At some point in school, most of us were hounded by a teacher who emphasized a concept with “you’ll need to know this later, or else!” We chalked this up to exaggeration.
It turns out that teacher was right, when it comes to math and finances.
An article in The Economist reports on a survey of subprime mortgage borrowers. All the borrowers were from New England, and all received their mortgages in 2006 and 2007.
The researchers found a disturbing correlation between financial success and math ability— 20 percent of borrowers with poor math skills went into foreclosure, compared to 5 percent of those with adequate skills.
Just as distressing, the poor math borrowers were behind on 25 percent of their payments. The others fell behind for only 10 percent.
So not only was inadequate math skills correlated with foreclosure, those borrowers created lower overall credit scores.
Why? First, don’t assume that being bad at math dooms you to a life of financial illiteracy. That’s not the case at all.
Instead, the study reveals that those least financially successful in the study group were also the worst at math. And being bad at math is linked to a number of other factors that hinder a person’s life— such as inadequate education, which is tied to lower wages overall.
So it’s impossible to say that having poor math skills will make you unsuccessful. They just tend to appear together.
I’m terrible at math. What do I do? Don’t panic. The Solvency Shark was terrible at math until he started using it in real-life applications.
You will be successful if you can:
Learn how to budget. When you ascertain how much cash flows in, how much flows out, and where it flows, you can manage your money by picking and choosing where to spend and save.
Understand how loans work. Every loan, whether a mortgage or credit card, has a principle and interest. If you get confused, ask someone in the know (like a debt counselor).
Organize your bills. Making payments on time is the easiest way to build a good credit history. Make it a part of your monthly routine.
Anyway: my name is Alexander Carl. I am a recent graduate of the University of North Carolina at Chapel Hill, where I spent four blissful years earning a degree in Communication Studies. Now I face the real world of economic downturns, student loans, and the absence of “academic” camaraderie.
Yet I refuse to be bummed. My economic philosophy is to live simply, save, and maximize whatever I can. Consumer culture is undeniably pervasive, but you don’t have to sell your soul to co-exist with it— there is great power from using your economic resources wisely.
I started writing when I figured out how to hold a pencil. Since then I’ve written short stories, poetry, screenplays, and have blogged. In fact, three of my screenplays have been produced into short films, two of which I directed. I’m no stranger to the media, having served as a DJ at a freeform radio station and worked as a crew member for live TV.
Pastimes include traveling (I’ll visit virtually anywhere), swimming, jogging, hiking, and hunkering down with a good movie.
Overall I’m a peaceful person, though not in a creepy New Agey way. I get my energy from music, good conversation, and the outdoors (I was an active Boy Scout, earning my Eagle). I consider myself “inquisitive” and “wry”, and for the sake of autobiography I’ll assume that I am.