Money Math

“Money Math” is NOT simple or easy. But getting it right is essential to winning as a David against Goliaths, to getting more productivity from every invested dollar.There many important parts of knowing your money math. Most of them are not fun for most small business owners. All of them contribute to greater profits when you know them and know how to leverage them.

What’s a New Customer Worth to You?

It’s strange, though a lot of small business people do not have an idea what a royal customer who buys regularly is worth to the business. By calculating and knowing that, you have to gain a good idea on what you are willing to invest or take risk of attracting a good and a regular customer.

Standing in front of bags of shredded cheese that are on sale at a rate of 3 bags for $5.00 I noticed that a larger bag of the same brand of cheese was being sold at its regular price of $1.50. That’s approximately 17 cents cheaper than the “on sale” bags. In today’s tough economic times, you have probably found yourself comparing prices a little more closely at the grocery store, and you may be shocked at some of the “deals” that aren’t really deals.

Spotting Real Deals

From tricky signs in the supermarket to “buy one get one free” sales, marketers are out for consumers’ money. Those who have strong math skills are able to navigate the plethora of “deals” in the marketplace. Marketers count on consumers seeing the word “free” and thinking that they are automatically getting something free. The truth is, buy one get one free really just means that the items are 50% off — a good deal, unless you can find something similar for 60-75% off the original price.

Math in Everyday Life

Shopping is not the only place your child will use math, although it is probably the most obvious example. For instance, if she wants to paint a room, she won’t know how many gallons of paint to buy unless she grasps the geometric concepts that allow her to figure out the area of her wall space. Sure, she could guess, but she’ll end up buying too much or too little and wasting her money, gas, and time trying to correct her errors. Another situation where math skills are used is with cooking. Your child will find that most recipes are too large for a small family, so she’ll have to cut them in half or even in quarters. This task is impossible without an understanding of division and fractions.

The Current Mortgage Crisis

If the American people had a better grasp of mathematics, we may not be in the crisis we’re in today. For a number of years, banks have been lending people more than they could afford. Those who understand how to look at their monthly deposits and expenditures are able to better decide on how much money they should take out. Math skills will be crucial when she is looking at her budget and deciding just how much of a house she can afford — or if she’s in a position to afford one at all.

Stores and lenders are not going to be looking out for your child’s best interests. They are looking to make money. It is your job, as a parent, to equip your child to look out for her own best interests. Math skills are used every single day. Whether she is shopping for groceries or house shopping, math is not a subject that your child can afford to struggle to understand.

 

 

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