Everyday financial math, done carefully

Financial mistakes rarely involve difficult mathematics. They involve direction, frequency, and rounding—three details that are easy to state and easy to get backwards under time pressure.

Percentages run one way

Adding 20% then removing 20% does not return the original number, because each step uses a different base. To remove VAT from a gross price, divide by one plus the rate rather than subtracting the percentage; at 20% the net is gross divided by 1.2.

Frequency changes the answer

Compounding monthly beats compounding annually at the same nominal rate, which is why advertised yield and nominal rate differ. Any projection needs the rate, the term, and the compounding frequency stated together, or it cannot be reproduced.

Amortisation is front-loaded

Early loan payments are mostly interest and late payments are mostly principal, even though the payment amount is constant. That is why overpaying early saves disproportionately more than overpaying late.

Rounding needs a rule

Money rounds to the smallest currency unit, but whether you round per line or per invoice changes the total by a cent or two. Pick one rule, apply it consistently, and document it in the place people will look during a reconciliation.

Check the components

Work through VAT Calculator, Compound Interest Calculator, and Loan Payment Calculator—each shows its intermediate values. See also VAT-Inclusive vs VAT-Exclusive Pricing.