Tips | June 27, 2016

Do numbers keep you awake? Six tips to battle your fears

Maths was not a favourite subject for a lot of us at school but managing personal finances in adulthood is an unavoidable reality.


A bat and a ball cost €1.10 in total. The bat costs €1 more than the ball. How much does each cost? If you’re like most people, you’ll say the bat cost €1 and the ball 10 cents. The correct answer is the bat is €1.05 and the ball is 5 cents.

This is a typical example of how easy it is to make a mistake with numbers, and as a result be drawn into making poor financial decisions. It’s also why retailers use multiple discount offers that confuse us into spending more than we were expecting.

Maths anxiety is a feeling of fear about anything involving numbers and is believed to affect about six out of ten university students.But numerical skills are critical for managing your personal finances whether it is calculating how long it will take to pay off your debt, how much you should save for a new home or simply choosing what to buy. Here are some tips to grow your money-managing prowess:

1. Set time aside
“Don’t put off until tomorrow what you can do today” is something we’ve all heard before. Whatever your financial situation, however bewildering changing that default asset allocation may seem, make the time to get your finances into shape, as leaving them to the last minute can be costly. Research shows procrastination is one of the main problems associated with saving and planning for retirement. Five Thirty Eight writer Ben Casselman writes that we are all procrastinators – our tax returns prove it, as one in seven people in the US wait until the last possible week to submit their tax returns.

2. Pay attention
If you have a looming deadline at work, a sneezy child and the boiler breaks, this is not a good time to review your pension investments or pick a new phone tariff because the numbers are likely to not make sense. Having a lot on your mind means you will likely end up making poorer decisions and this often tends to mean selecting the simplest option – which is not necessarily the best one. RSA’s Wired for Imprudence report calls this cognitive overload. Taking the time to make one financial decision at a time can really pay off – as you don’t become mentally exhausted and don’t act impulsively favouring the default option.

3. Pictures can help
Bank of England chief economist Andy Haldane has said he finds the British pension system complicated even though he considers himself moderately financially literate. Many people find financial issues difficult and boring because maths is a turn-off and seems unrelated to real-life. That’s why it can be a good idea to construct a visual representation of numbers if you don’t like analysing them. Different people process data in different ways so understanding where the numbers come from and relating them to a real-life picture can actually help quite a lot.

4. Write it out
The underlying assumption in economics is that humans are rational, even though many people do not behave rationally when dealing with their finances. Research says that sometimes money matters are too complex and interconnected to break down. This often leads to irrational choices. We often cannot hold a complete picture of our financial situation in our heads all the time and end up dealing with each aspect separately. Nick Chater, professor of behavioural science at Warwick Business School, says this means people will tend to borrow on a credit card even when they have a pot of savings elsewhere – which is hardly rational.

5. Get help
If you spin a coin twice, what is the probability of getting two heads? The answer is 25%. However, many UK MPs were bamboozled when asked this question, and in turn signed up to a workshop to help them interpret numbers in public life. There is nothing wrong with you if you can’t sort out your mortgage, bills or tax issues on your own. It’s OK to ask for help.

6. Reframe the fear
We like to think we fully control the way we think about a situation but, perhaps surprisingly, the way a problem is presented plays a part too. Nobel Prize-winning psychologist Daniel Kahneman called this the framing effect. Next time, when you’re trying to sort out your mortgage, bills or tax issues, consider it a challenge rather than a hassle. Research suggests that if we encourage children to see a maths test as a challenge not a threat, for instance, and explain their fear doesn’t necessarily reflect a lack of ability, negative thoughts can subside.

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