Is money all about math?

Research shows that learning more math has a positive impact on students’ financial outcomes.

A friend of mine recently posted a comment on Twitter that made me both chuckle and cringe. The tweet read: “OH at Anthropologie: ‘What’s 25% off of $60?’ #StayInSchoolKids.”

It’s a funny quip because we all know shoppers who would have trouble with this kind of simple calculation. (For those who need help: 25 per cent is one-fourth; $60 ÷ 4 = $15 off.) But, at the root of it, the comment is troubling precisely because poor math skills are so commonplace.

Being good with money obviously doesn’t require a PhD in math, but there’s no doubt that a basic level of math education is important to understanding some financial concepts, such as compound interest. Without strong math skills, people tend to use more emotional ways to invest, spend or save their money, Shawn Cole, professor of finance at Harvard Business School, told the Wall Street Journal last year.

Cole’s study, “Smart Money? The Effect of Education on Financial Outcomes,” found that students who lived in jurisdictions that required them to take a greater number of high school math courses ended up with superior financial outcomes (including better credit management, more investment income, fewer home foreclosures, and so on) than other students, even when accounting for demographic factors such as gender or race.

At the same time, though, many elementary school boards are forgoing traditional memorization and drill methods of teaching math in favour of techniques that focus on understanding larger concepts. That’s all well and good, until you discover your fourth grader still doesn’t know his times tables. (I speak from experience here.)

Parents are now expected to take over in the math-drill department. I’m not going to lie — it’s been quite a slog. So far, my 10-year-old son, Adam, has tried a bunch of different tools, including flash cards, websites and even Schoolhouse Rocks songs. Let’s just say it’s still a work in progress.

But he’ll get there — I’ll make sure of that. Yes, there are restaurant credit-card readers to tell us how much tip to leave the server, calculators on our smartphones that we can access at any time, heck, we can even ask Siri to tell us what 25 per cent off $60 is. But if Adam can’t make these basic calculations in his head, I’m not sure even my best efforts to teach him money skills will have a significant lasting impact.

Keep the conversation going

What do you think? Is math is a necessary component of financial literacy? Are today’s schools doing a good enough job teaching math? Post a comment below.


The views and opinions expressed in this article are those of the author and do not necessarily reflect those of Chartered Professional Accountants of Canada (CPA Canada).

About the Author

Tamar Satov

Managing Editor, CPA magazine
Tamar is a journalist specializing in business, parenting and personal finance. She blogs regularly in this space with advice and anecdotes on her efforts to raise a money-smart kid.