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You Don’t Need To Be Good At Math To Be Great With Money

April 2, 2013

imageMany people I know hate math.  It’s boring and they believe they can’t do it.  I understand this completely.  I happen to be pretty good at math but lousy at other things like fixing stuff when it breaks or using tools more complicated than a screwdriver.

But, you don’t need to be a star with a calculator or spreadsheet.  There are many sources at your fingertips that you can turn to for crunching the numbers.  Bank web sites and other reputable sources offer tools to answer questions like how your savings will grow over time, renting vs. buying a home or how much you need to retire.   You don’t even need to add or subtract when you use an on-line budget calculator!

What you do need to understand is how to make sense of the data.  What does the information tell you and what action should you take?  Are your assumptions reasonable or conservative?  What are the most likely scenarios?  For example, if you spend more than you earn, your debt will grow and so will your required interest payments over time.  If interest rates rise, your payments will be even larger.  You might need to adjust your lifestyle expenses or standard of living just to pay off your debt.  These are the important questions you need to ask yourself to get smart with your money.

With so many competing priorities for our hard earned dollars, asking ourselves these questions is tough.  But the answers are worth it for our future happiness!

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