Financial Wellbeing While studying maths in school, I used to think much of it was irrelevant – algebra, geometry, statistics – when would I ever use them? The one topic, however, that has proven its worth time and again is probability. The numbers behind the ‘chance’ of an occurrence. If there is a single mathematical concept that finds application in your financial decisions (besides basic arithmetic), it is probability. It feeds into ideas of risk and reward and, with that, helps you budget, invest and spend. Let’s dive in. Understanding Emotional Spending Think of the last big purchase you made when you felt you need to buy that dress, those shoes, that bag or that car. Often, these purchases are made to help us feel good. Equally often, they are made so we don’t feel left out – or rather, to increase the chances that we’ll fit in, be accepted into an implicit group, or avoid being excluded from it. Where does probability come in? If you dissect the rationale, it’s likely you will see that there are Business consultant Pria Masson explores how the often-overlooked mathematical concept of probability shapes our financial decisions, from everyday purchases to complex investments, encouraging more mindful, strategic approaches to money. WHAT ARE THE CHANCES? multiple factors at play to determine your acceptance into any sort of club. These objects are just one of them. If you already have other factors working in your favour, you don’t need the objects. Understanding this gives you the power to make a mindful decision about why you are doing what you are doing. The exception to this is – “I feel like buying it, I can afford it, I like it, I will buy it”. Probability and Complex Decisions Now consider a more complex decision, like whether to buy an insurance product. What is being sold to you is a product that protects you against the chance (probability) of an unpleasant event. Higher the probability, higher the risk for the insurance company, higher is the premium you need to pay. The insurance company makes sure you pay them enough to keep the risk-reward balance in their favour. bahrainthismonth.com | MAY 2025 COMMERCE 54
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