbeetle 9y ago
  Tell that to every maths teacher. "Show your work" was a nightmare.
  - noufalibrahim 9y ago
    As a kid, it was. As a secondary level student, I found it useful sometimes to write things out in detail when I was stuck and all the mental models I had didn't work. Good maths teachers can tell the difference and in my case, often did.
walshemj 9y ago
Id agree it would be more useful to understand your jurisdictions tax system and basic things about the stock market works ie what is a p/e ratio - how the bond yield curve works etc.
erikb 9y ago
Yes and no. Yes certainly the skills you describe are more in the financial category and help more, if you need to choose. But one really should be able to do both monitoring and simple calculations in one's head, at least getting into the range of the actual result. If you pay your single chicken leg with a $50 note and don't expect "more than $40 change" in return, then this can be bad for your finances as well.
tboyd47 9y ago
Anything involving the stock market is far from simple. And "don't spend money on stupid things" is more class signaling than financial advice. Who decides what is "stupid?" If it's important to you, why not estimate how much of an impact the purchase will have on your budget, and decide based on that? That requires math. I dunno, I do arithmetic in my head just about every day. I can't imagine engaging in any sort of business transaction without that skill. Even just going to the grocery store, not being able to round, add, and multiply, means you're always going to be surprised at the cash register. I'd much rather know how much I'm going to spend before I get to the cash register so I don't look silly asking them to put things back for me.
- hitekker 9y ago
  > "don't spend money on stupid things" is more class signaling than financial advance. If it weren’t for the sneering tone of the GP, the advice could have been meant as “don’t buy transient things that are beyond your means”
  - tboyd47 9y ago
    That proves my point even further. The "beyond your means" part is where math starts being needed again.
- skybrian 9y ago
  I think what we're seeing here is a class difference? For some people, if the grocery bill is higher than expected, you just shrug and try to do better next time.
  - sangnoir 9y ago
    > For some people, if the grocery bill is higher than expected, you just shrug and try to do better next time. I knew I had crossed some class boundary when I found myself not paying close attention to the running total at checkout. There is a difference in mindset for people whose budgets are rounded to the nearest $1, $10 or $100 respectively.
MR4D 9y ago
I’m not sure whether your comment was serious or not. If you can’t figure out change in your head, nothing will help you be able to budget. After all, budgeting can be looked at as a more complicated version of calculating change (albeit from a paycheck). And of course, without a good budget, your credit won’t be good, etc.

by volgo 9y ago

hammock 9y ago

How are you supposed to monitor your spending if you cannot figure out how much you paid for chicken?

Kuiper 9y ago
You don't need to "figure out" how much you paid for chicken; it's printed on the receipt. The only thing to "figure out" is "what's the cost per pound if I paid $7 for a 2.3 pound chicken" and maybe you want to do that arithmetic, but for a lot of people, "this chicken cost $7 and I estimate that it will feed me and my partner for maybe 2-3 meals" is the only 'calculation' that needs to happen. Larger calculations like "how much did I spend last month on groceries" are easily assessed simply by looking at a credit card statement. Being financially responsible does not necessarily entail knowing the exact dollar-to-calorie or dollar-to-weight ratio of every item in your shopping cart.
- sambe 9y ago
  If you can't make basic calculations with ratio and percentages, it seems unlikely that you can compare different costs per unit weight/volume or do the maths to figure out how much food you need without waste. Yes, you can look at a chicken and say "that's enough for 3 people". Yes - in the UK - it's quite likely (legally required?) that all products are labelled per 100g or per kg (although I'd contest people failing these tests are likely not to be understand or care for that labelling). It's a tough argument to make that these skills have no impact on on budgeting at all.
MaulingMonkey 9y ago
Not by counting pennies. Estimate, get a rough order of magnitude - things you can actually keep in your head and get an intuition for instead of math to maybe forget in a checkbook somewhere if you record the calculation at all. Check your balances. Savings going up is good, savings going down is bad. If you need to get detailed, or your estimates don't line up with what your savings account is actually doing, you can also harness the power of online banking records do half the work for you. I semi-recently went over three quarters worth of transactions and aggregated them by category: "Food", "Home Expenses", "Car Expenses", "Food", "Health", "Shopping", "Subscriptions", "Charity", "Unknown". (Not well covered by this exercise alone but easy enough to add to account: taxes.) This already was overkill for me. I did nothing but fact check my gut (which was wrong on some details but right on all the macro points that actually mattered - rent, living expenses, and entertainment - exactly as you'd expect with estimates.) Monitoring total spending already tells me I'm where I need to be - with a good rainy day fund, a good savings fund growing at a good rate. Chicken? Don't know don't care. Food totaled bellow my estimates, which were already low enough I didn't feel them worth the opportunity cost of trying to optimize. That time would be better spent learning how to better negotiate raises and hiring, or learning new career skills. Unknown? Ditto. I happened to subdivide "Food" a little when initially categorizing out of ease and curiosity into "Groceries", "Caffeine", and "Eating Out". Could've saved $633.45 between 1/1/2017 and 8/16/2017 by not buying caffeine, didn't use a lick of manual arithmetic to figure that out. Computers did it for me, and it probably wasn't worth the electrons to even do that.
- smallnamespace 9y ago
  > If you need to get detailed, or your estimates don't line up with what your savings account is actually doing I think the point is that the ability to count pennies when called upon is part of what keeps your rough intuitions properly calibrated. If one literally cannot do exact arithmetic when necessary (whether mentally, manually, or with a calculator), then how does the gut learn what to pay attention to, and when it might be wrong?
scarface74 9y ago
This reminds me of the myth of the "Latte Factor". http://www.slate.com/articles/business/the_united_states_of_debt/2016/05/the_latte_is_a_lie_and_buying_coffee_has_nothing_to_do_with_debt_an_excerpt.html http://www.slate.com/articles/business/the_united_states_of_...
- sokoloff 9y ago
  It's an exaggeration more than a myth, IMO. It's directionally correct, meaning no re good would be done by people considering it than ignoring it.
  - scarface74 9y ago
    What instead of the "Latte Factor", they said... - buy a house that is well below your means or even move some place where your cost of living compared to your money earning potential is favorable. -Get a degree in something that can make money instead of a BS in Ancient Chinese Art History. -Don't go into debt getting a degree from a prestigious college to be a high school teacher. Go to a cheap state school. -Buy a car and keep it for longer. My family spends money on a lot of little things that some people would think was frivolous but we also bought a house in the burbs that had a mortgage that was less than 20% of our monthly net income, we don't drive expensive cars, or try to keep up with the Joneses. My wife still brags about how much money she saves shopping at the thrift store and I'm always looking for a bargain because I don't care about the brand of clothes. On the other hand, I'm very aggressive about my salary and told my (step) kids to pursue careers (or trades) that had income potential. In other words, it's not the little decisions you make that make a difference it's the big ones. You can only by definition, cut spending by so much, but you can make choices to make more money. After we got married about six years ago, my wife and I by working together have increased our income by 33% by her taking a job that has good benefits but low pay (that she enjoys) that gave me the flexibility of aggressively changing jobs for higher salaries without worrying about benefits.
    - watwut 9y ago
      Majority of students go for practical or practically sounding degrees. And those who dont are clustered among students from more rich families. The "students are choosing impractical degrees" is just a way to ignore actual economy problems and blaming result on students.

Kuiper 9y ago

Especially when you consider that most supermarket labels will also include the "price per unit weight" or "price per unit volume" on the shelf with a smaller font, it becomes trivially easy to compare which bottle of soap is going to get you the most for your money. Or maybe you neglect to do this (simply opting for the container that looks the most appealing rather than optimizing for the amount of liquid per dollar you'll receive) and as a result you have to suffer the catastrophic consequences of spending $9 per month on dish soap when you could have spent $7.20 instead. The funny thing is that some of the asked are all arithmetic are constructed in such a way that you will get a "wrong" answer if you treat them as practical financial questions as opposed to purely arithmetic ones. For example, one of the sample questions in the article is "If a litre of cola costs $3.15, how much will you pay for a third of a litre?" This seems to be asking you to take $3.15 and divide it by three, but as a practical matter, it would be folly for me to take the price of a 20 oz soda bottle and then assume that I could calculate the cost of a 12 oz can simply by multiplying by 0.6. This question isn't a test of practical or financial literacy; it's purely arithmetic.

_ah 9y ago
I've started noticing some sneaky math in my local supermarket. When comparing two items, both list the unit price, but they list the price in different units. Example: A 1.4-lb package lists the price per oz, while the 0.8-lb package lists the price per lb. In every case, the intent seems too be an attempt to induce math errors and cause someone to accidentally purchase the package with the higher true unit price.
- fnord123 9y ago
  Just multiply or divide by 10s or 100s or whatever. It's not hard. Oh.. oh yeah. ;)
  - walshemj 9y ago
    That's not going to work with imperial units :-)

sergioisidoro 9y ago

This! I'm horrible at mental arithmetics and I have a degree in engineering. Everyone has access to a calculator in their pocket anyway, and ... Who's going to pay with cash within a couple of years? To add to what you said: I think explaining basic concepts is the way to go: Explain compound interest, how much 1$ today will be worth in their retirement at a fixed rate. How does money devalue with inflation, and other basic personal finance aspects. But above all, give people the intuition rather than just say "you should invest your savings"

grondilu 9y ago

> I mean.. people can't do math in their head. Who cares? I kind of agree. I guess I can answer to the first question : "If you bought four packs of tea: chamomile ($4.60), green ($4.15), black ($3.35) and lemon ($1.80) with a $20 note, how much change would you get?" but to be honest, it would take me an embarrassing long time to do it, and in the end I could very well have made a mistake. Don't get me wrong : mental calculus is an awesome skill and it so happens that I have lately been trying to improve in this regard. But the fact that not everybody masters this art should not be a surprise.

gknoy 9y ago
My reply would be "around five dollars, and if you want more let me whip out my phone's calculator". :D Now that I use a calculator, the tea adds up to just under $14, lower than my estimate of 15, but the taxes we non-Oregonians pay end up bringing it to a bit over $15. `sum(ceiling(price))` seems to be a useful way to estimate when the prices are small.
- antisthenes 9y ago
  Hah, the tax calculation almost certainly would mean that I would get it wrong! I would have given the plain arithmetic answer.

mbesto 9y ago

> like monitoring your credit, your spending, creating a budget, pay off credit card in full, pay down high interest debt ASAP, avoid pay day loans, don't spend money on stupid things, invest in high quality index funds, etc. IMHO this all starts with the fact that many people I've encountered simply do not understand the difference between income and assets. In fact, I run into this all of the time on HN with people here who say "I can't believe that's a billion dollar business". I would love for them to do this experiment and ask the common person what the Time Value of Money is. I bet the results are way worse. I'm convinced that there are serious externalities to all of the financial innovation that has happened in the last 40 years that we simply choose to ignore and it hurts the common man.

pge 9y ago
I think the Time Value of Money is one of the most important concepts any lay person should understand but most don't. I came out of college (an Ivy league school) as a physics major with zero understanding of finance. At my first job, one of the first things my boss asked me was, "What would you pay me today in exchange for me paying you $100 in one year?" That, of course, led to a lesson on the time value of money. Not a difficult concept to grasp, but despite a great education, I had never had an occasion to think about it and understand it. Once you get that concept, everything else about finance and investing is pretty straightforward. I wish every high schooler had a basic finance course that started with that same question. Then moved on to personal finance basics like understanding interest (credit cards, car loans, mortgages, etc) and net worth (assets) v. income.
- toomuchtodo 9y ago
  There is a great set of Khan Academy videos on the subject. https://www.khanacademy.org/economics-finance-domain/core-finance/interest-tutorial/present-value/v/time-value-of-money https://www.khanacademy.org/economics-finance-domain/core-fi...
candu 9y ago
In the US, at least, this is possibly because a not-insignificant number of people have zero or even negative net assets: https://en.wikipedia.org/wiki/Wealth_in_the_United_States https://en.wikipedia.org/wiki/Wealth_in_the_United_States It's hard to comprehend something you've never had (or, in some cases, even imagined you could have). I have friends who live paycheck to paycheck. For them, budgeting, saving, investing, long-term financial planning, etc. are completely foreign ideas. Part of this is an intergenerational legacy of poverty: their parents weren't in a position to think about these things either, so they were never raised to think about it - and so, like many North Americans, they spend money they don't have on things they don't need, work punishing hours at close to minimum wage to make up the difference, and are left with no time / energy afterwards to learn better. To compound the issue: even if they did have the time / energy to learn better, they can't secure the kind of credit that would enable them to quickly pay off their high-interest debts. It's deeply frustrating to watch, but this is what one step above abject poverty looks like. You have a lot of (well-meaning!) people telling you "just do X", without realizing that X often requires you have up-front capital, good credit, spare time, or any of the other things people in more stable financial situations take for granted. (I've been that person a few times, advising them to do things that to me are common sense - only to find out that, for them, those "common sense" steps are impossible.) In that sort of environment, it's meaningless to ask someone what the time value of money is; they have more serious structural problems with their finances that no amount of high-level philosophizing will solve.

noufalibrahim 9y ago

While your point is literally true, having basic arithmetic proficiency does go some way in making sense of the world. Quick mental calculations to see when you'll reach a certain place, ability to compare things when they're in different units etc. It's not only the skills but the overall mental model that they help create. The world starts to become a little more rational and sensible when you can do this.

stagbeetle 9y ago
Tell that to every maths teacher. "Show your work" was a nightmare.
- noufalibrahim 9y ago
  As a kid, it was. As a secondary level student, I found it useful sometimes to write things out in detail when I was stuck and all the mental models I had didn't work. Good maths teachers can tell the difference and in my case, often did.

walshemj 9y ago

Id agree it would be more useful to understand your jurisdictions tax system and basic things about the stock market works ie what is a p/e ratio - how the bond yield curve works etc.

erikb 9y ago

Yes and no. Yes certainly the skills you describe are more in the financial category and help more, if you need to choose. But one really should be able to do both monitoring and simple calculations in one's head, at least getting into the range of the actual result. If you pay your single chicken leg with a $50 note and don't expect "more than $40 change" in return, then this can be bad for your finances as well.

tboyd47 9y ago

Anything involving the stock market is far from simple. And "don't spend money on stupid things" is more class signaling than financial advice. Who decides what is "stupid?" If it's important to you, why not estimate how much of an impact the purchase will have on your budget, and decide based on that? That requires math. I dunno, I do arithmetic in my head just about every day. I can't imagine engaging in any sort of business transaction without that skill. Even just going to the grocery store, not being able to round, add, and multiply, means you're always going to be surprised at the cash register. I'd much rather know how much I'm going to spend before I get to the cash register so I don't look silly asking them to put things back for me.

hitekker 9y ago
> "don't spend money on stupid things" is more class signaling than financial advance. If it weren’t for the sneering tone of the GP, the advice could have been meant as “don’t buy transient things that are beyond your means”
- tboyd47 9y ago
  That proves my point even further. The "beyond your means" part is where math starts being needed again.
skybrian 9y ago
I think what we're seeing here is a class difference? For some people, if the grocery bill is higher than expected, you just shrug and try to do better next time.
- sangnoir 9y ago
  > For some people, if the grocery bill is higher than expected, you just shrug and try to do better next time. I knew I had crossed some class boundary when I found myself not paying close attention to the running total at checkout. There is a difference in mindset for people whose budgets are rounded to the nearest $1, $10 or $100 respectively.

MR4D 9y ago

I’m not sure whether your comment was serious or not. If you can’t figure out change in your head, nothing will help you be able to budget. After all, budgeting can be looked at as a more complicated version of calculating change (albeit from a paycheck). And of course, without a good budget, your credit won’t be good, etc.