17 money calculations you need to make

Manage your money better with proper calculations. (Image credit: rawpixel.com)

Throughout your personal finance journey, you’ll inevitably do some money calculations.

This thought stresses some of you and reaction is “I don’t want to do it. I’m not good with numbers!” Many think that these money calculations are harder than they actually are.

Here are some important money calculations. You’ll find that they’re not rocket science.

1. Home loan calculator

You calculate this when you’re shopping for property, to find out the estimated mortgage payment per month that you’ll have to make.

There are many versions, below is one example:

home loan calculator
Calculate your monthly commitment in advance. (Pic credit: PropertyGuru mortgage repayment calculator)

Toggling the variables – loan amount, interest rates and loan term can be an interesting process. Longer loan terms have lower monthly repayments, but you’re also bound for much longer.

2. Car loan calculator

Similar to housing loan calculators, except that they’re for a car purchase. The maximum term is 9 years.

3. Personal loan calculator

For when you want to borrow money for personal reasons. Again similar to house loan calculators but the terms vary quite a bit. You can end up paying a lot in interest if you’re not careful.

4. Instalment plans

Many credit cards offer an instalment feature, breaking down larger purchases into 12 monthly instalments.

5. Months to debt-free countdown

This calculation is from the debt-free community. They calculate the number of months it’ll take to pay off your debt, and try to reduce the length by making extra or larger payments.

The most usual types of debts are credit card and student loans.

If you make extra payments towards your housing loan you may sometimes be criticised for not channelling the extra money to potentially higher ROI investments.

While we can understand that argument, some of you just like the idea of living your lives debt free.

Pay your bills on time to avoid penalties. (Image credit: rawpixel.com)

6. Rule of 72

This calculation is an easy way to find out how long your investment will double in size. All you have to do is divide 72 with the investment’s estimated annual ROI %, and you’ll find out the years.

For example, if you put RM10,00 in a fixed deposit with 4% annual ROI, you’ll get RM2,000 in 18 years (72 divided by four).

If you put RM1,000 in a mutual fund with 8% annual ROI, you’ll get RM2,000 in nine years (72 divided by eight).

7. Your financial independence/retire early (FI/RE) number

The amount you need to be financially independent, without ever needing to work again.

Calculated your own FI/RE number here.

8. Taxes

The amount you owe the Malaysian government if you make over a certain amount per year. (RM26,000 per annum, although the number changes).

9. Zakat or tithe

The amount you’re religiously obligated to give back to the community.

10. Countdown until pay day.

The broke-r you are, the more you do the countdown until your pay day.

Countdown to payday. (Image credit: rawpixel.com)

11. Nett worth

Have you calculated your nett worth? You may be surprised that your nett worth is a lot less than you thought, especially if you have a lot of debt. Nett worth is calculated as total assets minus total debt.

12. Discounts and sales

The mental calculations you do at the mall when you want to find out what’s 40% off RM269.

13. Cost per use

Frugal people like this calculation. You get very satisfied if you can use a RM200 item 200 times or more, thus achieving a cost-per-use of only RM1.00.

The cost-per-use calculation helps you become more aware of the quality and longevity of the item, instead of just looking at the price, which is your natural tendency.

14. Money in and out

Gives an idea of how much money you are bringing in per month, and how much you spend per month.

Some track this down to the cent, while others are happy as long as their bank account shows a positive balance at the end of the month.

Calculate your monthly cost of living. (Image credit: rawpixel.com)

15. Your average cost-per-meal

There are multiple versions of this calculation but you can make it simple by just calculating the cost of your groceries divided by 100 meals per month.

16. Kilometres you get on a full tank of petrol

You can even make a game out of stretching a full tank by being mindful of using the break, using less air con and keeping your tires properly inflated.

17. Time value calculator

This varies for everyone. Let’s say an item you want costs RM20.00 in front of you but RM19 at another location.

Some will spend the extra hour to go there to save the RM1.00. Others will just pay the RM20.00. This is the classic “penny wise, pound foolish” mentality.

This article first appeared in Ringgit Oh Ringgit and was edited and republished with permission. 
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