Real-World Guide: How Discounts, Taxes, and Inflation are Calculated

1. Shopping: Discounts & Sales

When a store offers "20% Off", what are you actually paying?

• Formula:

  Price * (1 - Discount%)

• Example: A $50 shirt at 20% off.
  • Discount: $50 * 0.20 = $10 off.
  • Final Price: $40.

Pro Tip: "Stacking" coupons (e.g., "Take an extra 10% off the sale price") usually calculates off the new lower price, not the original.

• $40 * 10% off = $36 Final.
• (Total savings are $14, which is 28%, not 30%).

Tool: Discount Calculator

2. Income & Sales Tax

Taxes are "add-on" percentages.

• Sales Tax: If tax is 8%, you multiply

  Price * 1.08

  .
  • $100 item becomes $108.
• Income Tax: This is usually "progressive," meaning different chunks of your money are taxed at different percentages (brackets).
  • A "22% bracket" doesn't mean you pay 22% of everything, just the money earned in that bracket.

Tool: Tax Increase Calculator and Income Tax Calculator

3. Inflation & Cost of Living

Inflation is the "silent tax" that reduces your money's value.

• Concept: If inflation is 4%, a $100 grocery cart today will cost $104 next year.
• Salary Impact: If your boss gives you a 2% raise while inflation is 4%, your "real wage" actually dropped by 2%. You can buy less stuff than before despite the higher paycheck number.

Check your real gain with the Salary Increase Calculator.

4. Tipping at Restaurants

Tipping percentages are standard social math.

• Standard: 15-20% of the pre-tax bill.
• Easy Math: To find 20%, just move the decimal point one spot to the left (10%) and double it.
  • Bill: $45.00
  • 10%: $4.50
  • 20%: $9.00

Tool: Tip Calculator

5. Investment Growth (ROI)

This is where percentages are your friend. Compound interest allows money to grow exponentially.

• Rule of 72: Divide 72 by your return percentage to see how many years it takes to double your money.
  • At 8% return: 72 / 8 = 9 years to double.
  • At 4% return: 72 / 4 = 18 years to double.

Tool: Investment Return Calculator

Conclusion

You don't need to be a math genius to succeed financially—you just need to understand how these few percentage formulas apply to your wallet.

Bookmark our Full Calculator List to handle the complex math whenever you need it.