# Why Is Calculating the Probability of Events Important in Life?

Article Summary: When you calculate the probability of an event you look at chances of getting what you want versus all the possible things that can happen. The probability of an event that you know for sure will happen is 100% or 1 while the probability of an event that will never happen is 0% or just plain 0.

Probability is the chance that something might happen. When you calculate the probability of an event you look at chances of getting what you want versus all the possible things that can happen. The probability of an event that you know for sure will happen is 100% or 1 while the probability of an event that will never happen is 0% or just plain 0.

What about other events that you're not so sure about? The probability of these events can be given as a percent or as an odds ratio. Let's pick something a little silly but simple as an example. Let's pretend that you want to wear a sweater to school and you have a blue sweater and a yellow sweater. The probability of wearing the blue sweater is 50% or the odds are 1 out of 2. What is the probability of wearing the yellow sweater? It would be the same. The probability of all the events that are possible must add up to 100%.

There are lots of these simple examples that we could use to discuss more about probability. But this time we want to talk about Events Important in Life. As you grow up you need to think about your actions and what the consequences of these actions will be. It's important to know how to use probability when you make decisions about your future. Probability is a whole lot more than just selecting blue sweaters or blue socks from the drawer.

A lot of people just wish that they could win the lottery as a way to solve all their financial stresses. In fact about one-third of the adults in the United States think that winning the lottery is the best way to become financially secure. But you have a better chance of being struck by lightening or being in a plane crash (and there really aren't very many plane crashes) than you have of winning the lottery. The probability of winning the lottery is very close to 0. You need a better plan for your financial future than the lottery!

When you consider probability and your money, you decide how much risk you want to take. The government says that you will get back your money if the bank itself has financial trouble. If you put money in a bank that is insured by the federal government and you don't exceed the maximum insured amount, the probability of losing your money is 0. But banks usually do not pay very much interest back to you on your savings. You have low risk and low rate of return.

You've seen lots of ads on TV for trading stocks which means buying and selling stock in companies. Before buying a stock you need to investigate about the company. If the company makes a lot of money with their product and if you own some of their stock you may make more money too, potentially more money than what you could earn at the bank. But if the company loses money, you may lose too. People who work with company finances calculate the probability that a company should make money and are a good company to invest money in.

Another area of your life where probability is important is your health. For example, if you know that people in your family have heart disease and you develop high blood pressure when you are an adult then you know that you have a high probability of also having heart disease. You could be frightened by this high probability or you could live a healthier lifestyle that lowers your blood pressure and in turn lowers the probability of getting heart disease. In this case, you are using your understanding of probability to improve your health.