How To Calculate A Percentage (And Other Math Tricks You Need To Become A Millionaire)
If you’re serious about creating your very own small business and growing it to a value of one million dollars, you need to get comfortable with percentages. Today we’re going to look at how to calculate a percentage, and how to use that knowledge to invest your way to millionaire status!
Look, I get it. Math can suck. But it doesn’t have to.
Give us about three thousand words of your time and we’ll clear up some of the confusion and show you how to calculate percentages and leverage that knowledge in building your million-dollar business.
So brew up a coffee, get comfy, and let’s do this.
What is a percentage?
A percentage is a number that is expressed in the form of a fraction of a hundred. The word ‘percent’ literally means per hundred. It is written down by using the symbol ‘%’. So, you can express 50 percent as 50%.
When someone says 50%, they mean 50 per 100, or 50 out of 100. This can be written as 50/100 and calculated as 50 divided by 100.
You may have heard people say, ‘I am 200% sure’. This is an exaggeration because 200% does not exist. This means 200 out of 100, which is meaningless. Percent always is referred to expressing a number out of 100.
(You can say this like, “my return on investment was 200%” which would mean that you doubled your money. But we’ll get into doubling your money in just a minute)
Now, let’s see what 50% means. 50% is 50 out of 100 or 50/100. You calculate it by dividing 50 from 100. The answer to this is the fraction 1/2 or half. So, if someone says they are 50% sure, it means they are half sure about it.
You may read in the newspaper that 25% of people in the state have been vaccinated. What does this mean?
It means 25/100 or 1/4, which is a quarter or one-fourth of all people in the state have received the vaccine.
If 100% needs to be calculated, it represents the entirety. So, 100% of 200 is 200 itself.
How to calculate a percentage?
Now that you are clear about the meaning of percentage, it is time to know how to do the calculations.
Let’s start with a simple example.
There are 240 students in your school. 60% of them are male. Given this, how do you calculate the total number of male and female students?
60% of 240 students are male. Let’s now write it down in mathematical terms.
60/100 of 240 is the number you need to compute. When you see the word ‘of’ in mathematics, it is calculated by multiplication.
So, 60/100 of 240 can be written as…
60/100 x 240.
When you solve this, you get the answer 144. So now you know that 144 students in the school are male and the rest (250-144=106) are female.
The method is simple, express the percent as ‘divided by 100’. Use the multiplication symbol for ‘of’, and you can get your answer.
Let’s now look at a slightly tougher example and see how to calculate percentages.
You earned a total of $50,000 from sales in 2019. The profit you earned was 35% of the sales. What was the profit you earned in dollars?
We now need to calculate 35% of $50,000, let us write down this expression:
35/100 x 50,000. When we solve this, we get the answer 17,500.
The answer to this question is, $17,500 was the profit earned.
How to calculate a percentage with a calculator?
It is easy to calculate percentages by using a calculator. You need to search for the ‘%’ symbol on your calculator. With this button, calculating a percentage problem is easy using a calculator.
If you need to calculate 25% of 7000, here is how you do it:
Enter 25 into the calculator.
Press the % button.
Enter 7000 into the calculator.
You will see the answer 1750 displayed on the screen.
What if you have an old calculator without the ‘%’ button, or what if the ‘%’ button doesn’t work?
Don’t worry! You got this!
You need to first calculate 25/100. You can use the ‘divide’ symbol to carry out the operation.
So first press 25 ‘divide’ 100. You will see the answer 0.25 on the screen.
Then press the ‘multiply’ button and type 7000.
You will see the answer 1750 on the screen.
0.25 is the same as 0.35. And, honestly, it’s the way I prefer to enter fractions into my calculator. Old habits die hard.
How to calculate a percentage using Google?
If you’re sitting in front of your laptop or have your smartphone in front of you, then you can calculate percentages in a jiffy. Google has an built-in calculator but you don’t even need to open it. Chrome (or whatever browser you use) can handle all of your percentage calculating needs
When you open Google, you will see the search bar. You can type your math right in there and Google will automatically open the calculator, carry out the calculations, and display the answer for you.
If you want to calculate 22% of 3300, this is how you do it:
Open the Google website or use the Google search bar in your browser.
Type 22% of 3300.
(Pro tip: You can even type 22% 3300. Google is intuitive, even if you type 22 percent of 3300, it will still give you the answer.)
Once you finish typing, press the search button.
You will see the answer ‘726’ displayed on the screen.
How to calculate percentages with online apps and web pages?
There are some fantastic calculators living on the web. We use these, and not just for percentages, either. Some of them include:
Calculator.net: This website has a calculator. If you want to find 35% of 250. Then select 35 and the % symbol followed by 250. The answer 87.5 will be immediately displayed. You may note that the percent symbol is on the left side in the last row.
Online-calculator.com: This is another easy to use an online calculator. You need to select the Full-screen calculator option so you can see the percent symbol. You can use the mouse or type using the keyboard. There is a small difference while using this calculator. First, type 35 and the % symbol. Then you need to select ‘x’ (multiply) and then type 250. Press the “=” symbol to see the answer.
Calculatorsoup.com: This website has a basic calculator that can be used to calculate percentages. The operation is similar to that of the previous website.
Apart from online web pages, there are apps you can download to your mobile phone. Your smartphone comes with a calculator, but maybe you want something fancy, or maybe you’d just rather support a small developer than Apple or Google.
Either way, the app store has got you covered.
How to calculate a percentage change (increase)?
A percentage change refers to either an increase or decrease in the percentage of a value. The formula to calculate this is (New value – old value)/old value x 100.
Let’s understand this better using the example of a percentage change increase.
The price of a shoe was $20. It is now $22. Calculate the percentage change.
Here, you need to find out by how much percentage the price of the shoe increased.
Old price=20
New price-22
So percent change = (22-20)/20 x 100.
When we solve this, we get 10 as the answer. So, the percentage increase in the price of the shoe is 10%.
How to calculate a percentage change (decrease)?
Here the change in percentage is negative because the value has decreased. The formula to calculate this is the same as in the case of a percentage increase. It is
(New value – old value)/Old value x 100.
The price of a shoe was $20 last week. This week it is $18. Calculate the price change.
Old price-20
New price=18
So, percent change = 18-20/20 x 100
Computing this, we get -2/20 x 100, which is -10%. The negative sign in the answer indicates that the price of the shoe had reduced by 10% in one week.
Types of percentage problems
When you are dealing with percentages, you are likely to come across various situations where you would need to deal with percentages. Knowing how to solve these will help you understand all about percentages.
Find the ending number
In these problems, you need to find the ending number. To understand this better, go through the following.
There are three numbers involved in solving a percentage problem. The starting number, the ending number, and the percent.
For example, 20% of 10 is 2. In this, 10 is the starting number, 2 the ending number, and 20 the percent.
To find the ending number is to find the answer for a percent calculation problem. Let’s consider the following problem.
30% of 300 is what?
To find the ending number, let us represent this in the form of the equation.
30/100 x 300 = ending number
When we solve the expression, we get 90 as the answer. So, the ending number is 90.
30/100 x 300=90.
Find the starting number
Here the first number will be asked for, e.g., 45% of what is 135.
We are given the ending number and the percent, and we need to calculate the starting number. Let us express the question in the form of an equation.
45/100 x starting number = 135
Shifting 100 to the right side, the equation becomes
45 x starting number = 135 x 100
So, starting number = 13500/45, the answer is 300. The starting number is 300.
45% of 300=135.
How to calculate a percentage discount?
If you are given the starting and ending numbers, you can then easily calculate the percentage discount. This is useful to know how much percentage discount is being offered. Once you know this, it will help you compare with other stores. For example, Store X may be offering a 20% discount. If Store Y is offering a higher discount, you can go with them.
What percent of 300 is 90?
To solve this, let’s write this in the form of an equation.
Percent/100 x 300 = 90
Shifting 300 to the right side, we get
Percent/100=90/300.
So, the percent value = 90/300 x 100. When we solve this, we get 30 as the answer.
30% of 300 is 90.
How to calculate a percentage return on your investment (ROI)
This is where the money is. If you are going to grow into a savvy small business owner and investor, you need to get your head around ROI.
Let’s assume you buy shares of Company X. You invest $5,000 in these shares today. As you know, the value of shares in the stock market would keep changing daily depending on various factors. Let us assume in one year, the value becomes $5,500. You may want to know the ROI.
The formula for this is ROI = (New value – old value)/old value x 100.
In this example, the old value is 5000 and the new value is 5500. Let’s substitute the values.
ROI = (5500 – 5000)/5000 x 100
ROI = 500/5000 x 100 = 10
So, the return on investment is 10%. You have earned a 10% return on your investment in one year.
If the ROI is negative, then it signifies you have made a loss.
Compounding (The secret to getting rich)
In the world of investments, one of the most important concepts is that of compounding. The principle of compounding is the secret of getting rich. If you invest money regularly, then it compounds, allowing you to earn more.
The concept works like this:
You invest an amount known as the principal amount.
In the first year, your principal amount earns interest.
In the second year, you get interest for the principal amount plus the first year’s interest.
In the third year, you get interest for the principal amount and the first and second year’s interests.
This continues until the end of your investment time period.
That’s a bit confusing. Let’s clear it up with an example.
You invest $10,000 and earn 5% interest on it every year.
At the end of the first year, you earn 5% of 10,000, which is 500. So now the value of your investment is 10,500.
(You made $500 dollars in year 1)
At the end of the second year, you earn 5% of 10,500, which is 525. Your investment value now is 11,025.
(You made $525 in year two. Can you feel the magic starting to work?)
At the end of 10 years, your investment value will be 16,288.95. (This is assuming you don’t withdraw money in-between and the interest rate remains constant).
Let’s look at the ROI in this case.
You invested 10,000 and got 16,288.95
Your ROI is (16,288.95-10,000)/10,000 x 100 = 62.89%
Since you remained invested for 10 years, the annual return of interest is 62.89/10 = 6.289%. You earned only 5% interest but it became 6.289% thanks to the power of compounding.
And here, you only invested money once. If you keep investing money every year, then the value of your investment will rise rapidly.
Let’s assume you invest $1,200 every year in the stock market and earn a fixed return of 9%. The rate could be higher but since market prices fluctuate, we’ll assume an average return of 9%.
You will keep earning money every year on the money you invest each year plus the interest for each year. The money will now grow rapidly. Let’s assume you start this at the age of 25. If you do this systematically for 40 years, by the time you reach 65, you will have $479,642.
If you increase this investment to $2,800 every year, then in 40 years, you can become a millionaire. You can retire comfortably on relatively small amounts of investing. This is the secret to becoming rich. Invest regularly and earn compound interest (interest on interest).
(Here’s the real magic: in our last example, you would have invested [$2,800 x 40 years] $112,000, but you ended up making over $830,000 on the compounding interest!)
How to calculate (or estimate) a percentage in your head?
Let’s assume you don’t have a calculator or access to a computer, so how do you calculate percentages? There is a simple trick that will help you calculate a percentage in your head. It is pretty simple.
The basic idea is to calculate percentages for 10%, which is very easy to calculate in your head. You can add a decimal point one place from the right. For example, 10% of 1000 is 100.0, which is 100. 10% of 234 is 23.4. 10% of 3479 is 347.9.
Now once you calculate 10% in your head, you can make other calculations easily. Let’s try it out for the number 220.
If you want to find 5%, then calculate for 10% and divide by 2. 10% of 220 is 22. Divide by half, you get 11, which is 5% of 220.
To calculate 20%, find 10% value and multiply by 2. So 20% of 220 is 44.
If you want to find 25% of 220, calculate 50% and divide by 2. 50% of 220 is 110. Half of it is 55.
If you want to find 60% of 220, find 50% of 220, which you can get by dividing by 2, which is 110. You know 10% of 220 is 22. Add both to get 132, which is 60% of 220.
This is a useful way of calculating percentages in your head. Of course, this becomes difficult if you want to calculate 37% or any such number. But if you’re in a situation where you don’t have access to your phone, you probably don’t need a precise number anyway.
I often do this when I’m scanning for investment ideas. I can throw out most of the opportunities that come along by using these simplified mental tricks to get close to the right answer. If an opportunity looks promising, then I break out the calculator.
Know when your money doubles with the rule of 72
The rule of 72 is a formula is used in investments to help you find out how fast your money would double. The calculation is simple, divide 72 by the fixed rate of interest you earn annually.
For example, if you are earning 5% interest annually, how much time will it take to double your money. Divide 72 by 5, you will get 14.4. This means it will take you about 14.4 years to double your investment at this rate.
Let’s assume you invest in a stock that can give you a 12% return. 72/12 is 6, which is the number of years in which your money will double.
This is a good way to compare investments. Let’s assume you have three or four options with different rates of return. Use the rule of 72 to calculate how many years it will take to double your investment in each case. This will help you compare the different options, so you can decide which option will help you double your money the quickest.
I often think of potential investment in terms of “years-to-double” rather than just a ”return on investment”. They really amount to the same thing, but I like having an idea of how long an opportunity will take to pay for itself.
Just remember: the rule of 72 does not give you exact results. The result is approximate and is acceptable for making estimates. This rule is not to be applied if you want to know the exact number of months. But again, I have rarely been in a situation where an exact number was any more helpful than a good estimate.
Common mistakes
There are some common mistakes that are made while calculating percentages. You need to be aware of them so you don’t commit such mistakes.
Percentages don’t cancel
Let’s assume you have an investment of 1000 and its value went down by 20%. You may think that, to recover your losses, your investment should again increase by 20%. Right? 20% increase and 20% decrease should cancel out after all. But this is wrong!
Let’s look at this closely.
20% of 1000 is 200. The value of your investment has gone down by 200 and is now 800. If it increases again by 20%, its value will be 800 plus 20% of 800, which is 960. So, you can see that percentages do not cancel out. In this case, you would need a 25% increase to return to the original level.
Here’s a more dramatic example:
You own a stock that drops 50%. What percentage gain do you need to return to the original price?
100%
That’s right if you own a stock that declines by half, that same stock will need to double to get back to normal.
Don’t rely on mental Calculations
The mind calculation methods listed are only for urgent use or to get approximate values. If you are doing something important, don’t calculate in the mind or use shortcuts. Use paper or a calculator.
Remember: use mental calculations to quickly eliminate bad investment opportunities. But when you have a good one do your due diligence. Then do it again.
Be careful using the % button
In some calculators, using the % button multiplies by 100 instead of dividing. Your calculations may go wrong. Make sure the percent button behaves the way you expect.
(I’ve been burned by this, which is why I prefer to just divide by 100)
Don’t average percentages
If you have one investment that yields 10% and another that yields 20%, you can’t buy into both and assume that you will earn an average of 15%.
Percentages can get us into trouble because they lead us to gloss over underlying information. In this example you would need to look at deeper metrics like risks, or expected costs increases over time.
If I bought a real estate investment (that earns 10%) and a shares of a company (that earns 20%), I could not average the two ROI percentages because the underlying economics are vastly different.
The real estate investment might have a harder time compounding its earnings than the company would.
I personally know a man who made this mistake (only looking at ROI rates) and while he has gone on to make a few hundred thousand dollars in the 20 last years, he has missed out on over one million dollars in profit that he could have had.
Summary
Well, that’s it for today. I hope this has helped. Remember, we’re here to help you become a savvy investor and run a million-dollar business in three months or less each year!
Don’t forget to check out our other post on how to invest, start a micro business, and live the good life!
Further Reading
Our goal here at Three Month Millionaire is to help you achieve freedom, both financially and in your working life. The dream is to build a million-dollar business that can be run in three months or less per year.
We believe that the key to freedom is small business ownership.
And we believe that you can start a business from your home that will change your life.
We believe it because it happened to us.
And remember, the money we needed to start that business… It came from downloading apps just like these (although there were far fewer apps to download back then).
We have amassed over half-a-million dollars in assets since 2014 and it all started with gift cards from Swagbucks.
To see how we did it, check out our Income Reports.
To learn more about what we do here and how to achieve the 3MM dream, check out:
- Our Ultimate Productivity Guide
- Our Ultimate Guide to Building a Business
- Our Ultimate Guide to Investing
We also publish unbiased reviews of business tools and software. To see some of our top review posts, Check out:
- Our reviews of the Best Online Course Creation Software
- Our reviews of the Best Books For Following the Three-Month Millionaire Journey
- Our reviews of the Best Business Tools No One Ever Told Us About
- Our reviews of the Best Social Media Management Tools
- Our reviews of the best Email Marketing Services
