Maths is important in financial planning.

 

Why MATHS is important in financial planning ?

Budgeting: The foundation of financial success

At the heart of every successful financial plan lies a well-crafted budget, which aligns with your income and expenses.  

Compound interest: The 8th wonder of the world

Understanding compound interest is key to building wealth over time. It  allows you to earn a return on the initial amount invested and also on all the accumulated returns. Basically, given enough time, your savings will snowball. You can maximise the power of this mathematical magic if you allow your returns to be reinvested. In other words, keep your gains in the market for as long as you don’t need the money, and your investment should hopefully grow exponentially. 

Debt management: Make calculated choices

Debt is a reality for many of us. But if you understand the maths behind it, you can deal with it more efficiently. Start by assessing all your debts and their associated interest rates. Consider consolidating the high-interest debts or renegotiating interest rates where possible. By paying more than the minimum due each month, you can get rid of your debt faster and minimise future interest payments. 

Investing: Watch your money grow

Investing is not just for the wealthy – it's a powerful tool for everybody that allows you to grow your wealth over time. Don’t be intimidated; rather empower yourself by getting to grips with the fundamental concepts. Start by learning about the various investment building blocks like equities, bonds, property and cash. 

Retirement: Secure your future 

Retirement might seem like a distant concept when you're in your 20s or 30s, but starting early can make a significant difference. And guess what? When you’re looking at long-term financial planning, maths comes into the equation yet again (excuse the pun). It’s quite a complicated business: you need to estimate how much money you’ll need in retirement, taking inflation into account, then set savings targets depending on how much you can contribute to a retirement fund each month, with a buffer in case things go wrong. 

‍