A lot of moolah's resting on your math skills. Numbers not your strong suit? Beware: Poor math skills may lead to mortgage troubles, finds a new ...
Numbers not your strong suit? Beware: Poor math skills may lead to mortgage troubles, finds a new study from Columbia Business School.
After sweeping mortgage defaults led to a global financial crisis in 2008, researchers asked borrowers basic math questions—as simple as 300 divided by 2—to try and find a pattern between a lack of arithmetic smarts and not paying up. Lo and behold, “the correlation was astonishing,” says study author Stephen Meier, Ph.D. The researchers ruled out people’s education levels, general smarts, and mortgage types to find that failure to make simple calculations was the biggest link to falling behind on payments.
“It’s the complexity of financial decisions in general,” Meier says. “If you aren’t too good with numbers, that’s a huge problem,” he says.
Even if your mortgage is sound, fuzzy math skills can still affect your finances. So what can you do? “Often people think they have to do everything on their own,” Meier says, but that’s not the case. There are plenty of online tools that make a budget for you—you just have to stick to it. Try Mint.com, a free service that lets you input info like your income, phone bill and other payments, then sets up spending plans with simple, color-coded charts.
In the meantime, brush up on your skills with these 6 easy math tricks for everyday life.
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