If your teenager lacks adequate math skills, it diminishes their ability to make smart choices in adulthood. The results from poor financial decisions will affect them for years.
Adults who fail to analyze all the variables of various scenarios often regret the choices they make later. Lacking the math skills for deciding on the best option, they make decisions without enough information, or use bad information. This often leads to financial suffering or becoming the victim of unscrupulous con artists.
Four Situations When Making a Wise Decision Requires Math Skills
- Buying or renting a home. Renters and home-buyers must calculate more than their salary and rent or mortgage. Different neighborhoods vary widely in costs like repairs, utilities, insurance, HOA fees, transportation, and taxes. The property owner might provide the raw data, but the renters and home-buyers must calculate if they have enough money. Poor planning in choosing the right home leads to high levels of stress, decreased savings, and possibly losing the home itself.
- Contracting for services. Choosing the best services requires comparing cost and value from one supplier to another. Figuring out who has the best deal requires the ability to project costs and estimate returns. Let’s use the example of a building manager needing a landscaper. The manager collects three bids. Landscaper #1 bid 10% higher than Landscaper #2, but included one year of free repairs. Landscaper #3 bid 30% less than #2 but will take twice as long to finish. Will the 30% discount offset the cost of the project taking a long time? Will the free maintenance offset the ten percent higher cost of that landscaper? To figure out the best value, math is required.
- Choosing insurance. Figuring out what, and how much, insurance requires an understanding of probability. Is it better to pay high premiums and have a low deductible or low premiums and a high deductible? Analyzing risks and their financial outcomes helps adults choose the best insurance for their needs.
- Getting a loan or credit card. Too many people do not understand how interest rates work and end up buried in debt. Teenagers with financial literacy will start adulthood with an advantage because they can avoid taking on burdensome debt.
If your teenager lacks the math skills to do this level of complex budget analysis and planning, bring them into Mathnasium. We will help them learn the math skills necessary to build financial literacy. Call us today 303-979-9077 or click on the button below to get more information!
