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Personal Finance v2

Last updated

May 15, 2024
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- Detailed Licensing
- Front Matter

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Front Matter
1: Personal Financial Planning
This chapter introduces four major themes. Financial decisions are 1) individual-specific, 2) economic decisions, made in a 3) continuous process often with the 4) assistance of professional advisors. These themes emphasize the idiosyncratic, systemic, and continuous nature of personal finance, putting decisions within the larger contexts of an entire lifetime and an economy.
2: Basic Ideas of Finance
This chapter introduces the basic financial and accounting categories of revenues, expenses, assets, liabilities, and net worth as tools to understand the relationships between them as a way, in turn, of organizing financial thinking. It also introduces the concepts of opportunity costs and sunk costs as implicit but critical considerations in financial thinking.
3: Financial Statements
This chapter continues with the discussion of organizing financial data to help in decision making and introduces basic analytical tools that can be used to clarify the situation portrayed in financial statements.
4: Time Value of Money
This chapter introduces the critical relationships of time and risk to value. It demonstrates the math but focuses on the role that those relationships play in financial thinking, especially in comparing and evaluating choices in making financial decisions.
5: Financial Plans- Budgets
This chapter demonstrates how organized financial data can be used to create a plan, monitor progress, and adjust goals.
6: Taxes and Tax Planning
This chapter discusses the role of taxation in personal finance and its effects on earnings and on accumulating wealth. The chapter emphasizes the types, purposes, and impacts of taxes; the organization of resources for information; and the areas of controversy that lead to changes in the tax rules.
7: Financial Management
This chapter focuses on financing consumption using current earnings and/or credit, and financing longer-term assets with debt.
8: Consumer Strategies
This chapter discusses purchasing decisions, starting with recurring consumption, and then goes into detail on the purchase of a car, a more significant and longer-term purchase both in terms of its use and financing.
9: Buying a Home
This chapter applies the ideas developed in the previous chapter to what, for most people, will be the major purchase: a home. The chapter discusses its role both as a living expense and an investment, as well as the financing and financial consequences of the purchase.
10: Personal Risk Management- Insurance
This chapter introduces the idea of incorporating risk management into financial planning. An awareness of the need for risk management often comes with age and experience. This chapter focuses on planning for the unexpected. It progresses from the more obvious risks to property to the less obvious risks, such as the possible inability to earn due to temporary ill health, permanent disability, or death.
11: Personal Risk Management- Retirement and Estate Planning
This chapter focuses on planning for the expected: retirement, loss of income from wages, and the subsequent distribution of assets after death. Retirement planning discusses ways to develop alternative sources of income from capital that can eventually substitute for wages. Estate planning also touches on the considerations and mechanics of distributing accumulated wealth.
12: Behavioral Finance and Market Behavior
This chapter digresses from classical theory to take a look at how both personal and market behavior can deviate from the classic risk-return relationships and the consequences for personal financial planning and thinking.
13: Introduction to Investing
This chapter presents basic information about investment instruments and markets and explains the classic relationships of risk and return developed in modern portfolio theory.
14: Investment Options and Opportunities
This chapter is one of three that looks at investments commonly made by individual investors and their use in and risks for building wealth as part of a diverse investment strategy.
Back Matter

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