Focus on Personal Finance

TITTLE
CONTENTS
1 Personal Financial Planning in Action
	Making Financial Decisions
	Your Life Situation and Financial Planning
	Financial Planning in Our Economy
	Financial Planning Activities
	Developing and Achieving Financial Goals
	Types of Financial Goals
	Goal-Setting Guidelines
	Opportunity Costs and the Time Value of Money
	Personal Opportunity Costs
	Financial Opportunity Costs
	A Plan for Personal Financial Planning
	Career Choice and Financial Planning
	Appendix: Time Value of Money
2 Money Management Skills
	A Successful Money Management Plan
	Components of Money Management
	Money Management Troubles and Debt
	A System for Personal Financial Records
	Personal Financial Statements
	Your Personal Balance Sheet: The Starting Point
	Your Cash Flow Statement: Inflows and Outflows
	A Plan for Effective Budgeting
	Step 1: Set Financial Goals
	Step 2: Estimate Income
	Step 3: Budget an Emergency Fund and Savings
	Step 4: Budget Fixed Expenses
	Step 5: Budget Variable Expenses
	Step 6: Record Spending Amounts
	Step 7: Review Spending and Saving Patterns
	Money Management and Achieving Financial Goals
	Selecting a Saving Technique
	Calculating Savings Amounts
3 Taxes in Your Financial Plan
	Taxes in Your Financial Plan
	Planning Your Tax Strategy
	Types of Tax
	The Basics of Federal Income Tax
	Step 1: Determining Adjusted Gross Income
	Step 2: Computing Taxable Income
	Step 3: Calculating Taxes Owed
	Step 4: Making Tax Payments
	Step 5: Watching Deadlines and Avoiding Penalties
	Filing Your Federal Income Tax Return
	Who Must File?
	Which Tax Form Should You Use?
	What Is the Process for Completing the Federal Income Tax Return?
	How Do I File My State Tax Return?
	How Do I File My Taxes Online?
	What Tax Assistance Sources Are Available?
	Tax Preparation Services
	What If Your Return Is Audited?
	Using Tax Planning Strategies
	Consumer Purchasing
	Investment Decisions
	Retirement Plans
	Changing Tax Strategies
4 Savings and Payment Services
	What Financial Services Do You Need?
	Meeting Daily Money Needs
	Sources of Quick Cash
	Types of Financial Services
	Electronic and Online Banking
	Financial Services and Economic Conditions
	Sources of Financial Services
	Comparing Financial Institutions
	Types of Financial Institutions
	Problematic Financial Businesses
	Comparing Savings Plans
	Regular Savings Accounts
	Certificates of Deposit
	Interest-Earning Checking Accounts
	Money Market Accounts and Funds
	U.S. Savings Bonds
	Evaluating Savings Plans
	Comparing Payment Methods
	Electronic Payments
	Checking Accounts
	Evaluating Checking and Payment Accounts
	Other Payment Methods
	Managing Your Checking Account
5 Consumer Credit: Advantages, Disadvantages, Sources, and Costs
	What Is Consumer Credit?
	The Importance of Consumer Credit in Our Economy
	Uses and Misuses of Credit
	Advantages of Credit
	Disadvantages of Credit
	Types of Credit
	Closed-End Credit
	Open-End Credit
	Sources of Consumer Credit
	Loans
	Credit Cards
	Applying for Credit
	Can You Afford a Loan?
	General Rules of Credit Capacity
	The Five Cs of Credit
	Other Factors Considered in Determining Creditworthiness
	What If Your Application Is Denied?
	Your Credit Report
	The Cost of Credit
	Finance Charge and Annual Percentage Rate
	Tackling the Trade-Offs
	Calculating the Cost of Credit
	Protecting Your Credit
	Billing Errors and Disputes
	Identity Crisis: What to Do If Your Identity Is Stolen
	Protecting Your Credit from Theft or Loss
	Protecting Your Credit Information on the Internet
	Cosigning a Loan
	Complaining about Consumer Credit
	Consumer Credit Protection Laws
	Your Rights under Consumer Credit Laws
	Managing Your Debts
	Warning Signs of Debt Problems
	Debt Collection Practices
	Financial Counseling Services
	Declaring Personal Bankruptcy
6 Consumer Purchasing Strategies and Wise Buying of Motor Vehicles
	Consumer Buying Activities
	Practical Purchasing Strategies
	Warranties
	Major Consumer Purchases: Buying Motor Vehicles
	Phase 1: Preshopping Activities
	Phase 2: Evaluating Alternatives
	Phase 3: Determining Purchase Price
	Phase 4: Postpurchase Activities
	Resolving Consumer Complaints
	Step 1: Return to Place of Purchase
	Step 2: Contact Company Headquarters
	Step 3: Obtain Consumer Agency Assistance
	Step 4: Take Legal Action
	Legal Options for Consumers
	Small Claims Court
	Class-Action Suits
	Using a Lawyer
	Other Legal Alternatives
7 Selecting and Financing Housing
	Evaluating Renting and Buying Alternatives
	Your Lifestyle and Your Choice of Housing
	Renting versus Buying Housing
	Rental Activities
	Home-Buying Activities
	Step 1: Determine Home Ownership Needs
	Step 2: Find and Evaluate a Home
	Step 3: Price the Property
	The Finances of Home Buying
	Step 4: Obtain Financing
	Step 5: Close the Purchase Transaction
	Home Buying: A Summary
	A Home-Selling Strategy
	Preparing Your Home for Selling
	Determining the Selling Price
	Sale by Owner
	Listing with a Real Estate Agent
8 Home and Automobile Insurance
	Insurance and Risk Management
	What Is Insurance?
	Types of Risk
	Risk Management Methods
	Planning an Insurance Program
	Property and Liability Insurance in Your Financial Plan
	Home and Property Insurance
	Homeowner’s Insurance Coverages
	Renter’s Insurance
	Home Insurance Policy Forms
	Home Insurance Cost Factors
	How Much Coverage Do You Need?
	Factors That Affect Home Insurance Costs
	Automobile Insurance Coverages
	Motor Vehicle Bodily Injury Coverages
	Motor Vehicle Property Damage Coverage
	No-Fault Insurance
	Other Automobile Insurance Coverages
	Automobile Insurance Costs
	Amount of Coverage
	Motor Vehicle Insurance Premium Factors
	Reducing Vehicle Insurance Premiums 2
9 Health and Disability Income Insurance
	Health Insurance and Financial Planning
	What Is Health Insurance?
	Health Insurance Coverage
	Types of Health Insurance Coverage
	Major Provisions in a Health Insurance Policy
	Health Insurance Trade-Offs
	Which Coverage Should You Choose?
	Private Health Care Plans and Government Health Care Programs
	Private Health Care Plans
	Government Health Care Programs
	Disability Income Insurance
	The Need for Disability Income
	Sources of Disability Income
	Disability Income Insurance Trade-Offs
	Your Disability Income Needs
	High Medical Costs
	Why Does Health Care Cost So Much?
	What Is Being Done about the High Costs of Health Care?
	What Can You Do to Reduce Personal Health Care Costs?
10 Financial Planning with Life Insurance
	What Is Life Insurance?
	The Purpose of Life Insurance
	The Principle of Life Insurance
	How Long Will You Live?
	Do You Need Life Insurance?
	Estimating Your Life Insurance Requirements
	Types of Life Insurance Companies and Policies
	Types of Life Insurance Companies
	Types of Life Insurance Policies
	Selecting Provisions and Buying Life Insurance
	Key Provisions in a Life Insurance Policy
	Buying Life Insurance
	Financial Planning with Annuities
	Why Buy Annuities?
	Tax Considerations
11 Investing Basics and Evaluating Bonds
	Preparing for an Investment Program
	Establishing Investment Goals
	Performing a Financial Checkup
	Surviving a Financial Crisis
	Getting the Money Needed to Start an Investment Program
	The Value of Long-Term Investment Programs
	Factors Affecting the Choice of Investments
	Safety and Risk
	Components of the Risk Factor
	Investment Income
	Investment Growth
	Investment Liquidity
	Factors that Reduce Investment Risk
	Portfolio Management and Asset Allocation
	Your Role in the Investment Process
	Conservative Investment Options: Government Bonds
	Government Bonds and Debt Securities
	Conservative Investment Options: Corporate Bonds
	Why Corporations Sell Corporate Bonds
	Why Investors Purchase Corporate Bonds
	A Typical Bond Transaction
	The Decision to Buy or Sell Bonds
	The Internet
	Financial Coverage for Bond Transactions
	Bond Ratings
	Bond Yield Calculations
	Other Sources of Information
12 Investing in Stocks
	Common and Preferred Stock
	Why Corporations Issue Common Stock
	Why Investors Purchase Common Stock
	Preferred Stock
	Evaluating a Stock Issue
	The Internet
	Stock Advisory Services
	How to Read the Financial Section of the Newspaper
	Corporate News
	Numerical Measures That Influence Investment Decisions
	Why Corporate Earnings Are Important
	Other Factors That Influence the Price of a Stock
	Buying and Selling Stocks
	Secondary Markets for Stocks
	Brokerage Firms and Account Executives
	Should You Use a Full-Service or a Discount Brokerage Firm?
	Computerized Transactions
	A Sample Stock Transaction
	Commission Charges
	Long-Term and Short-Term Investment Strategies
	Long-Term Techniques
	Short-Term Techniques
13 Investing in Mutual Funds
	Why Investors Purchase Mutual Funds
	Characteristics of Funds
	Classifications of Mutual Funds
	Stock Funds
	Bond Funds
	Other Funds
	How to Make a Decision to Buy or Sell Mutual Funds
	Managed Funds versus Index Funds
	The Internet
	Professional Advisory Services
	The Mutual Fund Prospectus
	The Mutual Fund Annual Report
	Financial Publications
	Newspapers
	The Mechanics of a Mutual Fund Transaction
	Return on Investment
	Taxes and Mutual Funds
	Purchase Options
	Withdrawal Options
14 Retirement and Estate Planning
	Planning for Retirement: Start Early
	Conducting a Financial Analysis
	Estimating Retirement Living Expenses
	Your Retirement Income
	Employer Pension Plans
	Public Pension Plans
	Personal Retirement Plans
	Annuities
	Living on Your Retirement Income
	Estate Planning
	The Importance of Estate Planning
	What Is Estate Planning?
	Legal Documents
	Legal Aspects of Estate Planning
	Wills
	Types of Wills
	Formats of Wills
	Writing Your Will
	A Living Will
	Trusts
	Types of Trusts
	Taxes and Estate Planning
Appendixes A Developing a Career Search Strategy
B Consumer Agencies and Organizations
C Daily Spending Diary
Photo Credits
Index