Personal Finance vs. "Important Math"

[jasonnoguchi]

Not true my friend, my grandfather only finished 8th grade, he did not have what we call "a good math background", yet, he is well off, very smart with his money. Granted, I am sure he had to learn much on his own, but to completely understand finance with a good math background is not entirely true....

I do understand what you are saying, to have a deep understanding of the ends and outs of finance does require a proper math foundation.

Being well off and being knowledgeable in finance is two different matter. One of the top wealthiest person in China today was a rubbish collector just a few years ago and she is now worth over 100million. So, does that make her knowledgeable in finance? not at all. Business sense and finance are two different things. Ask him how a financial swap is arranged and he will probably scratch his scalp off. That's finance.

[jIM_Ohio]

I'd find it hard to explain finances to anyone without an understanding of the following:

Addition-subtraction-multiplication-division and percentages/fractions.

It would be difficult to explain debt and investing without more understanding of
interest rates, exponential functions, statistics, standard deviations, the application of standard deviations to all of above and similar

I see LOTS of people talk about investing on sites like this, yet very few can explain standard deviations and investment volatility together.

think about that...

[PrincessPerky]

Why is it one or the other? Because with the mass education system teachers do not have time to devote to each student a full varied curriculum.

While a calculator can do double or triple digit dividing (polynomial division = many numbers division) they cannot point out when you accidentally hit an extra 3 in there. (though I admit all that texting practice the kids get these days certainly helps with the calculator use...)

Calculators are also generally not at the grocery store when deciding between size A and size B. Your brain on the other hand is conveniently attached at all times.

But then knowing more details about any one of the million careers out there is not quite as helpful as you might think. There are after all TONS of options out there, specializing is over done IMO.

I figure a kid aught to be a jack of all trades, till one clicks. Then one should be a jack of most trades and learn as much as possible about the favorite. Unfortunately in America with the forced education system we have we do not allow for varied time of choosing a trade.

My son asked me the other day when the last time I used algebra was...I asked around, haven't yet found anyone who used it since highschool classes (or teaching) but I still teach it. More for the logic than the actual future need. If he decides on engineering or something he will need it, if not, no big.

Finances on the other hand we talk about when we discuss turning lights off, not wasting water, buying brand A vs Brand B (and the math for which size is cheaper by the oz) paying bills, not eating out whenever we want, and so on.

(there is also of course plenty of other 'home ec' stuff, history, music, art, language, writing, reading, science, ect)

So I don't see why it needs to be one or the other, for a homeschooler, for public education ah well can't help really. You do have limited time and need to keep millions happy....I

[lovcom]

Not true my friend, my grandfather only finished 8th grade, he did not have what we call "a good math background", yet, he is well off, very smart with his money. Granted, I am sure he had to learn much on his own, but to completely understand finance with a good math background is not entirely true....

I do understand what you are saying, to have a deep understanding of the ends and outs of finance does require a proper math foundation.

I suspect your students are too young to know what future vocation they'll need.

Do teach polynomial math. It is good and to dumb down math is to allow the current trend of foreigners passing us up big time.

The problem with today's math curriculum is that in comparision to even some 3rd world countries, the USA math is dumbed down, and this is one of many reasons the rest of the world is passing us by.

Financial math should not be emphasized until HS or beyond....get the basics down first, the algebra, the trig, then after that a student will better appreciate the financial math. Lets walk before we run.

[ActYourWage]

Being well off and being knowledgeable in finance is two different matter. One of the top wealthiest person in China today was a rubbish collector just a few years ago and she is now worth over 100million. So, does that make her knowledgeable in finance? not at all. Business sense and finance are two different things. Ask him how a financial swap is arranged and he will probably scratch his scalp off. That's finance.

Ok. Thanks.

[mezzchick]

FWIW - I am a product of a PA education and one of my best classes was in 12th grade. At the time (not sure about now) it was required in order to graduate that you take and pass Economics. The teacher was fabulous! He made us use the newspaper to find jobs based on our future goals (college grad vs. tech school vs. no post education), then determine our budgets for housing, food, clothing, etc. Then we got "mortgages" and "car loans" that we paid out of our fictitious checking accounts. We were paid every 2 weeks, etc. I sure hope that they are still requiring this class...

I also had a class like this. We were paired up with a husband/wife. We actually had to show all the paperwork-meaning we had to go to a dealership and have forms filled out, etc. Then a couple months later, we had a "disaster" Mine was a fire, where we lost everything. I remember some people had twins Once again, we had to show all the paperwork.
It was very interesting...

I do think though, that we should be teaching more personal finance classes at a younger age. My 13 year old just asked us about second mortgages the other night......

[PrincessPerky]

walk before you run, is not a good finance analogy. running is a pretty linear progression from crawling to walking, to running (with a good deal of tripping on the way)

Anyway on topic. Learning finances is not one big jump from basic math (+,-,/,*) to amortization of a mortgage. Knowing why we do not buy just anything at any time is important, knowing why a dollar is worth what it is worth (and not as much as it used to be) knowing why we do not spend all the money we have in the bank, knowing why we pay the electric bill (preferably on time) These concepts can be taught long before we worry about double digit division.

Conversely knowing how to understand your taxes or mortgage does not necessarily equate with knowing how to pay bills on time.

Think of finance as more of a science, or an art form. There is no particular reason to know about mammals before birds, but both are worthy of study. Just as there is no more reason to know division than the value of paying on time. Both are worthy topics for study. On the other hand the Latin classification of said mammals/birds is useful, but not necessary for most, just as the ability to do calculus is useful, but not necessary for most. And knowing how to amortize a mortgage is useful, but not totally necessary for most, there are these calculators that do the math for you.....

[jIM_Ohio]

My son asked me the other day when the last time I used algebra was...I asked around, haven't yet found anyone who used it since highschool classes (or teaching) but I still teach it. More for the logic than the actual future need. If he decides on engineering or something he will need it, if not, no big.

Disclaimer- my degree is in engineering
I work for a software company

Algebra is basic math

If city 1 and city 2 are 100 miles away, it will take 2 hours to get there on the backroads at 50mph or 1.5 hours on interstate at 70mph.

That is algebra

Car 1 costs 20k and gets 20 mpg
Car 2 costs 30k and gets 30 mpg

which is cheaper to own?
you need to plug in miles you put on a car for that to work itself out- that is algebra.

[disneysteve]

Algebra is basic math

If city 1 and city 2 are 100 miles away, it will take 2 hours to get there on the backroads at 50mph or 1.5 hours on interstate at 70mph.

That is algebra

Car 1 costs 20k and gets 20 mpg
Car 2 costs 30k and gets 30 mpg

which is cheaper to own?
you need to plug in miles you put on a car for that to work itself out- that is algebra.

Good examples. The problem isn't that people don't use algebra. The problem is that they don't realize they are using algebra. We all use it regularly. We just don't think of it as such.

[PrincessPerky]

Good examples. The problem isn't that people don't use algebra. The problem is that they don't realize they are using algebra. We all use it regularly. We just don't think of it as such.

exactly in both cases my husband would crunch some numbers figure in stress of travel/ maintenance of car, and call it a day with nary an equation. I on the other hand do not drive .

Regardless, I still teach it, more for the critical thinking than any thought that he will need it (though he is more likely to choose engineering, or some such than myself or my daughter)

[mom-from-missouri]

I'd like to recommend a math program. It is "Life Skills Math" put out by AGS. It teaches all the basics, fractions, interest rates, percents, metric, algerbra, decimas, rations, averages,statics, volume & surface areas, time, map reading, graphs.....Then, at the end of each concept it gives the student a set of everyday problems to solve, so they know why it is important to learn that concept. Problems include (I am flipping through the the text book now) doubling a recipe, figuring square footage for paint and carpet, figuring compound interest rates for credit cards and loans, balancing a checkbook, buying fabric, figuring liquid medication doses based on weight, graphing sports scores, figuring mpg......

My girls tell me it makes them more willing to want to learn and remember it when they see that they will actually use it in the future.

[lovcom]

walk before you run, is not a good finance analogy. running is a pretty linear progression from crawling to walking, to running (with a good deal of tripping on the way)

Anyway on topic. Learning finances is not one big jump from basic math (+,-,/,*) to amortization of a mortgage. Knowing why we do not buy just anything at any time is important, knowing why a dollar is worth what it is worth (and not as much as it used to be) knowing why we do not spend all the money we have in the bank, knowing why we pay the electric bill (preferably on time) These concepts can be taught long before we worry about double digit division.

Conversely knowing how to understand your taxes or mortgage does not necessarily equate with knowing how to pay bills on time.

Think of finance as more of a science, or an art form. There is no particular reason to know about mammals before birds, but both are worthy of study. Just as there is no more reason to know division than the value of paying on time. Both are worthy topics for study. On the other hand the Latin classification of said mammals/birds is useful, but not necessary for most, just as the ability to do calculus is useful, but not necessary for most. And knowing how to amortize a mortgage is useful, but not totally necessary for most, there are these calculators that do the math for you.....

1. Walk before you run is a perfect analogy for math, because as all math teacher the world over know, one has to get through simple arithmatic (walking) before one can progress to algebra, geometry, trig, calculus, etc. I guess you forgot how it was back in elementary, middle, jr. HS then HS. Unlike history, english, and other school subjects, mastering math can only be done in steps because the current step builds on the prior, and this is why a math student must understand chapter 1 before he can possibly master chapter two: walking before running....the learning is in fact linear, even as the equations are parabolic, hyperbolic, and logarithmic, and beyond.

2. The reason most people mess up financially has less to do with understanding financial math, and more about the inability to practice restraint, and achieving a high level of delayed gratification.

3. There are mathematicians that have messed up finances, so knowing math really well is just part of good financial practices.