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Focus on Personal Finance : An Active Approach to Help You Develop Successful Financial Skills

ISBN: 9780073530635

Table of Contents

Personal Financial Planning in Action

(42)

Making Financial Decisions

(6)

Your Life Situation and Financial Planning

(1)

Financial Planning in Our Economy

(3)

Financial Planning Activities

(2)

Developing and Achieving Financial Goals

(2)

Types of Financial Goals

(1)

Goal-Setting Guidelines

(1)

Opportunity Costs and the Time Value of Money

(4)

Personal Opportunity Costs

(1)

Financial Opportunity Costs

(3)

A Plan for Personal Financial Planning

(7)

Step 1: Determine Your Current Financial Situation

(1)

Step 2: Develop Your Financial Goals

(1)

Step 3: Identify Alternative Courses of Action

(1)

Step 4: Evaluate Your Alternatives

(1)

Step 5: Create and Implement Your Financial Action Plan

(1)

Step 6: Review and Revise Your Plan

(2)

Career Choice and Financial Planning

(10)

Appendix: Time Value of Money

(12)

Money Management Skills

(30)

A Successful Money Management Plan

(3)

Components of Money Management

(1)

A System for Personal Financial Records

(2)

Personal Financial Statements

(6)

Your Personal Balance Sheet: The Starting Point

(2)

Your Cash Flow Statement: Inflows and Outflows

(4)

A Plan for Effective Budgeting

(5)

Step 1: Set Financial Goals

(1)

Step 2: Estimate Income

(2)

Step 3: Budget an Emergency Fund and Savings

(1)

Step 4: Budget Fixed Expenses

(1)

Step 5: Budget Variable Expenses

(1)

Step 6: Record Spending Amounts

(1)

Step 7: Review Spending and Saving Patterns

(2)

Money Management and Achieving Financial Goals

(15)

Selecting a Saving Technique

(1)

Calculating Savings Amounts

(13)

Taxes in Your Financial Plan

(32)

Taxes in Your Financial Plan

(2)

Planning Your Tax Strategy

(1)

Types of Tax

(2)

The Basics of Federal Income Tax

(6)

Step 1: Determining Adjusted Gross Income

(1)

Step 2: Computing Taxable Income

(2)

Step 3: Calculating Taxes Owed

(2)

Step 4: Making Tax Payments

(1)

Step 5: Watching Deadlines and Avoiding Penalties

(1)

Filing Your Federal Income Tax Return

(10)

Who Must File?

(1)

Which Tax Form Should You Use?

(1)

What Is the Process for Completing the Federal Income Tax Return?

(2)

How Do I File My State Tax Return?

(1)

How Do I File My Taxes Online?

(3)

What Tax Assistance Sources Are Available?

(1)

Tax Preparation Services

(1)

What If Your Return Is Audited?

(2)

Using Tax Planning Strategies

(13)

Consumer Purchasing

(1)

Investment Decisions

(1)

Retirement Plans

(1)

Changing Tax Strategies

(10)

Savings and Payment Services

106

(32)

What Financial Services Do You Need?

107

(5)

Meeting Daily Money Needs

107

(1)

Sources of Quick Cash

107

(1)

Types of Financial Services

108

(1)

Electronic and Online Banking

109

(1)

Financial Services and Economic Conditions

110

(2)

Sources of Financial Services

112

(4)

Comparing Financial Institutions

112

(1)

Types of Financial Institutions

113

(1)

Problematic Financial Businesses

114

(2)

Comparing Savings Plans

116

(6)

Regular Savings Accounts

117

(1)

Certificates of Deposit

117

(1)

Interest-Earning Checking Accounts

117

(1)

Money Market Accounts and Funds

117

(1)

U.S. Savings Bonds

118

(1)

Evaluating Savings Plans

119

(3)

Comparing Payment Methods

122

(16)

Electronic Payments

123

(1)

Checking Accounts

123

(1)

Evaluating Checking and Payment Accounts

124

(1)

Other Payment Methods

125

(1)

Managing Your Checking Account

125

(13)

Consumer Credit: Advantages, Disadvantages, Sources, and Costs

138

(42)

What Is Consumer Credit?

139

(3)

The Importance of Consumer Credit in Our Economy

139

(1)

Uses and Misuses of Credit

139

(1)

Advantages of Credit

140

(1)

Disadvantages of Credit

141

(1)

Types of Credit

142

(1)

Closed-End Credit

142

(1)

Open-End Credit

143

(1)

Sources of Consumer Credit

143

(5)

Loans

144

(2)

Credit Cards

146

(2)

Applying for Credit

148

(8)

Can You Afford a Loan?

148

(1)

General Rules of Credit Capacity

148

(1)

The Five Cs of Credit

149

(1)

Other Factors Considered in Determining Creditworthiness

150

(2)

What If Your Application Is Denied?

152

(1)

Your Credit Report

152

(4)

The Cost of Credit

156

(4)

Finance Charge and Annual Percentage Rate

156

(1)

Tackling the Trade-Offs

157

(1)

Calculating the Cost of Credit

158

(2)

Protecting Your Credit

160

(3)

Billing Errors and Disputes

160

(1)

Identity Crisis: What to Do If Your Identity Is Stolen

161

(1)

Protecting Your Credit from Theft or Loss

162

(1)

Protecting Your Credit Information on the Internet

162

(1)

Cosigning a Loan

162

(1)

Complaining about Consumer Credit

163

(1)

Consumer Credit Protection Laws

163

(1)

Your Rights under Consumer Credit Laws

163

(1)

Managing Your Debts

164

(16)

Warning Signs of Debt Problems

164

(1)

Debt Collection Practices

165

(1)

Financial Counseling Services

165

(2)

Declaring Personal Bankruptcy

167

(13)

Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

180

(28)

Consumer Buying Activities

181

(4)

Practical Purchasing Strategies

181

(1)

Warranties

182

(2)

Research-Based Buying

184

(1)

Major Consumer Purchases: Buying Motor Vehicles

185

(9)

Phase 1: Preshopping Activities

185

(1)

Phase 2: Evaluating Alternatives

186

(2)

Phase 3: Determining Purchase Price

188

(2)

Phase 4: Postpurchase Activities

190

(4)

Resolving Consumer Complaints

194

(2)

Step 1: Return to Place of Purchase

194

(1)

Step 2: Contact Company Headquarters

194

(1)

Step 3: Obtain Consumer Agency Assistance

195

(1)

Step 4: Take Legal Action

196

(1)

Legal Options for Consumers

196

(12)

Small Claims Court

196

(1)

Class-Action Suits

197

(1)

Using a Lawyer

198

(1)

Other Legal Alternatives

198

(10)

Selecting and Financing Housing

208

(30)

Evaluating Renting and Buying Alternatives

209

(4)

Your Lifestyle and Your Choice of Housing

209

(1)

Renting versus Buying Housing

209

(2)

Rental Activities

211

(2)

Home-Buying Activities

213

(6)

Step 1: Determine Home Ownership Needs

213

(3)

Step 2: Find and Evaluate a Home

216

(2)

Step 3: Price the Property

218

(1)

The Finances of Home Buying

219

(8)

Step 4: Obtain Financing

219

(5)

Step 5: Close the Purchase Transaction

224

(2)

Home Buying: A Summary

226

(1)

A Home-Selling Strategy

227

(11)

Preparing Your Home for Selling

227

(1)

Determining the Selling Price

227

(1)

Sale by Owner

227

(1)

Listing with a Real Estate Agent

227

(11)

Home and Automobile Insurance

238

(34)

Insurance and Risk Management

239

(7)

What Is Insurance?

239

(1)

Types of Risk

240

(1)

Risk Management Methods

240

(1)

Planning an Insurance Program

241

(2)

Property and Liability Insurance in Your Financial Plan

243

(3)

Home and Property Insurance

246

(6)

Homeowner's Insurance Coverages

246

(3)

Renter's Insurance

249

(1)

Home Insurance Policy Forms

250

(2)

Home Insurance Cost Factors

252

(3)

How Much Coverage Do You Need?

252

(1)

Factors That Affect Home Insurance Costs

253

(2)

Automobile Insurance Coverages

255

(3)

Motor Vehicle Bodily Injury Coverages

255

(1)

Motor Vehicle Property Damage Coverage

256

(1)

No-Fault Insurance

257

(1)

Other Coverages

257

(1)

Automobile Insurance Costs

258

(14)

Amount of Coverage

258

(1)

Motor Vehicle Insurance Premium Factors

258

(1)

Reducing Vehicle Insurance Premiums

259

(13)

Health and Disability Income Insurance

272

(32)

Health Insurance and Financial Planning

273

(2)

What Is Health Insurance?

273

(2)

Health Insurance Coverage

275

(5)

Types of Health Insurance Coverage

275

(3)

Major Provisions in a Health Insurance Policy

278

(2)

Health Insurance Trade-Offs

280

(2)

Which Coverage Should You Choose?

281

(1)

Private Health Care Plans and Government Health Care Programs

282

(7)

Private Health Care Plans

282

(4)

Government Health Care Programs

286

(3)

Disability Income Insurance

289

(3)

The Need for Disability Income

289

(1)

Sources of Disability Income

290

(1)

Disability Income Insurance Trade-Offs

290

(1)

Your Disability Income Needs

291

(1)

High Medical Costs

292

(12)

Why Does Health Care Cost So Much?

293

(1)

What Is Being Done about the High Costs of Health Care?

294

(1)

What Can You Do to Reduce Personal Health Care Costs?

294

(10)

Financial Planning with Life Insurance

304

(28)

What Is Life Insurance?

305

(5)

The Purpose of Life Insurance

305

(1)

The Principle of Life Insurance

306

(1)

How Long Will You Live?

306

(1)

Do You Need Life Insurance?

307

(1)

Estimating Your Life Insurance Requirements

307

(3)

Types of Life Insurance Companies and Policies

310

(5)

Types of Life Insurance Companies

310

(1)

Types of Life Insurance Policies

310

(5)

Selecting Provisions and Buying Life Insurance

315

(7)

Key Provisions in a Life Insurance Policy

315

(2)

Buying Life Insurance

317

(5)

Financial Planning with Annuities

322

(10)

Why Buy Annuities?

322

(1)

Tax Considerations

322

(10)

Investing Basics and Evaluating Bonds

332

(38)

Preparing for an Investment Program

333

(6)

Establishing Investment Goals

333

(1)

Performing a Financial Checkup

334

(2)

Getting the Money Needed to Start an Investment Program

336

(1)

The Value of Long-Term Investment Programs

336

(3)

Factors Affecting the Choice of Investments

339

(4)

Safety and Risk

339

(1)

Components of the Risk Factor

339

(3)

Investment Income

342

(1)

Investment Growth

342

(1)

Investment Liquidity

342

(1)

Factors that Reduce Investment Risk

343

(5)

Portfolio Management and Asset Allocation

343

(2)

Your Role in the Investment Process

345

(3)

Conservative Investment Options: Government Bonds

348

(3)

Government Bonds and Debt Securities

348

(3)

Conservative Investment Options: Corporate Bonds

351

(5)

Why Corporations Sell Corporate Bonds

351

(2)

Why Investors Purchase Corporate Bonds

353

(2)

A Typical Bond Transaction

355

(1)

The Decision to Buy or Sell Bonds

356

(14)

The Internet

356

(1)

Financial Coverage for Bond Transactions

356

(1)

Bond Ratings

357

(1)

Bond Yield Calculations

358

(1)

Other Sources of Information

359

(11)

Investing in Stocks

370

(36)

Common and Preferred Stock

371

(7)

Why Corporations Issue Common Stock

372

(1)

Why Investors Purchase Common Stock

373

(3)

Preferred Stock

376

(2)

Evaluating a Stock Issue

378

(5)

The Internet

378

(3)

Stock Advisory Services

381

(1)

How to Read the Financial Section of the Newspaper

382

(1)

Corporate News

382

(1)

Numerical Measures That Influence Investment Decisions

383

(4)

Why Corporate Earnings Are Important

384

(2)

Other Factors That Influence the Price of a Stock

386

(1)

Buying and Selling Stocks

387

(6)

Secondary Markets for Stocks

388

(1)

Brokerage Firms and Account Executives

389

(1)

Should You Use a Full-Service or a Discount Brokerage Firm?

389

(1)

Computerized Transactions

390

(1)

A Sample Stock Transaction

391

(1)

Commission Charges

391

(2)

Long-Term and Short-Term Investment Strategies

393

(13)

Long-Term Techniques

393

(1)

Short-Term Techniques

394

(12)

Investing in Mutual Funds

406

(34)

Why Investors Purchase Mutual Funds

408

(4)

Characteristics of Mutual Funds

408

(4)

Classifications of Mutual Funds

412

(5)

Stock Funds

415

(1)

Bond Funds

416

(1)

Other Funds

416

(1)

How to Make a Decision to Buy or Sell Mutual Funds

417

(8)

Managed Funds versus Index Funds

418

(1)

The Internet

419

(1)

Professional Advisory Services

420

(2)

The Mutual Fund Prospectus

422

(1)

The Mutual Fund Annual Report

422

(1)

Financial Publications

422

(1)

Newspapers

423

(2)

The Mechanics of a Mutual Fund Transaction

425

(15)

Return on Investment

425

(1)

Taxes and Mutual Funds

426

(2)

Purchase Options

428

(1)

Withdrawal Options

429

(11)

Retirement and Estate Planning

440

(57)

Planning for Retirement: Start Early

441

(4)

Conducting a Financial Analysis

443

(1)

Estimating Retirement Living Expenses

443

(2)

Your Retirement Income

445

(8)

Employer Pension Plans

446

(2)

Public Pension Plans

448

(1)

Personal Retirement Plans

449

(2)

Annuities

451

(1)

Living on Your Retirement Income

451

(2)

Estate Planning

453

(2)

The Importance of Estate Planning

453

(1)

What Is Estate Planning?

453

(1)

Legal Documents

454

(1)

Legal Aspects of Estate Planning

455

(18)

Wills

455

(1)

Types of Wills

455

(1)

Formats of Wills

456

(1)

Writing Your Will

456

(1)

A Living Will

457

(1)

Trusts

458

(1)

Types of Trusts

458

(1)

Taxes and Estate Planning

459

(14)

Appendix

A. Developing a Career Search Strategy

473

(9)

B. Consumer Agencies and Organizations

482

(6)

C. Daily Spending Diary

488

(9)

Index

497