How to Solve Word Problems Involving Money

Improper Fractions and Mixed Numbers

Welcome to this Mometrix lesson on word problems with money. Usually word problems with money will deal with purchasing something, taxing something, or maybe deducting something from a total price. When reading a word problem, it could get overwhelming, seeing as you’re expected to solve a paragraph of text; surely that’s not math, right? If this is your thought process, well, I’ve got some helpful tips for you! For starters, word problems are not all that scary and actually quite easy to maneuver once you know how, and second, yes, math problems can exist in a block of text! Today, we’re going to break down the scary assumptions that come with solving money word problems and learn how to solve them without hesitation!

The best way to learn something is to try it for yourself, so let’s start by looking at a problem I’ve created:

You and your friends want to order a large pizza for $14.99. You have a budget of: $20. Considering the tax of 4% and the tip at 30%, will you have enough money to buy the large pizza?

When starting a word problem, a good rule of thumb is to identify information that is necessary and information that is unnecessary in the problem.

Your budget of $20 is unnecessary information starting out, however it will become important once we solve the problem. At this point, we really only need to focus on the price of the pizza and finding out what the tax is. Then we can move on from there.

First, we need to determine how much our tax will add onto the bill. To do this, we need to multiply 14.99 with 4%, or .04. (14.99)(.04)=.5996

Next, we need to add .5996, our tax, to 14.99, our total.

To keep our number most accurate, we won’t round to the nearest cent until we have reached our final number.

So, we have .5996+14.99=15.5896

Now that we know the sum of the original total and our tax, we need to factor in a 30% tip.

We need to multiply 15.5896 with 30%, or .30. (15.5896)(.30)=4.67688

Lastly, we need to add 4.67688 with 15.5896 to reach our total number 15.5896+4.67688=20.266. After rounding up, we reach 20.27.

The total for your order would be $20.27. You would be $.27 short of being able to order a pizza for you and your friends. I’d say it’s time to start checking the couches for spare change!

When we break down word problems into manageable steps, they seem a lot less daunting, right? Next time you’re given a word problem with money to solve, be sure to start with what is known, what is necessary, and what is unnecessary information in the word problem. Identifying these things will help to clear up your understanding of what is being asked in the problem. After identifying the necessary information needed to solve the problem, perform the operations outlined in the question to reach your total(s) and compare your answers.

Thanks for joining us for this video lesson on money word problems. If you enjoyed this lesson, be sure to “like” and “subscribe” to our channel for more videos like this one!



by Mometrix Test Preparation | Last Updated: March 30, 2020