doing math

courses › Finance & Money

Money Basics

level 9 course

Savings rate, what's left in the budget, simple interest, and matching time periods.

In your head, jot if needed · no calculator why?

Learn first (about 3 minutes)

Opens at level 9.

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the lesson

The idea, the techniques and a tip for each skill, right here. The Learn page adds worked examples for every skill and untimed practice.

Read the lesson · about 3 minutes

The idea

Four habits keep everyday money math honest. Your savings rate is what you save as a share of your take-home pay, the pay that reaches your account. What is left in a budget is pay minus every expense, and it can fall below zero.

Simple interest is the principal (the amount lent) times the yearly rate times the time in years. It never earns interest on interest.

Above all, match the time period before you compare. A month is 1/12 of a year, and a year counts as 52 weeks or 365 days.

Techniques

Part over whole

A savings rate, or any share of your pay.

  1. Put the part on top: what you save.
  2. Put the whole underneath: your take-home pay.
  3. Divide, then multiply by 100 for a percent.
worked example

Example: You take home $2,500 a month and save $300 of it. What is your savings rate, as a percent of take-home pay?

  1. $300 ÷ $2,500 = 0.12.
  2. 0.12 = 12%.

Answer: 12%

Principal × rate × years

Simple interest over years or months.

  1. Write the yearly rate as a decimal: 5% is 0.05.
  2. Write the time in years. Months go over 12: 6 months is 6/12 = 0.5 of a year.
  3. Multiply principal × rate × years. That is the interest alone, not the ending total.
worked example

Example: You lend $1,200 for 6 months at simple interest. Assume a rate of 5% per year. How much interest is earned?

  1. 6 months is 0.5 of a year.
  2. $1,200 × 0.05 × 0.5 = $30.

Answer: $30

Match the period first

Turning a daily, weekly, monthly or yearly amount into another period.

  1. Month to year: × 12. Year to month: ÷ 12.
  2. Week to year: × 52. Day to year: × 365.
  3. Split an awkward amount into parts you can multiply, then add them.
worked example

Example: You spend $4.50 on coffee every day. How much is that per year? (Count 365 days.)

  1. $4 × 365 = $1,460.
  2. $0.50 × 365 = $182.50.
  3. $1,460 + $182.50 = $1,642.50.

Answer: $1,642.50

Tips by skill

  • TipSavings rate: Saved ÷ take-home pay, then × 100. What you save goes on top.
  • TipWhat's left in the budget: Add every expense line first, then take the total from pay. More spent than earned means a minus sign.
  • TipSimple interest: Principal × rate × years. Turn months into years first by dividing by 12.
  • TipMatch the time period: Month to year is × 12, year to month ÷ 12, week to year × 52, day to year × 365.

Watch out for

  • Dividing take-home pay by savings. The savings rate puts what you save on top.
  • Leaving out an expense line when adding up a budget. Tick off each line as you add it.
  • Giving the ending total when the question asks for the interest alone.
  • Treating 6 months as 6 years, or comparing a monthly price with a yearly one before converting.

skills · practice stats

From rounds of this course only: box, review and test-out answers are left out. Once a skill has 40 tries, it compares your first 20 tries with your last 20.

rest ladder

Win 3 of your last 4 rounds and the course rests. A win is 90% right, within 2× the round's par. Pass the review when it comes back and the next rest is longer.

  1. 1 day
  2. 3 days
  3. 7 days
  4. 14 days
  5. 30 days
  6. 60 days
  7. mastered · every 90 days

your rounds

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