When I graduated with my Master’s in Journalism, I thought I was going to focus mainly on science writing. And, in truth, that’s what I did at first. I wrote for a physics web site, got a gig as a technology and science columnist for my local newspaper, and I even wrote some small pieces for Discover magazine. I had been a physics major in a former life, and I’ve always been interested in science, so it made sense for me to gravitate toward science in my writing.
Science includes a lot of math and, in general, I’m pretty decent at math. When someone approached me about financial writing, I figured that I could do it. After all, finance is just math, right?
My comfort level with math is something that is a little unusual in our society. Nearly 40 percent of adults hated math in school — and twice as many people say they hate math when compared with other school subjects. And, of course, anecdotally speaking, think about how many times you’ve heard people say that they’re “bad at math.”
This aversion to math might be affecting your ability to make good financial decisions, according to Jeffrey Bennett, the author of the book Math for Life. “Being bad at math is just another way of saying that you don’t understand how to function in the modern world,” says the astrophysicist and former University of Colorado-Boulder professor. “We see this playing out in the way poor mathematical thinking has led to global problems like the recent financial crisis and personal problems like people spending money on scams or gambling.”
In his book, Bennett explores some of the ways that math affects you in your everyday life. From financial decisions to political realities (like the effects of gerrymandering), Bennett takes a look at the importance of math, and the way that it’s misunderstood. If you want to make better financial decisions in your own life, he suggests, it makes sense to use math in a quantitative reasoning manner.
What is Quantitative Reasoning in Math?
Bennett points out that many school curricula don’t teach reasoning ideas when related to math. Part of the reason for this is that applying reasoning to math requires that you get into the nitty-gritty of the “why” behind the math. Anyone over the age of 30 who has tried to help a child with math developed as part of the Common Core is likely well-versed in the frustration that comes from trying to work through the problems, since they seem convoluted. However, Bennett is a proponent of curricula that focus on reasoning methods because it trains students to learn the “why” and “how” of math, rather than just spouting off formulas and getting an answer because you followed the steps.
Understanding quantitative reasoning, which requires you to get “why” and “how” can help you with the math of your personal finances as well. Once you truly understand concepts like compound interest, budgeting, debt, and investing, you are in a better place. You can also use this understanding to look at the big picture. How will your decisions affect your finances in the long run? What can you expect when you make certain decisions?
“The more important issues generally surround how we make financial and budgetary decisions,” Bennett says. This is where quantitative reasoning and “math for life” can come into play. He points out that, when choosing a health care plan, you need to consider the financial impact of an unexpected emergency, as well as the monthly premium costs of the policy.
In his book, Bennett also makes the case for using quantitative reasoning to figure out your earning potential when choosing a career or college major. Stepping back and looking at the realities of income after you finish school, and comparing that with the amount of debt you’ll have makes sense. Look at what degrees are likely to earn more, and how your grades might impact your future earning power, or your ability to get a scholarship and pay for school.
Everyone uses math every day, and understanding that might be the key to better evaluating your financial situation, and to making better decisions about your budget.