Don’t fear the denominator
TEXT OF INTERVIEW
Tess Vigeland: Confession time: A couple of weeks ago I made a major math boo-boo on air in front of millions of people. I was calculating a percentage and I forgot to move the decimal point over two places.
Believe it or not, I actually got A’s and B’s in the subject, but for many, many people math is just scary. Too bad you can’t go through life without it.
The National Mathematics Advisory Panel recently issued a report saying students who complete Algebra 2 are more than twice as likely to graduate from college. It recommended that students be required to learn fewer math topics, but to learn them more in depth.
Here to talk math and finance is Jean Chatzky. She’s the author of “Make Money, Not Excuses.”
Welcome.
Jean Chatzky: Thank you so much for having me.
Vigeland: How many of us are truly affected by what you might call “math anxiety?”
Chatzky: When it comes to women, the numbers go as high as half and I’ve seen different pieces of research on the subject. Men tend to be a little bit less affected, but the problem is this starts very, very early in childhood. You could have one instance, one teacher who called on you when your hand was not raised and sent you to the blackboard to solve a problem that you didn’t understand. You get embarrassed, you get very shy of the math very quickly and it only takes once, but the ramifications can actually last for a lifetime.
Vigeland: If you have decided, either in your head or found out for real, that you’re not good at math, how does that affect you in your personal finances?
Chatzky: It can be serious because you tend to avoid dealing with your money and if we’re avoiding dealing with the money because we don’t like to took at the numbers, then we’re not opening our statements, we’re not saving and calculating what it might cost us to live in retirement and we’re going to end up down the line with a huge shortfall.
Vigeland: When we talk about math anxiety in relation to personal finances, are we talking about folks being afraid of even addition, subtraction, multiplication, division, or are we talking, you know, you can’t calculate something to the fourth power off the top of your head?
Chatzky: I think that the fear tends to be of the fourth power, but what people don’t realize is that the sort of math that was required in the classroom is not at all the sort of math that is required in real life. The sort of math that you need for money is addition, subtraction, multiplication, percentages and fractions and that’s it.
Vigeland: Percentages and fractions — I think that’s where you might get people…
Chatzky: OK, but we all have shortcuts that are available to us that were not available to other generations. Every one of us these days carries around a cell phone and there’s a calculator in there, so we should be pulling out the calculators and using them, or if we don’t like to balance our checkbooks, then we should be banking online and letting the bank run all of those computations that we want to avoid for us.
Vigeland: Aside from getting yourself a financial advisor, what are some other steps that you can take if you’re math-phobic and you just really don’t feel comfortable with working with your own finances?
Chatzky: Small steps can be very, very helpful. A lot of local colleges, a lot of even local community colleges these days offer remedial math courses. The Internet can also be a great tool. If you can get yourself to one or more of the retirement calculators, you run yourself through a few of them and you start to get sort of a consensus opinion of how much money you are going to need to have to afford the sort of retirement that you are thinking in your mind you might want. Lastly, if you are not certain, don’t let that stop you from starting to save. Go ahead and save some money and put it in a lifecycle fund or a target-date retirement fund. That’s a mutual fund set up to essentially manage itself towards your retirement date and these funds can truly be a lifesaver, because they are for all those people out there who just don’t get up to the plate to make their own decisions.
Vigeland: It seems like our financial lives… that’s kind of one area of ourselves that we don’t share a lot with friends — you kind of talk about anything but money, but I wonder if that’s also a way for you to kind of get over the math phobias: talking to other people who probably have the same issues and maybe you can learn together.
Chatzky: I think that’s absolutely right. I actually saw a piece of research that came out from the Consumer Federation of America and Wachovia. It looked at savings and the fact that more than half of the people in this country are not saving adequately. When it looked at the drivers of good saving behavior, 80 percent of people said communicating about financial goals, communicating about our money and what we’re doing right and what we’re doing wrong was actually a huge help in getting moving in the right direction.
Vigeland: Jean Chatzky is the author of “Make Money, Not Excuses.” Thanks so much for coming in.
Chatzky: My pleasure.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
