Tips to Boost Your Business Math Skills, Part 1
Learn 3 tips that’ll help turn you into a business star.
Whether you’re working for a business, running a business of your own, or running the business of your own household, there are certain math skills you literally cannot afford to ignore. Things like calculating and understanding percentages, simple and compound interest, average values, and the always scary-sounding standard deviation (shudder!). If you’re unsure about any of these things, it’s your lucky day because for the next two weeks we’re headed to business math boot camp.
Tip 1: Learn to Quickly Add and Multiply Numbers in Your Head
There’s no point in learning lots of fancy business math if you haven’t first developed your ability to do basic arithmetic quickly and easily in your head. Seriously, you can have a fancy calculator and know a bunch of formulas, but the single fastest way to get a lot of bang for your buck is to learn how to mentally do things like add and multiply numbers. Just think how popular and invaluable you’ll be when you can “run the numbers” in meetings faster than everybody else, put together budgets on the spot, and tally up totals quicker than most people can operate a cash register.
Mental math is the sort of thing that takes some practice to master. Since we don’t have a lot of time to review all the techniques right now, I’ve put together a new hour-long audiobook on the subject called The Math Dude’s 5 Tips to Mastering Mental Math that’ll walk you step-by-step through 5 of the best mental math secrets and get you up and running quickly. Download it for less than $1 from Audible, iTunes, or Amazon. But no matter what method you use to learn, the bottom line is that brushing up on your mental math skills is essential!
Tip 2: Learn to Quickly Calculate Percentages
Percentages are one of the main elements of business math. People love to use them to talk about how sales have grown, how the value of one company compares to the value of another, and on and on. Fortunately, percentages are easy…once you know the trick to finding 1% and 10% of any number. To find 10%, start by writing the number in decimal form and then simply move the decimal point one position to the left. To find 1% of a number, just move the decimal point two positions to the left.
So 10% of $53.00 is just $5.30. And 1% of $53.00 is just 53 cents. Why is that so useful? Because once you’ve found 1% or 10%, it’s easy to find something like 12% since that’s just 10% + 1% + 1% or 15% since that’s just 10% plus half of 10%.
If you’d like to learn more about this, check out my earlier articles on using the power of 10% to help you calculate tips and sales prices. There’s also some additional percentage calculating tips and practice in the Mastering Mental Math audiobook that I mentioned earlier.
Tip 3: Learn to Use the Simple Interest Formula
Interest is an idea that shows up all over the place in the business world. The money you make on investments like savings accounts, CDs, stocks, and bonds, and the money you owe on loans like mortgages and credit cards is based on the idea of interest. In particular, it’s calculated from an interest rate which is usually given as some percentage (see, there are those percentages again!) of the total investment or debt owed each year.
The simplest kind of interest is called—quite logically—simple interest. To perform calculations with simple interest, you just need to remember that you are pretty. What? Yes, say it with me folks: “I am pretty.” And, of course, by that I mean the formula:
I = P x r x t
The “I” here stands for the interest earned or owed, the P stands for the principal amount of the investment or debt, the r stands for the interest rate per year or some other unit of time (which is usually given as a percentage, but which you’ll need to turn into a decimal number), and the t represents the total time over which the interest is calculated.
Simple Interest Formula Examples
For example, if you have $1,000 invested for 2 years in a CD earning 5% annually, at the end of those 2 years you will have earned $100. Just plug in the numbers:
I = $1000 x 0.05 x 2 = $100
Of course, you can use the fact that you are pretty (aka, I = P x r x t) to do more than simply calculate the interest when you know the principal, rate, and time. In fact, given any 3 of these 4 quantities (interest, principal, rate, and time), you can use a bit of algebra to calculate the fourth. Want to know how long it would take to earn a certain amount of interest on some principal at some rate?
Just turn I = P x r x t into t = I / (P x r) and you’re ready to go!
There are many other problems you can solve using the simple interest formula. We’ll talk about some examples in next week’s conclusion to this business math boot camp.
Number of the Week
Before we finish up, it’s time for this week’s featured number selected from the various numbers of the day posted to the Math Dude’s Facebook page and to QDT’s new blog, The Quick and Dirty. This week’s number is 379.3 feet. Why? Because that’s the height of the largest living organism on the planet—the coast redwood tree known as Hyperion (whose “cousins” I visited on a recent camping trip). To give a bit of perspective as to just how gargantuan this tree is, 379.3 feet is a little over 126 yards. Which means that Hyperion is a few yards longer than an American football field measured from the back of one end zone to the other! Kind of boggles the mind, doesn’t it?
Okay, that’s all for today. Remember to become a fan of the Math Dude on Facebook where you’ll find a new number of the day or math puzzle posted each and every weekday. And if you’re on Twitter, please follow me there too.
Finally, if you have math questions, feel free to send them my way via Facebook, Twitter, or by email at email@example.com. And don’t forget to pick up a copy of my new book: The Math Dude’s Quick and Dirty Guide to Algebra.
Until next time, this is Jason Marshall with The Math Dude’s Quick and Dirty Tips to Make Math Easier. Thanks for reading, math fans!
Image courtesy of Shutterstock