Book Review: You can Do the Math
This is a book that every personal finance focused individual should read and understand. It is not an investment book, per se, but instead a conceptual book that explains the math behind all of the major investments and major purchases we face over a lifetime. “You Can Do the Math: Overcome Your Math Phobia and Make Better Financial Decisions”, by math professor Ron Lipsman, really illustrates in detail how interest, mortgage payments, gambling risks, inflation, and taxation affect the financial decisions we make and explains the math related to each of those areas.
I know plenty of people highly interested in personal finance who are also silently leery of math and live in this off-center balance of investment/financial application and inability to truly conceptualize the mathematical concepts involved. This book brings the practical and informational realms together in a very easy to understand and follow method.
You can get through the book without ever doing any of the math and without touching the mathematical formulas that give your expected compounded interests or monthly car lease payments. However, I find it far more useful to actually practice the problem because then you can really see why it works and how each element (interest rate, initial investment, continued payments, taxation, inflation, time, etc.) plays a part in the puzzle.
I feel most personal finance focused individuals will get a great deal from the many comparison charts and situations that show how small manipulation of individual factors in a single investment can produce dramatically different results and, therefore, they will increase the overall productivity of their investment and financial choices with this information.
Topics Covered: basic savings, basic investing, taxes, inflation, real value of your salary, loans, comparing renting and owning a car or house, many types of insurance, credit cards, gambling, stocks, retirement.
Again, this book isn’t about investment or financial suggestions, it is about the math formulas and calculations involved in these transactions. Each of the topics presented are described in detail in how math fully illustrates the actual situation.
Finally, the book is not as dry or dull as might be expected — in fact, it was easy to get through it in a few sittings and amusing enough to keep me interested. Dry information may be helpful for some, but I’d never have gotten anything out of it if it was nothing but formulas and boring explanations. Lipsman did a wonderful job making this extremely useful information accessible.