Money Math for Life: A Webinar Summary

 

I recently participated as a panelist for a webinar titled Math Matters in Life: Personal Finances and Future Success. This webinar for financial educators, co-sponsored by the AFSA Education Foundation and National Math Foundation, discussed the important connection between math literacy and financial literacy and presented creative, engaging activities to teach money math.

 

Below are six take-aways from the webinar for parents and those who teach personal finance:

 

Fundamental Math Skills- The following math skills are required to make important financial decisions: addition, subtraction, multiplication, division, interpreting tables and graphs, ratios, and percentages. An example is calculating 7% sales tax on a $30,000 car ($30,000 x .07 = $2,100). Another is a 73-year old’s RMD on $100,000 IRA account ($100,000 ÷ 26.5 = $3,774, rounded).

 

Kinesthetic Learning- Information that is taught using activities that require students to touch or manipulate things (i.e., “hands-on” methods) is often retained better by students. Several examples of kinesthetic activities were shown including colorful floor mats from the National Math Foundation for elementary school students to practice adding and subtracting numbers.

 

Integrated Coursework- Only 25 states require a standalone financial education course for students to graduate and efforts are underway to include all 50 states and DC by 2030. In the meantime, students in non-requirement states can receive some financial education through other subject areas. All students are required to take math courses.

 

Financial Ratios- Financial ratios are combinations of numbers that provide valuable insights into household finances. They are calculated with basic math. (e.g., division). An example is a liquidity ratio, which is calculated by dividing monthly expenses (from a cash flow statement) into liquid assets (from a net worth statement). The higher the ratio (e.g., 5:1 vs. 2:1), the better because it means that someone has a larger emergency fund to withstand various financial shocks in life.

 

Application Activities- I shared several activities that I used with college students at Rutgers University including time value of money calculation problems (with an answer sheet containing keystrokes) and case study analyses based on real life situations. Both activities require an understanding of, or the use of, math.

 

Math Resources for Financial Educators- Among the resources that were mentioned are the 37-module AFSA Education Foundation online course MoneySKILL, which has lots of math calculations built into end-of-module assessments, and the Next Gen Personal Finance (NGPF) Math website that includes dozens of interactive activities that simultaneously teach math and personal finance concepts such as the Rule of 72 and calculating income taxes.

 

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.