Importance of Math in Management of Personal Finances
Personal finance is one of the areas of life that most adults struggle with. Money management is all Math. Knowing how much you earn, what to spend and how to spend the money in your account is what counts, but it is a challenge.
There are various seminars and trainings organized to teach you more on personal finance but to avoid spending more in registration, accommodation, and travel to the locations and for the trainings, read on. More information on importance of math and better management tips are listed below:
- Tracking expenses
The main money management strategy involves tracking the movement of your money weekly, monthly, or quarterly. If you wonder where your money disappears to every time, then you pull out paper and pen, and track how you spend your money.
Start by writing down the amount you earn then categorizing your bills and your regular expenses. Use past receipts and bank statements to determine a close estimate of what you spend. Computing these will give you an overview of just how much you spend. Basically, your expenses should be lower than your earnings.
- Creating a budget
Once you have ascertained how much you spend monthly or weekly, depending on how your payments come in, you should create a budget. Mathematical knowledge gained in junior and even senior classes will be essential here.
Begin by dividing your money into the four main categories of fixed costs savings, investments, and the guilt-free spending. Allocate 50-60 percent of total earnings to the fixed costs like rent, utility bills, gas, power, etc.
Your investments account for 10% of your earnings, savings between 5 to 10%, and the guilt free spending between 20-35%. To accurately arrive at the correct values, your basic mathematical knowledge will be very important. Budgeting makes it possible for you to know where your money goes even before earning that money. This puts you at a better position in life and your finances will always be controlled.
- Knowing when to use a credit card
Debt is a bad thing and one way of getting out of it is not getting into debt. For this to happen, you have to calculate amount of money charged as interest, the Annual Percentage Rate calculated monthly and not annually as said. Knowing these loopholes will help you calculate the accurate values charged and you can decide if you need to take the good on credit or not.
You should also avoid splurge shopping and only buy what is necessary with money at hand or money in your bank account and money not allocated for anything else.
- Making investment decisions
Whether you wish to invest your money in stocks, bonds, real estate, treasury bills, etc., you must have mathematical skills and capabilities to calculate the rates. Finance courses teach more on how to determine the values of investments but mathematics remains an important subject for one to pass.
In conclusion, personal finance relies on mathematical knowledge. The knowledge gained in school is applicable directly or indirectly to solve financial troubles and to balance your books. With properly managed finances, you will get to determine better opportunities to grow your money.
Author Bio
Steve Hawkins is a tutor working at a leading tuition agency. He teaches math and he can also offer help with your math tuition assignments. Check out his profile for information on how to contact him.