As a cost analyst the hardest part is finding the data. Even more difficult is finding good data. Having an understanding of averages is important since many businesses use them as benchmarks. Benchmarks are standards. The S&P 500 is typically the benchmark that money managers are trying to beat. Beating the standard means more money will flow into their mutual or hedge fund.
When choosing CDs many people look for APR %. Which one has the highest rate for a period of time.
FDIC insured Bank XYZ offers a one year $1,000 CD that yields 1% and pays interest at maturity.
FDIC insured Bank ABC offers a one year $1,000 CD that yields 1.1% and pays interest at maturity.
If no other choices exist, which one would you choose and why?
I am hoping you would choose the ABC offer. You will receive $10 from XYZ and $11 from ABC bank. That is a 10% increase in money received! You get this percentage by taking $1/$10. Again percentages matters!
I'm sure almost everybody understands this...however questions get asked all the time which credit card or debt should you pay off first. The answer is always the one with the highest percentage. Forget the psychological...I paid off one card yeah me! The goal isn't about paying off cards or debt. The goal is to increase your cash flow...period! This is why filling out budgets, personal financial statements, and financial plans are important.
To measure success, it is about the cash flow. Do you have more cash flow this month than previous months?
If the answer is yes...then you are on the right track.