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8.11 MATH ILLITERACY; FINANCIAL MATH, SIMPLE MATHEMATICS, EXAMPLES FOR PERSONAL FINANCES

Many of today's consumers are math illiterate. By this I mean they cannot do simple calculations with a pencil and paper. Many cannot even use a calculator properly.

Consider this example at a fast food restaurant. I ordered 2 cheeseburgers, on sale for $.59 each, and a small drink for $.69. The cash register total was $2.19. I had done a quick calculation in my head and knew that it had to be about $2.00. The clerk punched it in again; it was still $2.19. Then another clerk came over and rang it up. Still $2.19. I tried to explain the math to them: that rounded off it was 60 + 60 + 70 or $1.90 plus 6% tax or about $2.00. I might as well have been speaking Greek. Finally the manager came over with a handheld calculator. And guess what? The total was $1.98.

The clerks had not pressed the special "sale" button when they rang up the cheeseburgers. But it took about ten minutes and three people to find the error.

There are several ways to estimate this bill. First round off, then:

== Method == 1: 60 + 60 = 120. Add 70 and you get $1.90.

== Method == 2: Multiply 70 X 3 and subtract 20 = $1.90

== Method == 3: Multiply 60 X 3 and add 10 = $1.90.

To estimate tax at 6%, round off the total amount to $2.

===== $2.00 X .06 = .12.

Nearly exact total calculation: $1.90 + $.12 (tax) -$.03 (to compensate for rounding off) = $1.99.

Saving money involves math. Most of the math in quite easy. In future issues, we will examine and explain some of the necessary calculations. We will also include a quiz.

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