Percentage changes show you how much more or less something is worth this year than last year—how much money you've made in your 401(k), for example, or how much you've earned on your house. Often, when you deal with brokerage firms and read the stock pages, the percentage changes are computed for you. But knowing how to do it yourself can be helpful—and it's easy.
Figuring out a percentage change is a two-step process.
- Take today's value and subtract the prior value from it.
- Divide that answer by the prior value.
- First, subtract the prior value from today's value:
$300,000 – $220,000 = $80,000.
- Then divide that answer by the prior value:
$80,000 / $220,000 = .363636.
You made slightly over 36 percent. In other words, you made a killing.
Map to a Million
Make a simple math move that's guaranteed to improve your financial situation.
Move $2,000 a year from a savings account earning 1.5 percent to a money market account earning 4 percent.
Move $2,000 a year from a savings account earning 1.5 percent to an index fund earning 8 percent.
Math 101 continues...