Description
Book SynopsisWhether looking to create and adhere to a budget or trying to best utilize consumer credit and loans, Personal Finance will help readers make smart financial decisions throughout their lives. Guiding them all the way through to retirement, this book includes numerous real-world examples to easily show them how to apply the material.
Table of ContentsPart I: The Personal Financial Planning Process 1
1. Personal Financial Planning in Action 1
Introduction 2
1.1 The Personal Financial Planning Process 2
1.2 Factors That Influence Personal Financial Planning 6
1.3 Elements of a Comprehensive Financial Plan 12
1.4 Making Effective Decisions 13
Summary 17
Key Terms 17
Summary Questions 18
Applying This Chapter 19
You Try It 21
2. Money Management Strategies and Skills 22
Introduction 23
2.1 Collecting and Organizing Your Financial Information 23
2.2 Using Personal Financial Statements 25
2.3 Using Financial Ratios 33
Summary 36
Key Terms 37
Summary Questions 38
Applying This Chapter 39
You Try It 41
3. Managing Your Taxes 42
Introduction 43
3.1 The Basics of Federal Income Tax 43
3.2 Calculating Taxable Income and Taxes Owed 48
3.3 Filing Your Federal Tax Return 58
3.4 Tax Planning Strategies 62
Summary 68
Key Terms 68
Summary Questions 71
Applying This Chapter 72
You Try It 74
Part II: Managing Your Personal Finances 75
4. Managing Your Cash and Savings 75
Introduction 76
4.1 Objectives of Cash Management 76
4.2 Rules of Effective Cash Management 79
4.3 Selecting a Financial Institution 81
4.4 Cash Management Products and Services 86
4.5 Resolving Cash Management Problems 96
Summary 99
Key Terms 99
Summary Questions 102
Applying This Chapter 103
You Try It 105
5. Consumer Credit 106
Introduction 107
5.1 What is Consumer Credit? 107
5.2 Types of Consumer Credit 111
5.3 Applying for Credit 113
5.4 Protecting Your Credit and Correcting Credit Mistakes 115
5.5 Credit Cards 119
5.6 Advantages and Disadvantages of Credit Card Use 124
Summary 128
Key Terms 128
Summary Questions 131
Applying This Chapter 132
You Try It 133
6. Using Consumer Loans 134
Introduction 135
6.1 Characteristics of Consumer Loans 135
6.2 Types of Consumer Loans 137
6.3 Sources of Consumer Loans 142
6.4 Managing Your Debts 144
6.5 Declaring Personal Bankruptcy 149
Summary 152
Key Terms 152
Summary Questions 154
Applying This Chapter 155
You Try It 157
7. Making Automobile and Housing Decisions 158
Introduction 159
7.1 Buying a Motor Vehicle 159
7.2 Automobile Financing Alternatives 167
7.3 The Housing Decision 170
7.4 Buying a Home 174
7.5 Mortgage Financing 176
7.6 Completing a Real Estate Transaction 183
Summary 185
Key Terms 185
Summary Questions 187
Applying This Chapter 188
You Try It 189
Part III: Protecting Yourself with Insurance 190
8. Insuring Your Home and Automobile 190
Introduction 191
8.1 How Insurance Works 191
8.2 Managing Homeowners’ and Renters’ Risk 194
8.3 Homeowner’s Insurance Policies 197
8.4 Automobile Insurance 202
8.5 Buying Insurance and Filing Claims 209
Summary 211
Key Terms 211
Summary Questions 214
Applying This Chapter 215
You Try It 217
9. Health and Disability Insurance 218
Introduction 219
9.1 Employee Compensation and Health Insurance 219
9.2 Types of Health Insurance 225
9.3 Planning for Disability Income Needs 236
Summary 240
Key Terms 240
Summary Questions 243
Applying This Chapter 244
You Try It 246
10. Financial Planning with Life Insurance 247
Introduction 248
10.1 What is Life Insurance? 248
10.2 Determining Your Life Insurance Needs 251
10.3 Choosing Life Insurance Companies and Policies 258
10.4 Buying Life Insurance 264
10.5 Important Provisions in a Life Insurance Contract 267
Summary 271
Key Terms 271
Summary Questions 274
Applying This Chapter 275
You Try It 277
Part IV: Managing Your Investments and Your Future 278
11. Investment Basics 278
Introduction 279
11.1 Developing Realistic Investment Goals 279
11.2 Understanding Your Investment Alternatives 284
11.3 Factors That Reduce Investment Risk 289
11.4 Establishing Your Investment Strategy 297
Summary 301
Key Terms 301
Summary Questions 304
Applying This Chapter 305
You Try It 306
12. Investing in Stocks and Bonds 307
Introduction 308
12.1 Common Stock 308
12.2 Classification of Common Stock 314
12.3 Buying and Selling Stocks 317
12.4 Stock Selection and Performance Evaluation 323
12.5 Investing in Bonds 328
12.6 Buying and Selling Bonds 337
12.7 Preferred Stock 341
Summary 343
Key Terms 344
Summary Questions 347
Applying This Chapter 348
You Try It 350
13. Investing in Mutual Funds 351
Introduction 352
13.1 What is a Mutual Fund? 352
13.2 Mutual Fund Investment Classifications 363
13.3 Selecting and Evaluating Mutual Funds 367
Summary 373
Key Terms 374
Summary Questions 376
Applying This Chapter 377
You Try It 378
14. Planning for Retirement 380
Introduction 381
14.1 Estimating Retirement Income Needs 381
14.2 Sources of Retirement Income 386
14.3 Personal Retirement Savings Options 394
14.4 Preparing for Retirement Payouts 397
Summary 400
Key Terms 400
Summary Questions 401
Applying This Chapter 402
You Try It 403
15. Preserving Your Estate 404
Introduction 405
15.1 What is Estate Planning? 405
15.2 Key Components of an Estate Plan 408
15.3 Types and Formats of Wills 411
15.4 Estate and Gift Taxes 417
15.5 Reducing Taxes Through Trusts and Gifts 421
Summary 426
Key Terms 426
Summary Questions 428
Applying This Chapter 429
You Try It 431
Endnotes 432
Appendix 433
Glossary 455
Index 478
