How to Learn Finance Math

Financial math is mathematics used in the business world to deal with calculating transactions, commission, investments and so on. Financial math is not compartmentalized into a single section of the field of mathematics, which means learning financial mathematics will require you to apply different types of mathematics to different situations. The key to learning financial math is to know when to apply what to where.

Instructions

    • 1

      Review basic business math. Focus on the arithmetic, geometry and algebra that you are inexperienced in. If needed, borrow books on each of these three subjects from a library and take the review tests at the end of each chapter. You will quickly discover the areas in which you need to improve.

    • 2

      Bring math into your life. Think of all the areas in your life in which math can be applied. Situations like organizing your personal investments, doing taxes and using spreadsheets are all instances where you can apply your math skills. Use what you have reviewed to accelerate these processes. Create general formulas that you can apply in multiple situations. For example, use the formula "profit times 100 divided by investment" to yield the rate of return on your investment as a percentage.

    • 3

      Familiarize yourself with the concepts of simple and compound interest. Borrow a book on interest or banking from the library. Understand the definitions of and differences between simple and compound interest. Memorize the formulas for computing interest.

    • 4

      Apply the concept of interest to your finances. Update your banking records and calculate the interest you will earn in the next year. Do the same for your other investments. Set a goal for savings by the end of next year and use a formula to determine the minimum of how much money you will have to save to reach your goal. For example, the compound interest formula, "your deposit times Euler's number raised to the value of the rate of interest times the number of years invested" can help you in many of your savings and investment plans.

    • 5

      Acquire the knowledge of the mathematics needed in the world of goods and services. Borrow a book on retail mathematics. Study the sections that discuss pricing on items. Discover the relationships between markups, discounts and maximum profit. Apply your knowledge of algebra here to solve for ideal prices. Use the exercises in your book to check your understanding.

    • 6

      Learn to measure properties in terms of money. Borrow a book on real estate mathematics. Focus on the sections that examine how property is priced. Learn to apply geometric concepts in measuring the price of property based on models of price per square foot. Check your knowledge using the review problems in the book.

    • 7

      Integrate the different areas of financial mathematics. Measure your property and use the techniques of real estate you have studied to calculate your own property's value. Apply the knowledge of the mathematics of investing and retail to determine how you could make a profit on your property or whether your property is under or overvalued.

    • 8

      Bring your finance math to the next level. Enroll in or audit a financial mathematics class at your local university. Sit-in on or take the exams to evaluate how your understanding of financial mathematics holds up at the college level. Browse university course websites for new information on financial mathematics techniques. Ask companies in your area if you could assist them in any financial calculations. Always be looking for opportunities to test out and upgrade your skill in financial mathematics.

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