Money foundations
Understand simple interest with a savings example
Simple interest applies a rate to the original principal. Keep the rate's time period consistent with your calculation.
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Money foundations
Get comfortable with the numbers.
Understand the ideas behind everyday money decisions, one clear example at a time.
30 articles
Money foundations
See compound interest one year at a time
Compounding becomes clear when each year's interest is added before the next year's calculation.
Money foundations
Separate a percentage change from a percentage point
A move from 2% to 3% is one percentage point, but a 50% increase relative to the starting rate.
Money foundations
Understand nominal and inflation-adjusted money
A balance can rise while buying less. Compare the money amount with the change in relevant prices.
Money foundations
Read an account balance alongside pending transactions
The displayed balance may not include every commitment. Reconcile pending activity before deciding what is available.
Money foundations
Distinguish income from money moved between accounts
Moving money between your own accounts changes its location, not the household's total income.
Money foundations
Understand net worth without treating it as cash
Net worth combines assets and liabilities at a point in time. It does not tell you which bills can be paid today.
Money foundations
Separate liquid savings from valuable possessions
An item can be valuable without being easy to turn into money when a bill is due.
Money foundations
Read a payslip before setting your spending limit
Use the amount actually payable to you, then separate reimbursements and unusual items before setting a regular budget.
Money foundations
Convert weekly costs into a monthly estimate
Four weeks are shorter than most months. Use an annual bridge for a sensible monthly average.
Money foundations
Convert an annual bill into a weekly saving target
Divide by the contributions remaining before the bill, rather than automatically using a full year.
Money foundations
Understand opportunity cost in everyday choices
Spending money or time on one choice means giving up its best available alternative.
Money foundations
Tell an average cost from a marginal cost
Average cost spreads the total across all uses. Marginal cost asks what one additional use would add.
Money foundations
Use a break-even point for a household purchase
A break-even estimate reveals how many uses are needed to recover a higher upfront cost.
Money foundations
Compare a discount with money actually saved
A discount is relative to a reference price. Actual savings depend on what you would otherwise have spent.
Money foundations
Understand how small fees accumulate
Small charges become easier to judge when you convert them into the frequency you actually pay.
Money foundations
Keep one-off income separate from recurring income
A one-off payment can solve a one-off need without becoming the basis for a permanent monthly commitment.
Money foundations
Understand the difference between a goal and a forecast
A goal states what you want. A forecast estimates what current assumptions are likely to produce.
Money foundations
Make a financial estimate with a range
A range is often more honest than a precise figure when the price or timing is still uncertain.
Money foundations
Recognize a sunk cost before spending more
Money already spent cannot be recovered by spending more. Compare the future options from this point forward.
Money foundations
Distinguish cash flow from a monthly surplus
A monthly surplus does not guarantee enough money on every payment date. Track the order of events.
Money foundations
Understand purchasing power through a grocery basket
A consistent basket shows how changing prices affect what your grocery money can buy.
Money foundations
Check a financial calculation with units
Writing dollars, weeks and percentages beside the numbers catches many common calculation errors.
Money foundations
Read a percentage-based service fee
Check what the percentage applies to and whether a fixed charge is added before comparing service fees.
Money foundations
Understand an exchange-rate quote before travelling
Read which currency is being bought, then compare the amount received after all charges.
Money foundations
Allow for rounding when splitting a bill
Whole cents do not always divide evenly. Allocate the small remainder so the contributions match the bill.
Money foundations
Compare gross revenue with profit on a side project
Sales receipts show revenue. Profit requires subtracting the costs associated with earning that revenue.
Money foundations
Use a personal balance sheet for a clear snapshot
A personal balance sheet puts what you own and what you owe on the same dated page.
Money foundations
Understand how account fees affect a small balance
A flat monthly charge can take a large share of a small balance, even when the stated fee looks modest.
Money foundations
Keep financial records without storing unnecessary data
Keep the evidence you need while limiting unnecessary copies of sensitive financial information.
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