The world of money gets more complex by the day. The financial industry constantly bombard us with sophisticated sounding jargon in the media, a lot of which is specifically designed to sound intimidating. But when you peel back the layers of abstract terms and long-ass acronyms, you’ll find the concepts are usually not that difficult to understand.

The dirty little secret, sadly, is that some parts of the industry have a vested interest in complicating things.

They want you to believe that only they can make sense of economic things. I know this because I’ve spent my entire adult life sorting through these things. When I first graduated college with my, at the time, seemingly useless English degree, I was lucky enough to score a low-paying back office job for a small local wealth management firm. It didn’t pay much, but it was a great way to learn. 

I knew by 9 o’clock on that first day of work that I was in over my head. I mean, I remember that we talked about what a stock was in my 10th grade economics class, but who pays attention to that stuff at 16 anyway, right? 

Suffice it to say that IRAs, 401ks, derivatives, and bond duration were all Greek to me back then.

But one thing I’ve learned in the last 15 years is that people who are good with money are NOT necessarily smarter than other people. You don’t really need an MBA, PhD, or Masters in Financial Engineering to build wealth. I have both an MBA and CFP (Certified Financial Planner), and truthfully both have been useful for me in my particular situation, but you don’t really need either to be wealthy. In fact, here’s a list of some pretty wealthy guys who never bothered with a college degree:

  • Ted Turner
  • Ralph Lauren
  • Mark Zuckerberg
  • Bill Gates
  • Steve Jobs
  • Larry Ellison
  • Henry Ford
  • Dave Thomas
  • Michael Dell
  • Recognize anyone?

The point is that you don’t need to be extremely smart (in math or really any one particular subject) to be good with money. If you passed the 5th grade, you have all the math skills you need… adding, subtracting, multiplication, division, fractions, etc. Everything you need you learned in your sweet elementary school days. So, while the financial industry would love to convince you that the more sophisticated-sounding the strategy is, the better, don’t believe them for a second.

Just for fun, let’s see just how far 5th grade math will take us, shall we? Here are three of the most crucial parts of grade school math that you need for a healthy financial life.

By the way, here’s a note from your mom to any 5th graders out there reading this, don’t think for a second that you’re done with school after you finish out the school year. I’m just trying to make a point here, and you should probably at least finish high school. 😉

Addition and Subtraction

When you boil everything down it’s really pretty simple. Over your lifetime you are going to earn a certain amount of money. Now, let’s assume for a moment that that amount is fixed, and there’s nothing you can do to increase it. While that’s almost certainly not true, let’s assume that it is for a moment, and that your entire lifetime of income is predestined to be, for example, one million dollars. (That might sound like a lot, but over 40 years it breaks down to about $12/hour.)

Now stop for a minute and look out over the rest of your working life, and mentally imagine those years converted into that $1 million. When you look at it like this, you have only one variable you can control to build wealth–your spending. If you simply add up your income, subtract out your living expenses and taxes, then whatever is left over is your savings. The less you spend, the more you save. The more you save, the less you spend. It couldn’t get much simpler.

The important thing to realize about this is that your costs are 100% in your own hands. While everyone has a certain minimum cost of living, even that depends on where you live and what you choose to do. While the majority of those reading this are probably too young to remember life 40 years ago, it’s important to realize that the average house size was 1000 square feet smaller than it is today. Are we really that much happier with more space? We might not remember a time when we didn’t have a world of information in our hands at every moment, but does that change what is really valuable in life? The most important part of financial success is simply being diligent in controlling costs, which means habitually evaluating what we spend money on and whether or not it’s really worth it. The only math involved is simple old-fashioned, grade-school arithmetic.


You’ve heard the saying, it’s not what you make, it’s what you keep. I’ve seen millionaires who never made more than $50,000/year. Seriously. They simply mastered the art of living below their means, and paid very little, if any, taxes on their earnings. The government has provided a multitude of tax incentives to everyday citizens to encourage saving and building wealth. It’s in their best interest to have a prosperous citizenry that won’t need government handouts to pay their medical bills when they get old.

So, simply funding an IRA, Roth IRA, or 401k each year is a great start. It’s not important that you make the perfect tax decision. Just try to minimize taxes each year as much as possible, and you will probably do well in the long run.


I have a proposal for you: if you had to choose between one million dollars today, or one penny doubled every day for a month, which would you choose?

This is a classic experiment that illustrates the power of compounding, but it’s really just multiplication at work. You start with a small amount, but over time and repeated incremental gains, it can grow to surprisingly large sums!

The answer to the riddle is, of course, you would rather have the doubling penny. Depending on how many days are in that particular month, you’ll receive somewhere between $5-10 million dollars, just by the art of compounding. And while this illustrates the power of a 100%/day return, which is clearly practically impossible in the real world, any return over the rate of inflation builds wealth over time. Even if your “return” is simply the elimination of debt, that too compounds for you, in the form of reduced future debt payments.

Remember the rule of 72: take the number 72 and divide your average annual return into it. The result is the approximate number of years it takes for your money to double.


Hopefully, you can see that it doesn’t take years of training, advanced degrees, and an IQ of 140 to be wealthy. All you need is some common sense and 5th grade math.