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ABOUT THE AUTHORS vii
hers. Each year she shares her common sense approach

Melissa M. Hart, CPA of “No plan is a plan” with various student groups, clubs,
North Carolina State University high schools, and outside organizations. She is a mem-
ber of the North Carolina Association of Certified Public
Melissa Hart is a permanent lecturer in the Poole Col- Accountants (NCACPA) where she serves on multiple
lege of Management at North Carolina State Univer- committees. She received her BBA from the University
sity. She was inducted into the Academy of Outstanding of Maryland and an MBA from North Carolina State
Teachers and nominated for the Gertrude Cox Award for University. Prior to obtaining an MBA, she worked eight
Innovative Excellence in Teaching and Learning with years in public accounting in auditing, tax compliance,
Technology. She teaches courses in personal finance and and consulting. Her hobbies include keeping up with
corporate finance and has developed multiple ways to her family’s many extracurricular activities and travel-
use technology to introduce real-life situations into the ing. She travels extensively with her family to enjoy the
classroom and online environment. Spreading the word many cultures and beauty of the state, the country, and
about financial literacy has always been a passion of the world.
Preface
Dear Personal Finance Professors and Personal Finance
Students,
Just for a moment consider how the following questions
affect you and your students.
Will consumer prices begin to escalate?
Does Brexit deteriorate the world economic outlook?
How might an economic slowdown in other countries
affect you?
Is this a good time to purchase a home?
Will the Dow Jones Industrial Average rise to record
levels or crash again?
Are you saving enough for your retirement?
Will Social Security be around when you retire?
For most people, the answers to the above questions affect
not only their financial security, but also their quality of
life. In fact, for many individuals the financial crisis of
2007–2009 was a wake-up call that forced them to exam-
ine how they managed their personal finances. These same
economic problems had far reaching consequences, in terms
of employment, housing, investing, and retirement plan-
ning. The possibility of another economic crisis in the future
underscores the importance of managing your personal
finances and your investment program.
As authors and teachers, we believe it is important to
help people develop a plan to achieve financial security.
While the 12th edition of Personal Finance does not guarantee that each student will be able to get the ideal job or
become a millionaire, it does provide the information needed to take advantage of opportunities and to help manage
personal finances. As in previous editions, we address the changing financial needs and challenges that students face
on a daily basis. The 12th edition of Personal Finance provides extensive coverage of career planning; money manage-
ment; taxes; consumer credit, including college loans; housing; legal protection; insurance; investments; retirement
planning; and estate planning. By teaching students how to make informed choices, we believe you can encourage them
to build a foundation of financial security.
For 12 editions, we have listened carefully to both students and professors. With each revision, we have asked profes-
sors for suggestions that will help them teach better and help students learn more efficiently. And with each edition,
we have incorporated these suggestions and ideas to create what has become a best-selling personal finance textbook.
We are also proud to say that we have included extensive student feedback in our text and instructional package. We do
sincerely thank you for your suggestions, ideas, and support.
A text and instructional package should always be evaluated by the people who use it. We encourage you to e-mail
us if you have comments, suggestions, or would like more information about the new edition. Finally, we invite you to
examine the visual guide that follows to see how the new edition of Personal Finance and instructional package can
help your students obtain financial security and success.
Welcome to the new 12th edition of Personal Finance.
Sincerely,
Jack Kapoor Les Dlabay Bob Hughes Melissa Hart

kapoorj@cod.edu dlabay@lakeforest.edu bhughes@dcccd.edu mmhart@ncsu.edu
viii
PREFACE ix
Acknowledgments
The extensive feedback and thoughtful comments pro- Karen Sneary, Northwestern Oklahoma State
vided by the following instructors greatly contributed to University
the quality of the 12th edition of Personal Finance. Joe Welker, College of Western Idaho
NaRita Anderson, University of Central Oklahoma Jerry Whitley, Guilford Technical Community College
Shon P. Anderson, Wright State University Many talented professionals at McGraw-Hill Higher
Allen Arnold, University of Central Oklahoma Education have contributed to the development of
Jorene Batali, College of Western Idaho Personal Finance, 12th edition. We are especially
Stefanie Billette, St. Johns River State College grateful to Michele Janicek, Chuck Synovec, Jennifer
Kevin Cabe, Indiana Wesleyan University Upton, Melissa Caughlin, Harvey Yep, Kristin Bradley,
Mary Carlson, College of DuPage Tara McDermott, Beth Thole, Missy Homer, Karen
Fernando Conde, Columbia College of Missouri Jozefowicz, and Elise Lansdon.
Caroline Fulmer, University of Alabama In addition, Jack Kapoor expresses special apprecia-
Joe Howell, Salt Lake Community College tion to Theresa and Dave Kapoor, Kathryn Thumme,
Samira Hussein, Johnson County Community College and Karen and Joshua Tucker for their typing, proof-
Dianna Parker, Ozarks Technical Community College reading, and research assistance. Les Dlabay would also
Thomas Passero, Owens Community College like to thank Jason Ross, Gene Monterastelli, Bryna
David Pecha, Ph.D., Northwestern Oklahoma State Mollinger, and Kevin Smith for their help reviewing the
University manuscript. Finally, we thank our wives and families for
Thomas Prusa, Rutgers University their patience, understanding, encouragement, and love
Courtney Smith,College of Western Idaho throughout the years.
Personal Finance Offers You Everything You Have

Always Expected . . . and More!
The primary purpose of this book is to help you apply the personal finance practices you learn from the book and from
your instructor to your own life. The following new features of the 12th edition expand on this principle. You can use
them to assess your current personal financial literacy, identify your personal finance goals, and develop and apply a
personal finance strategy to help you achieve those goals. (For a complete list of all of the features in Personal Finance,
12th edition, refer to the Guided Tour on pages xviii–xxiii.)
F INANCIAL LITERACY IN MY LIFE

This edition has moved with a laser-like focus toward the concept of financial literacy. In our many years of teaching
and evaluating what knowledge and skills are most important to the lifelong success of our students, financial literacy—
the ability to understand and interpret knowledge relating to the financial decisions we make—looms largest. We hope
that students will remember all of the details we have put so much time and care into writing, and that you put into
teaching. If nothing else, though, we feel we have been successful if students come out of this course with the skills
required to interpret financial information and to make wise decisions about their own money, and the confidence that
comes with knowing they are able to solve the problems they encounter.
Throughout the text, we spend more time talking about financial literacy. The new chapter opening vignettes ask
questions about “Financial Literacy in My Life.” The Financial Planning features have been tweaked to emphasize “my
life”—the life and decisions that you, the student, will make.
x PREFACE
Chapter Selected Topics Benefits for the Teaching–Learning Environment

Chapter 1 Revised exhibit: Changing economic condi- Provides updated coverage of economic indicators, showing
tions and financial decisions how they might influence financial planning decisions.
New Financial Planning for My Life feature Provides students with a way to assess their financial health
as they get started in building their financial plan.
Revised Dashboard feature Provides an overview of emergency savings funds.
New Continuing Case: Personal Finance Allows students an opportunity to assess various financial
Basics and the Time Value of Money situations and recommend courses of action, based on the
knowledge gained in mastering the chapter material.
Chapter 2 New How to . . . Feature Emphasizes the career planning actions that students can
take to target employment in a particular field.
New Continuing Case: Financial Aspects of Allows students an opportunity to assess various financial
Career Planning situations and recommend courses of action, based on the
New Smart Money Minute feature Discusses the proliferation of new resume templates.
New content: Cover letter tips Covers ways to stand out in a cover letter.
New example: The Q Letter Provides a sample of a Q letter, an alternative to the tradi-
tional cover letter.
Chapter 3 New content: Differing outlooks and atti- Provides information about the different ways that a stu-
tudes toward money dent’s relationship to money may shape a budget.
New content: The phases of the budgeting Organizes the steps that students should take to create and
process implement a budget.
New Smart Money Minute feature Covers statistics on savings behavior.
New Continuing Case: Money Management Allows students an opportunity to assess various financial
Strategy situations and recommend courses of action, based on the
Chapter 4 Updated Smart Money Minute feature Updates statistics on most and least "tax-friendly" states in
the U.S.
Revised content: Tax rates Demonstrates how to calculate total tax due using a tax
bracket schedule, with most current information.
Expanded content: Health care and taxes Updates students on key changes related to the Affordable
Care Act.
Expanded content: Tax credits Covers new tax credits for 2016.
New Smart Money Minute feature Provides information about the benefits of early filing.
Revised content: Contacting the IRS Provides an updated listing of ways to contact the IRS,
including through apps.
New Smart Money Minute feature Discusses the IRS’s increased oversight of tax preparers.
Revised content: Tax scams Describes the latest and most popular tax scams.
Updated Exhibit: How to avoid common Provides an updated, detailed list of steps one might take to
filing errors reduce the likelihood of a filing error.
New Continuing Case: Planning Your Tax Allows students an opportunity to assess various financial
Strategy situations and recommend courses of action, based on the
PREFACE xi

Chapter 5 New Smart Money Minute feature Covers access to ATMs without a traditional debit card.
Updated content: Credit unions Details the changes happening in credit union membership
and services.
Expanded content: The “Unbanked” and Updates coverage of pawnshops, check-cashing outlets,
High-Cost Financial Services payday loans, rent-to-own centers, and car title loans.
New exhibit: Financial services comparison Offers a concise summary of the differences among differ-
ent types of financial institutions.
Updated content: Financial services in other Presents updated information on financial alternatives
cultures around the world.
New Smart Money Minute feature Warns of potential dangers of "phishing."
New Continuing Case: Financial Services Allows students an opportunity to assess various financial
situations and recommend courses of action, based on the
Chapter 6 Updated content: Changes in perception Provides information why many people use credit to live
about credit. beyond their means, and why past generations used it
sparingly.
Updated content: Advantages of credit Describes how most major cards provide benefits, such as
accidental death insurance, collision damage waiver, road-
side services, gift cards, etc., at no extra cost.
New content: Smart cards Includes information that some credit cards include
increased security measures, and discussion of how those
features work.
New content: Use of home equity loans as Expands discussion on the pros, cons, and appropriate uses
credit of home equity loans.
New Smart Money Minute feature Covers how to establish a strong record of credit.
New Smart Money Minute feature Provides information on how to protect your security with
mobile payments.
Updated Exhibit 6-9: Federal government Shows official consumer complaint form.
agencies that enforce consumer credit laws
Updated Exhibit 6-11: Consumer credit laws Provides updated information about federal government
agencies that enforce consumer credit laws.
New Continuing Case: Introduction to Con- Allows students an opportunity to assess various financial
sumer Credit situations and recommend courses of action, based on the
Chapter 7 Updated content: Chapter 13 bankruptcy Updates statistics and fee information on Chapter 13 bank-
ruptcy in the U.S. in recent years.
New Continuing Case: Choosing a Source Allows students an opportunity to assess various financial
of Credit situations and recommend courses of action, based on the
Chapter 8 New content: Factors that influence buying Acknowledgement and discussion that psychological factors
affect buying strategies.
New Smart Money Minute feature Offers tips for living in a frugal and environmentally
friendly way.
xii PREFACE

Chapter 8 New Smart Money Minute feature Discusses new safety features appearing in vehicles.
(Cont.)
New Smart Money Minute feature Offers an explanation of bartering as an alternative way to
exchange goods and services.
New Smart Money Minute feature Provides a breakdown of Consumer Reports’ automobile
testing process.
Updated content: Common frauds Presents an up-to-date discussion of popular cons, includ-
ing new information on crowdfunding and online dating
scams.
Updated content: Prepaid legal services Discusses the questions that need to be asked before hiring
legal assistance.
New Continuing Case: Consumer Purchas- Allows students an opportunity to assess various financial
ing Strategies and Legal Protection situations and recommend courses of action, based on the
Chapter 9 Updated Smart Money Minute feature Offers updated information on the most valuable home
upgrades.
New Smart Money Minute feature Describes the ins and outs of online mortgage companies.
Expanded content: Mortgage applications Offers information on loan estimates.
Updated Smart Money Minute feature Suggests common apps and websites to use in researching
the homebuying process.
New Continuing Case: The Housing Decision Allows students an opportunity to assess various financial
Chapter 10 New content: Strange but true tales of Discusses the strange new world of insurance for any and
insurance everything.
New feature: Flood coverage Lists crucial facts on flooding and flood insurance in
the U.S.
New content: When home insurance cover- Presents the very real dangers of not understanding
ages collide anti-concurrent causation clauses in your home insurance
covereage.
New example: Increase a deductible to Provides a mathematical example to show how paying a
reduce the premium higher deductible affects your premium.
New feature: Pay as you go insurance Outlines how new "pay as you go" insurance plans work.
New Continuing Case: Property and Motor Allows students an opportunity to assess various financial
Vehicle Insurance situations and recommend courses of action, based on the
Chapter 11 Revised coverage: High medical costs Provides revised and updated information on runaway health
care costs.
Revised coverage: High administrative costs Discusses the ethics of high administrative costs in health
care.
New Smart Money Minute feature: Medical Covers the costs of private insurance.
insurance costs
New Exhibit 11-4 Demonstrates costs of long-term care nationwide.

PREFACE xiii

Chapter 11 New Exhibit 11-5 Provides resources that can be used to get information
(Cont.) about long-term care.
New example: Reimbursement versus Explains the trade-off between reimbursement and indem-
indemnity nity using a real-life scenario.
Updated coverage: Employer self-funded Provides new information about self-funded health plans.
health plans
New Exhibit 11-7 Compares HSAs, FSAs, and HRAs.
New coverage: Private insurance companies Describes that as of September 23, 2012, all health insurance
companies and group health plans are required to provide a
summary of health plan’s benefits and coverage.
New feature: Health care law and taxes Explains the relationship between the Affordable Care Act
and personal taxes.
New coverage: The Affordable Care Act Describes the Affordable Care Act and its provisions and
and the Individual Shared Responsibility exemptions in detail.
Provision
Updated content: Sources of health care Provides an updated roster of reliable sources of health care
information information.
New Continuing Case: Health, Disability, and Allows students an opportunity to assess various financial
Long-Term Care Instructions situations and recommend courses of action, based on the
Chapter 12 Updated content: Life insurance Provides updated information on life insurance policies and
their face value as of 2016.
Revised Exhibit 12-1 Illustrates expectations of life and expected deaths based
on sex and age in 2016.
New content: Multiple of income method Presents an additional method for determining the amount
of insurance.
Updated Smart Money Minute feature Provides information on the amount of hours and equivalent
wage of a stay-at-home mom.
Revised Exhibit 12-3: Family need method Provides an updated rubric to use when determining the
worksheet amount of life insurance you need.
New Smart Money Minute feature: Financial Describes the importance of life insurance in establishing
jeopardy financial stability.
Revised coverage: Limited payment policy Updates the statistics on premiums paid by those in excel-
lent health.
Revised feature: Preferred rates Provides updated guidelines for achieving the
lowest rates.
Updated Smart Money Minute feature: Face Provides updated statistics about the average face amount
amount of life insurance policies of life insurance policies.
Updated Exhibit 12-7 Shows updated data for the growth of different classes of
life insurance.
New Continuing Case: Life Insurance Allows students an opportunity to assess various financial
xiv PREFACE

Chapter 13 New Smart Money Minute feature: Choosing Provides information on choosing a credit card.
a credit card
Updated coverage: Managing a financial Includes new information on the government’s efforts to
crisis maintain a sound economy and the effects of the business
cycle on the economy.
Updated coverage: Risk-return tradeoff Uses Netflix stock as an updated example.
Updated Smart Money Minute feature: U.S. Gives updated information for different income levels in the
income levels United States.
Updated Exhibit 13-6 Provides an up-to-date roster of internet resources to be
used in personal financial planning.
New examples: Real-world examples Uses real-world companies including Netflix, J.M. Smucker,
Chesapeake Energy, Coca-Cola, Kraft Foods Group, Shut-
terfly, Biogen, AT&T, and General Mills to illustrate key topics
in the chapter.
New Continuing Case: Investing Allows students an opportunity to assess various financial
Fundamentals situations and recommend courses of action, based on the
Chapter 14 Updated content: The psychology of stock Explains the psychological reasons why people choose
investing stocks for a long-term investment program.
Updated Smart Money Minute feature: Shows updated statistics about what groups own stock.
Stock ownership
Updated information: Income from Explains the importance of the record date for a quarterly
dividends dividend distribution for Chevron.
Updated Exhibit 14-2 Sample stock Illustrates how investors can make money with a stock
transaction investment in General Electric.
Updated Exhibit 14-5: Stock information from Describes the type of information provided by the Yahoo!
the Internet Finance website for the Gap Corporation.
Updated Smart Money Minute feature: DJIA Provides new information about historical values for the
Dow Jones Industrial Average for the period December
2009 through December 2015.
New Exhibit 14-7: Value Line research Illustrates the type of detailed research information for
information Dollar Tree, Inc. available from the Value Line professional
advisory service
Updated coverage: Numerical measures Provides updated examples for all examples in the section
Dividend and Total Return Calculations.
Updated coverage: Buying and selling stocks Includes new information on the secondary market.
Updated Exhibit 14-8: Typical commission Shows current commission charges for some popular online
charges brokerage firms.
Revised Exhibit 14-9: Dollar-cost averaging Includes seven years of investments instead of four years for
the dollar-cost averaging example.
Updated example: Margin transactions Provides an example of how investors can increase their
profits by using margin.
Updated example: Selling short Provides an updated example on the selling short process.
New Continuing Case: Investing in Stocks Allows students an opportunity to assess various financial
PREFACE xv

Chapter 15 New Exhibit 15-1: Differences between bonds Includes information about the most important differences
and stocks between bonds and stocks.
Updated Smart Money Minute feature: Bond Provides updated information for the yields on high-quality
yields corporate bonds.
Updated coverage: Convertible bonds Updates coverage on convertible bonds with an updated
example from Wesco International.
Revised example: Interest calculation Shows students how to calculate the interest for a $1,000
Coca-Cola bond that pays 3.20 percent annual interest.
New coverage: Dollar appreciation of bond Provides additional discussion around the effects of broader
value economic policies on bond value.
Updated example: Approximate market Shows how a bond’s value can change because of changes in
value overall interest rates in the economy.
Updated coverage: A typical bond Describes how you might buy or sell a Bank of America
transaction bond.
Revised content: Government securities Addresses the quality of securities issued by the U.S.
government.
Updated Smart Money Minute feature: Provides information about yields for 10-year treasury notes
Treasury yields from 1990 to March 2015.
Revised Exhibit 15-6: Bond information Gives information from the Yahoo! Finance website about a
Dell Corporation bond.
Revised examples: Yields Includes current dollar values for all the examples in the
section.
Revised feature: Financial Planning Gives current financial information for Home Depot that can
Calculations be used to calculate the times interest earned ratio.
Updated coverage: Other sources of Provides up-to-date sources to turn to for information on
information bonds.
New Continuing Case: Investing in Bonds Allows students an opportunity to assess various financial
Chapter 16 Updated Smart Money Minute feature: Includes current information about the age of investors who
Mutual fund ownership own mutual funds.
Updated Exhibit 16-1: Fund diversification Shows the type of stocks and securities included in the
Invesco Growth and Income fund.
Updated Exhibit 16-2: Fund fee table Illustrates the fee table for the Davis New York Venture
fund.
Updated Smart Money Minute feature: Illustrates the reasons why people invest in funds.
Investing in mutual funds
Updated Exhibit 16-4: Large funds Updates information about three large funds: The Vanguard
Group, Fidelity Investments, and American Funds.
New Exhibit 16-6: Information from Money Shows a portion of the “Money 50: The World’s Best Mutual
magazine Funds and ETFs” article from Money magazine.
New Continuing Case: Investing in Mutual Allows students an opportunity to assess various financial
Funds situations and recommend courses of action, based on the
xvi PREFACE

Chapter 17 Updated Smart Money Minute feature: Shows the trends in home ownership in the U.S. over the last
Home ownership rates 50 years, by region.
Expanded content: Your home as an Presents the questions you might want to ask to see if you’re
investment ready to buy a home.
New Smart Money Minute feature: Housing Illustrates that home ownership, as a percentage of net
share of net worth worth, is on the rise.
Updated Exhibit 17-2: U.S. home sales Shows that recent economic indicators suggest that the
worst of the housing crisis is over.
Revised and updated coverage: Gold bullion Provides the latest information on bullion production by the
U.S. government.
Updated Exhibit 17-4: Gold prices Illustrates how the price of gold has fluctuated from 1976
to 2016.
Revised Smart Money Minute feature: Shows the biggest producers of gold in the world as of 2014.
Biggest gold producers
New Continuing Case: Investing in Real Allows students an opportunity to assess various
Estate financial situations and recommend courses of action,
based on the knowledge gained in mastering the chapter
material.
Chapter 18 Revised coverage: Why retirement planning? Provides updated statistics about Americans’ attitudes
toward retirement and recommend means to boost
contributions.
Expanded coverage: Starting early Presents advice on saving for retirement.
Expanded coverage: Housing Details considerations that should be taken before obtaining
a reverse mortgage.
Updated Exhibit 18-4: Older household Illustrates how an “average” older household spends its
expenditures money (2013).
Updated Smart Money Minute feature: Who Shows what groups are collecting Social Security, as of 2015.
gets Social Security?
Updated Smart Money Minute feature: Presents average monthly Social Security benefits for differ-
Monthly benefits ent groups.
Updated Exhibit 18-8: The future of Social Shows that the number of workers per beneficiary has plum-
Security meted since 1945.
Updated coverage: Internet access Describes how to create a mySocial Security account.
Updated Exhibit 18-8: Workers per Cautions that the number of workers per Social Security
beneficiary beneficiary is dropping in the U.S.
New feature: Conflicts of interest Provides an expanded discussion of what conflicts of inter-
est in retirement advice cost.
New Continuing Case: Starting Early Allows students an opportunity to assess various
financial situations and recommend courses of action,
based on the knowledge gained in mastering the chapter
material.
PREFACE xvii

Chapter 19 Revised content: Wills Covers the hazards of not having a will.
Updated content: Credit-shelter trust Points out that a married couple will not pay any estate tax if
their estate is less than $10.9 million in 2016.
Revised content: Federal and state estate Provides the latest available information about gift taxes
taxes (2016).
New Continuing Case: Estate Planning Allows students an opportunity to assess various financial
A SSURANCE OF LEARNING
Many educational institutions today are focused on the notion of assurance of learning, an important element of some
accreditation standards. Personal Finance, 12th edition, is designed specifically to support your assurance of learning
initiatives with a simple, yet powerful, solution.
Each test bank question for Personal Finance, 12th edition, maps to a specific chapter learning outcome/objective
listed in the text. You can use the test bank software to easily query for learning outcomes/objectives that directly relate
to the learning objectives for your course. You can then use the reporting features of the software to aggregate student
results in similar fashion, making the collection and presentation of assurance of learning data simple and easy.
Guided Tour
Confirming Pages
Chapter Opener: The chapter opener contains new features that serve
as the chapter road map at a glance!
Confirming Pages
Financial Literacy in Financial Literacy

IN YOUR LIFE
You might . . . reduce current spending or seek to earn
additional income to start or grow your emergency fund. Most
important is to set aside some money, even a small amount, for
financial uncertainty. This action is a first step toward financial
Your Life
What if you . . . needed funds for
major auto repairs? Or encountered security. Next, you should learn to avoid common money
unexpected medical bills? An mistakes. Your knowledge and actions will allow you to use
emergency fund is one of the wise financial strategies for achieving your personal goals.
foundations for effective personal Now, what would you do? What actions are you currently
Covers why and how the issues presented in

financial planning. What actions would taking to create or expand your emergency fund? You will
you take? be able to monitor your progress using the “Your Personal
Finance Dashboard” feature at the end of the chapter.
the chapter are important, and presents some my life

alternatives that one might consider when
© Mark Bowden/Getty Images
HOW DO I START?
1
One day, you may receive news that your aunt has given you a gift of $10,000. Or you might find yourself
facing related decisions. There is a strong

with an extensive amount of credit card debt. Or maybe you desire to contribute money to a homeless shel-
ter or a hunger-relief organization.
Personal Finance Basics

Each of these situations involves financial decision-making that requires, first, planning and then taking
emphasis here on action.

action. The process you use should be carefully considered so no (or only a few) surprises occur.
and the Time Value

The main focus when making decisions is to avoid financial difficulties and legal tangles. How will you best
plan for using your finances? For each of the following statements, select “yes,” “no,” or “uncertain” to indi-
of Money
cate your personal response regarding these financial planning activities.
1. When making major financial decisions, I research them using
Learning Objectives
a variety of information sources. Yes No Uncertain
2. My family and household situation is likely to stay fairly stable
LEARNING
over the next year or two.
LO1-1 Analyze the process for making personal financial decisions.
Yes No Uncertain
OBJECTIVES LO1-2
3. My specific financial goals for the next Assess personal
year are in writing. and economic Yes factors
No that influence personal
Uncertain
4. Time value of money calculations oftenfinancial
guide my planning.
saving and
A summary of learning objectives is presented

spending decisions. Yes No Uncertain
LO1-3 Develop personal
5. I am able to name specific types of risks that can affect my financial goals.
personal financial decisions.LO1-4 Calculate time value of money Yes to analyze
No Uncertain
personal financial
at the start of each chapter. These objectives

decisions.
As you study this chapter, you will encounter “My Life” boxes with additional information and resources
related to these items.
LO1-5 Identify strategies for achieving personal financial goals for
different life situations.
are highlighted at the start of each major The Financial Planning Process
section in the chapter and appear again in LO1-1
Analyze the process for
making personal financial
Being “rich” means different things to different people. Some define wealth as owning
many expensive possessions and having a high income. People may associate being rich
with not having to worry about finances or being able to pay bills. For others, being rich
the end-of-chapter summary. The learning

means they are able to donate to organizations that matter to them.
decisions.
How people obtain financial wealth varies. Starting a successful business or pursu-
ing a high-paying career are common paths to wealth. However, frugal living and wise
investing can also result in long-term financial security. In recent years, many have dis-
objectives are also used to organize the end-

Confirming Pages
covered that the quality of their lives should be measured in terms of something other
kap20683_ch01_001-030.indd 1
than money and material items. A renewed emphasis on family, friends, and serving 11/10/16 01:57 PM
others has surfaced.
of-chapter problems and activities, as well

2
as materials
Financialin the Instructor’s Manual and
Literacy You might . . . reduce current spending or seek to earn
IN YOUR LIFE
Test Bank. Problems in Connect can also be
additional income to start or grow your emergency fund. Most kap20683_ch01_001-030.indd 2 11/10/16 01:57 PM
important is to set aside some money, even a small amount, for

What if you . . . needed funds for financial uncertainty. This action is a first step toward financial
security. Next, you should learn to avoid common money
organized using the objectives.

major auto repairs? Or encountered
unexpected medical bills? An mistakes. Your knowledge and actions will allow you to use
emergency fund is one of the wise financial strategies for achieving your personal goals.
foundations for effective personal Now, what would you do? What actions are you currently
financial planning. What actions would taking to create or expand your emergency fund? You will
you take? be able to monitor your progress using the “Your Personal
Finance Dashboard” feature at the end of the chapter.
my life
My Life
HOW DO I START?
One day, you may receive news that your aunt has given you a gift of $10,000. Or you might find yourself
with an extensive amount of credit card debt. Or maybe you desire to contribute money to a homeless shel-
ter or a hunger-relief organization.
The My Life concept begins with the chapter

Each of these situations involves financial decision-making that requires, first, planning and then taking
action. The process you use should be carefully considered so no (or only a few) surprises occur.
The main focus when making decisions is to avoid financial difficulties and legal tangles. How will you best
opener. It presents students with an engaging

plan for using your finances? For each of the following statements, select “yes,” “no,” or “uncertain” to indi-
cate your personal response regarding these financial planning activities.
1. When making major financial decisions, I research them using
scenario that relates what they’re about to learn

a variety of information sources. Yes No Uncertain
2. My family and household situation is likely to stay fairly stable
over the next year or two. Yes No Uncertain
to their own lives. The follow-up questions are

3. My specific financial goals for the next year are in writing. Yes No Uncertain
4. Time value of money calculations often guide my saving and
spending decisions. Yes No Uncertain
designed to get students thinking about how

5. I am able to name specific types of risks that can affect my
personal financial decisions. Yes No Uncertain
As you study this chapter, you will encounter “My Life” boxes with additional information and resources
involved they currently are in their personal

related to these items.
The Financial Planning Process

LO1-1 Being “rich” means different things to different people. Some define wealth as owning
finances and to motivate them to try new
Analyze the process for
making personal financial
many expensive possessions and having a high income. People may associate being rich
with not having to worry about finances or being able to pay bills. For others, being rich
means they are able to donate to organizations that matter to them.
beneficial practices in their own personal
finance life. The My Life boxes throughout the
decisions.
How people obtain financial wealth varies. Starting a successful business or pursu-
ing a high-paying career are common paths to wealth. However, frugal living and wise
investing can also result in long-term financial security. In recent years, many have dis-
chapters and the Learning Objectives in the

covered that the quality of their lives should be measured in terms of something other
than money and material items. A renewed emphasis on family, friends, and serving
others has surfaced.
2
chapter summary expand on this concept.

kap20683_ch01_001-030.indd 2 11/10/16 01:57 PM
xviii
Boxed features are used in each chapter to build student interest and highlight
important topics. Three different types of boxed features are used.
Confirming Pages
HOW TO . . .
Select a Path to Financial Security
Do you feel stress when you think about money? Are your financial decisions influenced by emotions rather
than valid information? Do you often have disagreements about money?
How To . . . To address these and other financial concerns, two paths exist for your daily money decisions. The easy path
involves little thinking, no planning, and minimal effort, usually resulting in wasted money and financial difficulties. In
contrast, the appropriate path takes some time and effort, but results in lower stress and personal financial security.
The How To . . . boxes fit in with the It is EASY to…
…spend without planning.

…but APPROPRIATE to…
…save for emergencies and the future.
application-driven themes of Personal …overuse credit cards. …maintain a low level of debt.
Finance. Each box highlights a personal

…avoid insurance coverage. …have a risk management plan.
…select investments carelessly. …research to avoid investment scams.
finance issue and walks students through

…make decisions on your own. …communicate with others.
how to navigate the situation.

You can easily start to move yourself from easy mistakes to appropriate actions with these steps:
1. Do something. Start small, such as saving a small amount each month. Or decide to reduce your
credit card use.
2. Avoid excuses. Do not tell yourself that “I don’t have time” or “It’s what everyone else is doing.”
3. Rate your current situation. Indicate on this scale where you are currently in relation to the two
available paths:
Spender Saver
Financial difficulties Financial security

4. Set your mission. Create a personal finance mission statement to communicate your personal values, financial
goals, and future vision. This paragraph (or list or drawing or other format) will remind you and family members
of your desired path for financial security. The wording describes where you want to be and how you will
get there. Develop your financial mission statement by talking with those who can help guide your actions.
Your personal finance mission statement may include phrases such as “My financial mission is to change my
spending habits for . . . ,” “. . . to better understand my insurance needs,” or “. . . to donate (or volunteer) to local
community service organizations.”
Choosing to take the appropriate actions can result in reduced emotional stress, improved personal relationships,
and increased financial security.
2. Consumer Spending Total demand for goods and services in the economy influ-
ences employment opportunities and the potential for income. As consumer purchasing
increases, the financial resources of current and prospective employees expand. This
situation improves the financial condition of many households.
In contrast, reduced spending causes unemployment, since staff reduction com-
monly results from a company’s reduced financial resources. The financial hardships
of unemployment are a major concern of business, labor, and government. Retraining
Financial Planning for

programs, income assistance, and job services can help people adjust.
Confirming Pages
12
Financial Planning for My Life

My Life
This box offers information that can
kap20683_ch01_001-030.indd 12 11/10/16 01:57 PM
ASSESSING YOUR FINANCIAL HEALTH

Several instruments are available to assess your financial
wellness and capability. To evaluate your current financial
activities, respond with a YES or NO answer to the following
8. Does your recordkeeping system allow you to
quickly locate important documents?
9. Do you know the balance of your credit card
assist students when faced with special
situations and unique financial planning
items: accounts and other loans?
1. Do you have a budget or spending plan that guides 10. Over the past year, have you avoided late fees for
your financial activities?
decisions. Many emphasize the use of

credit cards, loans, or bills?
2. Each month, do you pay your bills and credit card
A positive answer to eight or more of these questions indi-
accounts on time?
cates a strong personal financial situation.
Internet sources.
3. Do you maintain a record of the amount spent on For additional information on assessing your personal
various items each month? financial health, consider these sources.
4. Is your monthly spending less than your income?
• Financial Capability Scale, Center for Financial
5. If you had an unexpected major expense, would you Security, University of Wisconsin-Extension
have access to funds to cover this cost?
• Financial Fitness Quiz, Schwab MoneyWise
6. Do you know the amount in the bank account you
use for daily spending? • Financial Wellness Check-Up Quiz, Vision Financial
Group
7. Do you have money automatically set aside
each month in a saving or investment • Personal Financial Wellness Score, Personal Finance
program? Employee Education Fund
financial activities. The library resource site for this book in Connect provides addi-
tional resources and activities. As you move into the following chapters, we recommend
that you:
∙ Read and study the book carefully. Use the Practice Quizzes and end-of-chapter
Confirming Pages
activities.
∙ Use online sources and apps for the latest personal finance information.
∙ Talk to family members, friends, experts, and others, who have knowledge of
various money topics.
∙ Search online for answers to questions that result from your desire to
Financial Planning
Financial Planning Calculations
Calculations
know more.
Achieving your financial objectives requires two things: (1) a willingness to learn
and (2) appropriate information
TAX-EQUIVALENT sources. You
EMPLOYEE must provide the first element; the mate-
BENEFITS
rial that follows will provide the second. For successful financial planning, know where
This feature presents more than 90

you are now, know where you want to be, and be persistent in
Employee benefits that are nontaxable have a higher finan-
your efforts to get there.
A variation of this formula, which would give the after-tax
cial See
valuethe nearby
than Financial
you may realize.Planning for My Life
A $100 employee boxonto help
benefit you
value assess
of an your financial
employee benefit, is
whichhealth
you as
areyou get isstarted.
taxed not worth as much as a nontaxable
mathematical applications relevant to

Taxable value of the benefit (1 − Tax rate)
$100 benefit. This formula is used to calculate the tax-equiv-
alent value of a nontaxable benefit: For the above example, the calculation would be
PRACTICE Value ofQUIZ 1-5
the benefit $486 (1 − 0.28) = $486(0.72) = $350
personal financial situations.

_______________
1 − Tax rate
In other words, a taxable benefit with a value of $486 would
For 1.example,
What are the main
receiving components
a life of personal
insurance policy with a financial
non- haveplanning?
an after-tax value of $350 since you would have to pay
taxable2.annual
Whatpremium
is the purpose
of $350 ofisa comparable
financial plan?
to receiving $136 ($486 × 0.28) in tax on the benefit.
3. employee
a taxable Identify some common
benefit worth actions
$486 if taken to inachieve
you are the 28financial goals.
These calculations can help you compare different
percent tax bracket. This tax-equivalent amount is calcu- employee benefits within a company or when consider-
lated as follows: ing different jobs. Remember to also consider the value
$350
_______ $350 of employee benefits in terms of your personal and family
= _____ = $486
1 − 0.28 0.72 needs and goals.
25
YOUR EMPLOYMENT RIGHTS

Employees have legal rights both during the hiring process and on the job. For example,
an employer cannot refuse to hire a woman or terminate her employment because of
pregnancy, nor can it force her to go on leave at an arbitrary point during her pregnancy.
kap20683_ch01_001-030.indd 25 11/12/16 02:14 PM
In addition, a woman who stops working due to pregnancy must get full credit for previ-
ous service, accrued retirement benefits, and accumulated seniority. Other employment
xix
rights include the following:
∙ A person may not be discriminated against in the employment selection process
on the basis of age, race, color, religion, sex, marital status, national origin, men-
tal or physical disabilities, or sexual orientation.
∙ Minimum-wage and overtime pay legislation apply to individuals in certain work
settings.
∙ Worker’s compensation (for work-related injury or illness), Social Security, and
Key Terms
Key terms appear in bold type and in the
Confirming Pages
margin definition boxes. The terms and their 18 PART 1 PLANNING YOUR PERSONAL FINANCES
page references are also listed at the end of For example, $500 on deposit at 6 percent for six months would earn $15
($500 × 0.06 × 6/12, or 1/2 year).
each chapter.
The increased value of money from interest earned involves two types of time value
of money calculations, future value and present value. The amount that will be avail-
able at a later date is called the future value. In contrast, the current value of an amount
desired in the future is the present value. Five methods are available for calculating time
value of money:
1. Formula Calculation. With this conventional method, math notations are used for
computing future value and present value.
2. Time Value of Money Tables. Traditionally, before calculators and computers,
future value and present value tables were used to provide for easier
computations.
3. Financial Calculator. A variety of calculators are programmed with financial func-
tions. Both future value and present value calculations are performed using appro-
priate keystrokes.
future value The amount 4. Spreadsheet Software. Excel and other spreadsheet programs have built-in formulas
My Life Boxes
to which current savings will for financial computations, including future value and present value.
increase based on a certain 5. Websites and Apps. Many time-value-of-money calculators are available online and
interest rate and a certain through mobile devices. These programs may be used to calculate the future value
time period; also referred to
of savings as well as loan payment amounts.
as compounding.
My Life boxes appear next to material that my life 4

FUTURE VALUE OF A SINGLE AMOUNT Deposited
money earns interest that will increase over time. Future value is
the amount to which current savings will grow based on a certain
relates back to the opening My Life scenario

Time value of money calculations often guide my interest rate and a certain time period. For example, $100 depos-
saving and spending decisions. ited in a 6 percent account for one year will grow to $106. This
To assist you with using future value and amount is computed as follows:
and the Learning Objectives. These boxes

present value computations for achieving
personal financial goals, several websites are Future value = $100 + ($100 × 0.06 × 1 year) + $106
available: for example, www.dinkytown.net,
www.moneychimp.com/calculator, and cgi The same process could be continued for a second, third, and fourth
offer useful tips and possible solutions to help

.money.cnn.com/tools. year, but the computations would be time-consuming. The previ-
ously mentioned calculation methods make the process easier.
An example of the future value of a single amount might involve
an investment of $650 earning 8 percent for 10 years. This situa-
students better manage their finances. tion would be calculated as follows:
Time Value of
Formula Money Table Financial Calculator Spreadsheet Software
FV = PV(1 + i)n Using Exhibit 1-A, PV , I/Y , N , PMT , CPT FV = FV(rate, periods,
Confirming Pages FV = 650(1 + .08)10
Chapter Appendix,
650 PV , 8 I/Y , 10 N ,
amount per period,
multiply the amount
0 PMT , CPT FV $1,403.30
Confirming
single amount) Pages
FV = $1,403.30 deposited by the factor = FV(0.08,10,0,−650)
for the interest rate and (Different financial calculators = $1,403.30
i – interest rate time period. will require different
n – number of 650 × 2.159 = $1,403.35 keystrokes.)
time periods
(Note: Expanded explanations of these time value of money calculation methods are presented in the Chapter Appendix.)
8 PART 1 PLANNING YOUR PERSONAL FINANCES
Future value computations are often referred to as compounding, since interest is
earned on previously earned interest. Compounding allows the future value of a deposit
STEP 6: REVIEW AND REVISE YOUR PLAN
smart money minute
Smart Money Minute
STEP 6: REVIEW AND REVISE YOUR PLAN
smart money minute
Financial planning is a dynamic process that does not end
when you take action. You need to regularly assess your Financial planning is a dynamic process that does not end
Most financial planning professionals have a code when you take action. You need to regularly assess your
of ethics, but not all abide by these principles. To
financial decisions. You should do a complete Mostreview
financialofplanning
your professionals have a code
financial decisions. You should do a complete review of your
Each chapter contains several Smart
avoid financial difficulties and potential fraud, make
sure your financial planner strictly applies industry
finances at least once a year. Changing personal,
economic factors may require more frequent
of ethics,social,
When life events affect your financial needs,

but notand
assessments.
avoid
all abide by these principles. To
financial difficulties
thisfinancial
sure your financial
and potential fraud, make
kap20683_ch01_001-030.indd 18
planner strictly applies industry
finances at least once a year. Changing personal, social, and
11/10/16 01:57 PM
economic factors may require more frequent assessments.
Money Minute features with fun
policies regarding confidentiality, integrity, and
objectivity to prevent a conflict of interest, and has a planning process will provide a vehicle forpolicies
adaptingregarding confidentiality, integrity, and
to those When life events affect your financial needs, this financial
commitment to continuing education. objectivity
changes. Regularly reviewing this decision-making to prevent
process will a conflict of interest, and has a planning process will provide a vehicle for adapting to those
facts, information, and financial help you make priority adjustments that will commitment
bring yourtofinan-
continuing education. changes. Regularly reviewing this decision-making process will
cial goals and activities in line with your current life situation. help you make priority adjustments that will bring your finan-
cial goals and activities in line with your current life situation.
planning assistance.
EXAMPLE: Step 6 - Review and Revise the Plan
EXAMPLE: Step 6 - Review and Revise the Plan
Over the next 6 to 12 months, Kent Mullins should reassess his financial, career, and per-
sonal situations. What employment opportunities or family circumstances might affect his Over the next 6 to 12 months, Kent Mullins should reassess his financial, career, and per-
need or desire to take a different course of action? sonal situations. What employment opportunities or family circumstances might affect his
How about you? Depending on your current (or future) life situation, what factors in need or desire to take a different course of action?
your life might affect your personal financial situation and decisions in the future? How about you? Depending on your current (or future) life situation, what factors in
your life might affect your personal financial situation and decisions in the future?
PFP Sheet 1
Personal data
PRACTICE QUIZ 1-1
PFP Sheet 1
Practice Quiz
PRACTICE QUIZ 1-1
Personal data
PFP Sheet 2
Financial
1.
2.
What are the main elements of every decision we make?
What are some risks associated with financial decisions? The Practice Quiz at the end
PFP Sheet 2 1.
2.
What are the main elements of every decision we make?
What are some risks associated with financial decisions?
3. What are some common sources of financial planning information? Financial
of each major section provides
institutions and
advisers 4. Why should you reevaluate your actions after making a personal financialinstitutions and 3. What are some common sources of financial planning information?
decision? advisers 4. Why should you reevaluate your actions after making a personal financial
questions to help students assess decision?
Influences on Personal Financial Planning their knowledge of the main ideas

Influences on Personal Financial Planning
LO1-2 Many factors influence daily financial decisions, ranging from age and household size
LO1-2
covered in that section. As shown
Many factors influence daily financial decisions, ranging from age and household size
to interest rates and inflation. Three main elements affect financial planning activities:
Assess personal and economic
life situation, personal values, and economic factors.
factors that influence personal here, many
Assess personal and economic
life situation, personal of these
values, and economic
factors that influence personal
factors. quizzes include
to interest rates and inflation. Three main elements affect financial planning activities:
references to related
financial planning.
LIFE SITUATION AND PERSONAL VALUES
adult life cycle The stages
financial planning.
LIFE SITUATION AND PERSONAL VALUES
Personal
Financial Planning sheets, offered
People in their 20s spend money differently than those in their 50s. Personal factors
in the family situation and adult life cycle The stages
People in their 20s spend money differently than those in their 50s. Personal factors
such as age, income, household size, and personal beliefs influence spending and sav- in the family situation and
financial needs of an adult. such as age, income, household size, and personal beliefs influence spending and sav-
ing patterns. Life situation or lifestyle is created by a combination
both in Excel and in hard copy at
financial needs of an adult.
of factors. ing patterns. Life situation or lifestyle is created by a combination
of factors.
my life 2 As our society changes, different types of financial needs
evolve. Today people tend to get married at amy lifeand 2 the back of the book.
later age, more As our society changes, different types of financial needs
households have two incomes. Many households are headed by
My family and household situation is likely to evolve. Today people tend to get married at a later age, and more
stay fairly stable over the next year or two. My family
single parents. More than 2 million women provide careand
forhousehold
both households have two incomes. Many households are headed by
situation is likely to
Many personal, social, and economic factors can dependent children and parents. People are stay
alsofairly
livingstable over the next year or two.
longer; single parents. More than 2 million women provide care for both
affect your life situation. Refer to Exhibit 1-6 for Many personal, social,
over 80 percent of all Americans now living are expected to live and economic factors can dependent children and parents. People are also living longer;
xx further information on financial goals and per-
sonal finance activities for various life situations.
past age 65. affect your life situation. Refer to Exhibit 1-6 for
further information on financial goals and per-
over 80 percent of all Americans now living are expected to live
past age 65.
The adult life cycle—the stages in the family and financial
sonal finance activities for various life situations. The adult life cycle—the stages in the family and financial
needs of an adult—is an important influence on your financial
needs of an adult—is an important influence on your financial
A variety of end-of-chapter features are offered to support the concepts presented
throughout each chapter. Confirming Pages
my life stages for financial planning

Personal Finance YOUR PERSONAL FINANCE DASHBOARD
Confirming Pages
Dashboard and My Life

The creation of an emergency fund is often overlooked.
Financial advisers suggest saving three to six months of
FINA
living expenses for unexpected situations. A larger amount
TE NC
UA IAL may be needed if you are self-employed or a full-time
EQ LY
AD
Stages
S student.
6
EC
LO1-3 5 7 based on
Yourtime value of money
emergency fundcalculations. Future value
can be measured with a dashboard,
UR
4 8
and present value calculations enable you to measure the
E
US
Develop personal financial
3 goals. The financial
9 goals a tool used by organizations to monitor key performance
ERO
you develop should take increased value (or lost interest) that results from a saving,
2 a S-M-A-R-T approach with10 goals indicators such as delivery time, product defects, or cus-
DANG
that are: Specific, Measurable, Action-oriented, Realistic, investing, borrowing, or purchasing decision.
1 11 tomer complaints. As an individual, you can use a personal
There are increasing numbers of nontraditional

and Time-based.
0 12 LO1-5 finance dashboard to assess your financial situation. As
with
Identify driving, afor
strategies personal finance
achieving dashboard
personal financialallows you to
LO1-4 MONTHS
goals keep
for different
track oflife progress Successful
situations.
your financial
to a destination.
students taking personal finance. The

Calculate time valueEMERGENCY
of money to SAVINGS
analyzeFUND
personal planning requires specific goals combined with spending,
financial decisions. Every decision involves a trade-off saving, investing, and borrowing strategies based on your
with things given up. Personal opportunity costs include personal situation and various social and economic factors,
Dashboard feature provides students of all

time, effort, and health. Financial opportunity costs are especially inflation and interest rates.
YOUR SITUATION Have you started your emergency fund? Do you make progress each month? Where is the needle
ages with a high-level snapshot outlining how

on your Personal Finance Dashboard for an emergency fund? Other personal financial planning actions you might consider
KEY TERMS
during various stages of your life include:
adult life cycle 8 future value 18 personal financial planning 3
to evaluate progress in achieving mastery of In College

bankruptcy
economics
22
10
In inflation
My 20s10
liquidity 22
In My 30spresent value 20 In My 50s
and 40s and Beyond
time value of money 17
the chapter concepts in real life. The My Life

financial plan 23 opportunity cost 5 values 9
Confirming Pages
• Develop wise • Pay off any • Assess progress • Assess need for
budgeting habits college loans toward long-term long-term health
Stages box at the end of each chapter provides SELF-TEST

• Create a PROBLEMS
regular •
savings program
Increase amounts
saved and
financial goals
• Evaluate needed
1. The Rule of 72 provides a guideline for determining how long it takes your money to double. This rule can also be used to
care coverage
• Review your will
personal finance action items for students

determine your earning rate. invested insurance as a and estate plan
LO1-4 •6.Establish
Computinga the
planTimeIfValue
your of
money is expected
Money. to doublecalculator
Using a financial in 12 years,
or what is yourofrate
time value of return?
money tables in the Chapter Appendix,
result of changes
calculate
2. If you for wise
desire the$10,000
use
to have following.
of in savings• eight
Continue proper
years from now, what amount would you need to deposit in an •account
Consider
that various
in household or
earns 5banking
percent? services
a. The future spending
value of $450 six years andat 7 percent.
from now activities, locations
of all ages.
financial situation
andb. credit credit
The future value of $900 saved habits
each year for 10 years at 8 percent. for retirement
Self-Test c.
Solutions
The amount a person would have to deposit today (present value) at a 6 percent interest rate to have $1,000 five years
1. Using the Rule ofnow.
from 72, if your money is expected to double in 12 years, you are earning approximately 6 percent (72 ÷ 12 years
= 6 percent).
d. The amount a person would have to deposit today to be able to take out $600 a year for 10 years from an account earning
2. To calculate8the present value of $10,000 for eight years at 5 percent, use a financial calculator or Exhibit 1-C (Chapter
percent.
Financial Planning
Appendix):
LO1-4
$10,000 ×the
7. Calculating 0.677 = $6,770.
Future Value of a Series of Amounts. Elaine Romberg prepares her own income tax return each year. A tax
preparer would charge her $80 for this service. Over a period of 10 years, how much does Elaine gain from preparing her
own tax return? Assume she can earn 3 percent on her savings.
FINANCIAL PLANNING
8. Calculating PROBLEMS
the Time Value of Money for Savings Goals. If you desire to have $20,000 for a down payment for a house in
Problems
LO1-4
SUMMARY
five years, OF LEARNING
what amount OBJECTIVES
would you need to deposit today? Assume that your money will earn 5 percent.
(Note: Some
LO1-4 of these problems
9. Calculating require
the Present the use
Value of aof the time
Series. Petevalue of money
Morton tablesto
is planning ingo
thetoChapter Appendix.)
graduate school in a program of study that will
LO1-1 takethe
1. Calculating three years.
Future Peteofwants
Value to have
Property. Ben$15,000
Collinsavailable
plans to buy
LO1-2
eacha year
houseforforvarious school
$220,000. andreal
If that living expenses.
estate If he to
is expected earns 4 per-
LO1-2
Analyze
increasethe
in process
cent on his
value for making
by 3money,
percent how
eachmuchpersonal
must
year, financial
whatbewill
deposited at the start
its approximate of Assess
value his personal
studies
be seven to befrom
years and
ablenow? economic
to withdraw $15,000factors
a yearthat influence
for three
decisions. years?
When making major financial decisions, use personal financial planning. Financial goals and
With more added to this edition, these

2. Using the Rule of 72. Using the rule of 72, approximate the following amounts. LO1-2
aLO1-4
variety
10.ofUsing
information
the Timesources
Value oftoMoney
implement
for Retirement Planning. Carla financial
the personal planning
Lopez deposits $3,200decisions areher
a year into affected by account.
retirement a person’sIf life
a. If the value of land in an area is increasing 6 percent a year, how long will it take for property values to double?
financial planning process: (1) determine your current
these funds have an average earning of 9 percent over the 40 situation (income, age, household size, health) and personal
years until her retirement, what will be the value of her retire-
b. If you
financial earn account?
ment 10 (2)
situation, percent on your
develop investments,
financial goals,how(3)long will it take for your
identify money
values, andtobydouble?
economic factors (prices, interest rates, and
problems allow students to apply their c. At11.ancourses

alternative
LO1-4
create
annual interest
Calculating
the future
and implement
3. Determining
automobiles
the rate
of action,
value
of
Value
ofRate.
a financial
the Inflation
is now $28,000.
5 evaluate
(4)of
that In
What
percent,
Reducedhow
amount
2006,over
action
was of
plan,
long will
alternatives,
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10and
selected
theFuture
years
If ait(5)
(6)ifreview
rate ofCash
increase
take forspends
person
the funds
automobiles
your savings
had were
for A
these
deposited
an average
automobiles
to double?
employment
$15 a week
costin
onopportunities).
ofan
coffee (assume $750 a year), what would be
accountThe
$16,000.
between
earning
the two
3 percent?
average cost of those same LO1-2
time periods?
quantitative analysis of personal financial

and revise
LO1-4 12. the financial
Calculating plan.
the Present Value Flows. financial company advertises on television that they will pay you
4. Computing$60,000
Futurenow in exchange
Living Expenses.forAannual
family payments of $10,000
spends $48,000 a yearthat
foryou areexpenses.
living expected If
to prices
receiveincrease
for a legal
by 2settlement
percent a over
year theLO1-2
nextthree
for the next 10 years.
years,Ifwhat
you amount
estimatewill
the the
timefamily
valueneed
of money at 10
for their percent,
living wouldafter
expenses youthree
accept this offer?
years?
decisions.
LO1-4 13. Calculating
5. Calculating Earningsthe Savings. What
on Potential Futurewould
Valuebe
of the yearlyTran
Savings. Lee plans
earnings to set aside
for a person with $2,400
$8,000 ainyear for the
savings next
at an six years,
annual earning
interest 4
LO1-4
percent.
rate of 2.5 What would be the future value of this savings amount?
percent?
LO1-4 14. Determining a Loan Payment Amount. If you borrow $8,000 with a 5 percent interest rate, to be repaid in five equal yearly
payments, what would be the amount of each payment? (Note: Use a financial calculator or the present value of an annuity
table in the Chapter Appendix.)
Financial Planning FINANCIAL PLANNING ACTIVITIES

kap20683_ch01_001-030.indd 26
LO1-1 1. Determining Personal Risks. Talk to friends, relatives, and others about their personal financial activities. Ask about potential
27
11/10/16 01:57 PM
Activities
risks involved with making financial decisions. What actions might be taken to investigate and reduce these risks?
LO1-1, 2. Using Financial Planning Experts. Prepare a list and contact information for financial planning specialists in your
1-2 community, such as investment advisers, credit counselors, insurance agents, real estate brokers, and tax preparers, who could
assist people
kap20683_ch01_001-030.indd 27 with personal financial planning. 11/10/16 01:57 PM
LO1-2 3. Analyzing Changing Life Situations. Ask friends, relatives, and others how their spending, saving, and borrowing activities
The Financial Planning Activities provide changed when they decided to continue their education, change careers, or have children.
LO1-2 4. Researching Economic Conditions. Locate online sources or apps to determine recent trends in interest rates, inflation,
and other economic indicators. Information about the consumer price index (measuring changes in the cost of living)
methods of researching and applying financial may be obtained at www.bls.gov. Report how this economic information might affect your financial planning
decisions.
LO1-3 5. Setting Financial Goals. Ask friends, relatives, and others about their short-term and long-term financial goals. What are
planning topics. some of the common goals for various personal situations? Using Sheet 3 in the Personal Financial Planner, create one short-
term and one long-term goal for people in these life situations: (a) a young single person, (b) a single parent with a child age
8, (c) a married person with no children, and (d) a retired person.
LO1-4, 6. Comparing Alternative Financial Actions. What actions would be necessary to compare a financial planner who advertises
1-5 “One Low Fee Is Charged to Develop Your Personal Financial Plan” and one that advertises “You Are Not Charged a Fee,
My Services Are Covered by the Investment Company for Which I Work”?
Confirming Pages
FINANCIAL PLANNING CASE

You Be the Financial Planner his short-term finances since he has three months of living
Financial Planning Case
28
Students are given a hypothetical personal

At some point in your life you may use the services of a finan- expenses in a saving account. However, “three months can go
cial planner. However, your personal knowledge should be the by very quickly,” as Patrick noted.
foundation for most financial decisions. For each of these situ- Situation 3: Nina Resendiz, age 23, recently received a
kap20683_ch01_001-030.indd 28 11/10/16 01:57 PM
finance dilemma and data to work through to

ations, determine actions you might recommend: $12,000 gift from her aunt. Nina is considering various uses
Situation 1: Fran and Ed Blake, ages 43 and 47, have a for these unexpected funds including paying off credit card
daughter who is completing her first year of college and a son bills from her last vacation or setting aside money for a down
payment on a house. Or she might invest the money in a tax-
practice concepts they have learned from the

three years younger. Currently they have $42,000 in savings
and investment funds set aside for their children’s education. deferred retirement account. Another possibility is using the
With increasing education costs, they are concerned whether money for technology certification courses to enhance her
earning power. Nina also wants to contribute some of the
chapter. A series of questions helps students to

this amount is adequate. In recent months, Fran’s mother has
required extensive medical attention and personal care assis- funds to a homeless shelter and a world hunger organization.
tance. Unable to live alone, she is now a resident of a long- She is overwhelmed by the choices and comments to her-
self, “I want to avoid the temptation of wasting the money on
use analytic and critical thinking skills while

term care facility. The cost of this service is $4,750 a month,
with annual increases of about 5 percent. While a major por- impulse items. I want to make sure I use the money on things
tion of the cost is covered by Social Security and her pension, with lasting value.”
Fran’s mother is unable to cover the entire cost. In addition,
Fran and Ed are concerned about saving for their own retire-
ment. While they have consistently made annual deposits to a
retirement fund, current financial demands may force them to
Questions
1. For each situation, identify the main financial planning
issues that need to be addressed.
reinforcing chapter topics.
access some of that money. 2. What additional information would you like to have
Situation 2: “While I knew it might happen someday, I before recommending actions in each situation?
didn’t expect it right now.” This was the reaction of Patrick
3. Based on the information provided and your assessment
Hamilton when his company merged with another orga-
of the situation, what actions would you recommend for
nization and moved its offices to another state, resulting
the Blakes, Patrick, and Nina?
in him losing his job. Patrick does have some flexibility in
PERSONAL FINANCIAL PLANNER IN ACTION

Starting Your Financial Plan
Planning is the foundation for success in every aspect of life. Assessing your current financial situation, along with setting goals is the xxi
key to successful financial planning.
Your Short-Term Financial Planning Activities Resources

1. Prepare a list of personal and financial information for yourself and family members. Also PFP Sheets 1, 2
create a list of financial service organizations that you use. http://time.com/money/
www.kiplinger.com
2. Set financial goals related to various current and future needs. PFP Sheet 4
http://financialplan.about.com
FINANCIAL PLANNING CASE
You Be the Financial Planner his short-term finances since he has three months of living
At some point in your life you may use the services of a finan- expenses in a saving account. However, “three months can go
cial planner. However, your personal knowledge should be the by very quickly,” as Patrick noted.
foundation for most financial decisions. For each of these situ- Situation 3: Nina Resendiz, age 23, recently received a
ations, determine actions you might recommend: $12,000 gift from her aunt. Nina is considering various uses
Situation 1: Fran and Ed Blake, ages 43 and 47, have a for these unexpected funds including paying off credit card
daughter who is completing her first year of college and a son bills from her last vacation or setting aside money for a down
three years younger. Currently they have $42,000 in savings payment on a house. Or she might invest the money in a tax-
and investment funds set aside for their children’s education. deferred retirement account. Another possibility is using the
With increasing education costs, they are concerned whether money for technology certification courses to enhance her
this amount is adequate. In recent months, Fran’s mother has earning power. Nina also wants to contribute some of the
required extensive medical attention and personal care assis- funds to a homeless shelter and a world hunger organization.
tance. Unable to live alone, she is now a resident of a long- She is overwhelmed by the choices and comments to her-
term care facility. The cost of this service is $4,750 a month, self, “I want to avoid the temptation of wasting the money on
with annual increases of about 5 percent. While a major por- impulse items. I want to make sure I use the money on things
tion of the cost is covered by Social Security and her pension, with lasting value.”
Fran’s mother is unable to cover the entire cost. In addition,
Fran and Ed are concerned about saving for their own retire- Questions
ment. While they have consistently made annual deposits to a 1. For each situation, identify the main financial planning
retirement fund, current financial demands may force them to issues that need to be addressed.
access some of that money. 2. What additional information would you like to have
Situation 2: “While I knew it might happen someday, I before recommending actions in each situation?
didn’t expect it right now.” This was the reaction of Patrick
3. Based on the information provided and your assessment
Hamilton when his company merged with another orga-
of the situation, what actions would you recommend for
nization and moved its offices to another state, resulting
the Blakes, Patrick, and Nina?
in him losing his job. Patrick does have some flexibility in
Personal Financial Planner PERSONAL FINANCIAL PLANNER IN ACTION
in Action
Starting Your Financial Plan
Planning is the foundation for success in every aspect of life. Assessing your current financial situation, along with setting goals is the
key to successful financial planning.
Your Short-Term Financial Planning Activities Resources
This feature provides long- and short-term 1. Prepare a list of personal and financial information for yourself and family members. Also
create a list of financial service organizations that you use.
PFP Sheets 1, 2
http://time.com/money/
financial planning activities per the concepts

www.kiplinger.com
2. Set financial goals related to various current and future needs. PFP Sheet 4
http://financialplan.about.com
learned within the chapter, and links each to 3. Monitor current economic conditions (inflation, interest rates) to determine possible
actions to take related to your personal finances.
PFP Sheet 3
www.federalreserve.gov
relevant Personal Financial Planner sheets

www.bls.gov
Your Long-Term Financial Planning Activities Resources
(located at the end of the book) and websites 1. Based on various financial goals, calculate the savings deposits necessary to achieve
those goals.
PFP Sheet 5
www.dinkytown.net
for further personal financial planning.

2. Identify various financial planning actions for you and other household members for the Exhibit 1-6
next two to five years. www.brightpeakfinancial.com
Confirming Pages
29
CONTINUING CASE
Continuing Case
Confirming Pages
Personal Finance Basics and the Time Value of Money
Jamie Lee Jackson, age 24, has recently decided to switch from attending college part-time to full-time in order to pursue her busi-
ness degree and aims to graduate within the next three years. She has 55 credit hours remaining in order to earn her bachelor’s
The new continuing case gives students the

degree, and knows that it will be a challenge to complete her course of study while still working part-time in the bakery department kap20683_ch01_001-030.indd 29 11/10/16 01:57 PM
of a local grocery store, where she earns $390 a week. Jamie Lee wants to keep her part-time job at the grocery store, as she loves
baking andCONTINUING
creates very decorative cakes. CASE She dreams of opening her own cupcake café within the next five years. She also realizes
that by returning to school full-time, she will forgo any free time that she enjoys now socializing with friends.
Jamie Lee
utilities.
Jamie Lee
andness
Personal
shedegree
currentlyFinance
She Jackson,
would really
has noand aims
plans
age 24,likehas
to graduate
to buy
Basics
shares a small
to recently
eventually
a new onewithin
and the
apartment
anythetime
withTime
have atoplace
decided
next three
soon. She
Value
a friend,
switchoffrom
her own.
years.
of Money
and they
She hasa55
is carrying
split all of the associated living expenses, such as rent and
Her car
attending is still
college going strong,
part-time
credit on
balance hours
eveninthough
to full-time
her remaining
credit cardinand
order
it is
order to sevenher
pursue
to earn her
is making
years old,
busi-
bachelor’s
regular monthly
opportunity to apply course concepts in a life
degree, and
payments
of
having
a
knows
of $50
local grocery
withthat
creates
$9,000
it will
hopes
store,
verypayment
down
of be
where
decorative
a challenge
paying
she
cakes.toShe
needed
to complete
it off within
earns $390 a
a year.her
week.
dreams
start
Jamie
course
Jamie
Lee
of opening
the cupcake
hasofalso
study
wants
caféher
twoown
to
while still
recently
keep
cupcake
years
her
takenworking
part-time
after café
part-time
out a student
job at the
costs and expenses. Jamie Lee also began depositing $1,800 a year in a savings account that earns 2 percent interest, in hopes of
baking theand
in to
loan thecover
grocery
bakery
store,
herdepartment
as
educational
she
within the next five years. She also realizes
graduation.
loves situation. This feature encourages students to
that by returning to school full-time, she will forgo any free time that she enjoys now socializing with friends.
Current Financial
Jamie
utilities.
Checking
Situation:
Lee currently
Sheaccount:
would really
shares a small apartment with a friend, and they split all of the associated living expenses, such as rent and
$1,250 like to eventually have a place of her own. Her car is still going strong, even though it is seven years old,
evaluate the changes that affect a family and
then respond to the resulting shift in needs,
and she has no
Emergency plans
Fund to buyaccount:
savings a new one any time soon. She is carrying a balance on her credit card and is making regular monthly
$3,100
payments
Car: $4,000 of $50 with hopes of paying it off within a year. Jamie has also recently taken out a student loan to cover her educational
costs
Studentandloan:
expenses.
$5,400 Jamie Lee also began depositing $1,800 a year in a savings account that earns 2 percent interest, in hopes of
resources, and priorities through the questions

having
Credit the
card$9,000 down
balance: $400payment needed to start the cupcake café two years after graduation.
Gross annual
Current salary:
Financial $2,125
Situation:
Net monthly salary: $1,560
Checking account: $1,250
Emergency Fund savings account: $3,100
Questions
Car: $4,000
1. Using Personal
Student Financial Planner Sheet 3, Personal Financial Goals, as a guide,what are Jamie Lee’s short-term financial
loan: $5,400
at the end of each case.
goals?
Credit How
carddobalance:
they compare
$400 to her intermediate financial goals?
Gross Jamie
2. Browse annualLee’s
salary: $2,125financial situation. Using the SMART approach, what recommendations would you make for her
current
to Net monthly
achieve salary: $1,560
her long-term goals?
3. Questions
Name two opportunity costs that would be considered in Jamie Lee’s situation.
4. 1.Jamie Lee
Using needs toFinancial
Personal save a total of $9,000
Planner Sheet in
3, order to get
Personal startedGoals,
Financial in her as
cupcake café venture.
a guide,what SheLee’s
are Jamie is presently depositing
short-term financial
$1,800
goals?a How
year in
doathey
regular savings
compare account
to her earningfinancial
intermediate 2% interest.
goals?
2.Using Personal
Browse Jamie Financial Planner
Lee’s current Sheet
financial 5, TimeUsing
situation. Valuethe
ofSMART
Money,approach,
as a guide, howrecommendations
what much will she have accumulated
would fiveher
you make for
years from now
to achieve her in this regular
long-term savings account, assuming she will be leaving her Emergency Fund savings account balance
goals?
untouched and for a rainy day?
3. Name two opportunity costs that would be considered in Jamie Lee’s situation.
4. Jamie Lee needs to save a total of $9,000 in order to get started in her cupcake café venture. She is presently depositing
$1,800 a year in a regular savings account earning 2% interest.
DAILY
Using PersonalSPENDING DIARY
Financial Planner Sheet 5, Time Value of Money, as a guide, how much will she have accumulated five
years from now in this regular savings account, assuming she will be leaving her Emergency Fund savings account balance
untouched and for this
“I first thought a rainy day? would be a waste of time, but the information has helped me become much more careful of
process
Daily Spending Diary

how I spend my money.”
Directions
DAILY SPENDING DIARY
Nearly everyone who has taken the effort to keeping a Daily Spending Diary has found it beneficial. While at first the process
may seem “Itedious, after awhile, recording
wouldthis
be ainformation becomes
but theeasier and faster.
Do you buy a latte or a soda every day before

first thought this process waste of time, information has helped me become much more careful of
Using the
how“Daily
I spendSpending
my money.”Diary” sheets, record every cent of your spending each day in the categories provided. Or you may
create your own format to monitor your spending. You can indicate the use of a credit card with (CR). This experience will help
youDirections
better understand your spending patterns and identify desired changes you might want to make in your spending habits.
Nearly everyone who has taken the effort to keeping a Daily Spending Diary has found it beneficial. While at first the process
Analysis
may seemQuestions
1. What
tedious, after awhile, recording this information becomes easier and faster.
didthe
Using your DailySpending
“Daily Spending Diarysheets,
Diary” revealrecord
about every
your spending habits?
cent of your Whateach
spending areas
dayofinspending mightprovided.
the categories you consider
Or you may
class? Do you and your friends meet for a
changing?
create
2. you
How
your own format to monitor your spending. You can indicate the use of a credit card with (CR). This experience will help
better understand
might your
your Daily spendingDiary
Spending patterns andyou
assist identify
whendesired changes
identifying andyou might want
achieving to make
financial in your spending habits.
goals? movie once a week? How much do you spend
on gas for your car each month? Do you try to
The Daily Spending
Analysis Diary sheets are located in Appendix D at the end of the book and on the library resource site within Connect.
Questions
1. What did your Daily Spending Diary reveal about your spending habits? What areas of spending might you consider
changing?
30
2. How might your Daily Spending Diary assist you when identifying and achieving financial goals?
The Daily Spending Diary sheets are located in Appendix D at the end of the book and on the library resource site within Connect. donate to your favorite local charity every year?
30
These everyday spending activities might go
kap20683_ch01_001-030.indd 30 11/10/16 01:57 PM
largely unnoticed, yet they have a significant
effect on the overall health of an individual’s
finances. The Daily Spending Diary sheets (in
kap20683_ch01_001-030.indd 30 11/10/16 01:57 PM
Appendix D and online) and end-of-chapter

activities offer students a place to keep track
of every cent they spend in any category.
Careful monitoring and assessing of these daily
spending habits can lead to better control and
understanding of students’ personal finances.
xxii
Personal Finance continues to provide instructors and students with features and
materials to create a learning environment that can be adapted to any educational
setting.
First Pages
Personal Financial
Planner Sheets
Name: ______________________________________________________ Date: __________________
22 Tax Planning Activities

The PFP sheets that correlate with sections Purpose: To consider actions that can prevent tax penalties and may result in tax savings.
PERSONAL FINANCIAL PLANNER

Instructions: Consider which of the following actions are appropriate to your tax situation. This
of the text are conveniently located at the end

sheet is also available in an Excel spreadsheet on the library resource site in Connect.
Suggested websites: www.irs.gov turbotax.intuit.com/tax-tools/
of the text. Each worksheet asks students to

Action to be
taken (if applicable) Completed
Filing Status/Withholding
work through the application and record their • Change filing status or exemptions because of changes in life
situation.
own personal financial plan answers. These • Change amount of withholding because of changes in tax
situation.
• Plan to make estimated tax payments (due the 15th of April,
sheets apply concepts learned to students’ June, September, and January).
Tax Records/Documents
personal situation and serve as a road map to • Organize home files for ease of maintaining and retrieving data.
• Send current mailing address and correct Social Security
their personal financial future. Students can fill

number to IRS, place of employment, and other sources of
income.
Annual Tax Activities

them out, submit them for homework, and keep • Be certain all needed data and current tax forms are available
well before deadline.
them filed in a safe spot for future reference! • Research tax code changes and uncertain tax areas.
Tax Savings Actions
Key websites are provided to help students • Consider tax-exempt and tax-deferred investments.
• If you expect to have the same or lower tax rate next year,
research and devise their personal financial

accelerate deductions into the current year.
• If you expect to have the same or lower tax rate next year,
delay the receipt of income until next year.
plan, and the “What’s Next for Your Personal • If you expect to have a higher tax rate next year, delay
deductions because they will have a greater benefit.
• If you expect to have a higher tax rate next year, accelerate
Financial Plan?” section at the end of the receipt of income to have it taxed at the current lower
rate.
• Start or increase use of tax-deferred retirement plans.
each sheet challenges students to use their Suggested

Apps:
• IRS2go
• Other.
responses to plan the next level, as well as

• iDonatedit What’s Next for Your Personal Financial Plan?
• Identify saving and investing decisions that would minimize future income taxes.
• Develop a plan for actions to take related to your current and future tax situation.
foreshadow upcoming concepts. The authors

also recommend favorite apps to help students
master the relevant contents.
kap20683_pfp.indd 24 11/11/16 09:50 AM
Look for one or more PFP icons next to

many Practice Quizzes. The icons direct
students to the Personal Financial Planner
sheet that corresponds with the preceding
section.
xxiii
Required=Results
©Getty Images/iStockphoto
McGraw-Hill Connect®
Learn Without Limits
Connect is a teaching and learning platform
that is proven to deliver better results for
students and instructors.
Connect empowers students by continually

adapting to deliver precisely what they
need, when they need it, and how they need
it, so your class time is more engaging and
effective.
73% of instructors who use

Connect require it; instructor Using Connect improves retention
rates by 19.8%, passing rates by
satisfaction increases by 28% when 12.7%, and exam scores by 9.1%.
Connect is required.
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Connect Insight is Connect’s new one-
of-a-kind visual analytics dashboard that
provides at-a-glance information regarding
student performance, which is immediately
actionable. By presenting assignment,
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visible for aggregate or individual results,
Connect Insight gives the user the ability to
take a just-in-time approach to teaching and
learning, which was never before available.
Connect Insight presents data that helps
instructors improve class performance in a
way that is efficient and effective.
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Edition by Jack Kapoor

hers. Each year she shares her common sense approach

Jack Kapoor Les Dlabay Bob Hughes Melissa Hart

Personal Finance Offers You Everything You Have

F INANCIAL LITERACY IN MY LIFE

Chapter Selected Topics Benefits for the Teaching–Learning Environment

Revised Dashboard feature Provides an overview of emergency savings funds.

New Smart Money Minute feature Covers statistics on savings behavior.

Chapter Selected Topics Benefits for the Teaching–Learning Environment

New Smart Money Minute feature Warns of potential dangers of "phishing."

Chapter Selected Topics Benefits for the Teaching–Learning Environment

Expanded content: Mortgage applications Offers information on loan estimates.

New Exhibit 11-4 Demonstrates costs of long-term care nationwide.

Chapter Selected Topics Benefits for the Teaching–Learning Environment

New Exhibit 11-7 Compares HSAs, FSAs, and HRAs.

Chapter Selected Topics Benefits for the Teaching–Learning Environment

Chapter Selected Topics Benefits for the Teaching–Learning Environment

Chapter Selected Topics Benefits for the Teaching–Learning Environment

Expanded coverage: Starting early Presents advice on saving for retirement.

Chapter Selected Topics Benefits for the Teaching–Learning Environment

Financial Literacy in Financial Literacy

Covers why and how the issues presented in

the chapter are important, and presents some my life

facing related decisions. There is a strong

Personal Finance Basics

emphasis here on action.

and the Time Value

1. When making major financial decisions, I research them using

A summary of learning objectives is presented

at the start of each chapter. These objectives

the end-of-chapter summary. The learning

objectives are also used to organize the end-

of-chapter problems and activities, as well

important is to set aside some money, even a small amount, for

organized using the objectives.

The My Life concept begins with the chapter

opener. It presents students with an engaging

1. When making major financial decisions, I research them using

scenario that relates what they’re about to learn

to their own lives. The follow-up questions are

designed to get students thinking about how

involved they currently are in their personal

The Financial Planning Process

chapters and the Learning Objectives in the

chapter summary expand on this concept.

The How To . . . boxes fit in with the It is EASY to…

…spend without planning.

…save for emergencies and the future.

Finance. Each box highlights a personal

…select investments carelessly. …research to avoid investment scams.

finance issue and walks students through

how to navigate the situation.

Financial difficulties Financial security

Financial Planning for

Financial Planning for My Life

ASSESSING YOUR FINANCIAL HEALTH

decisions. Many emphasize the use of

This feature presents more than 90

mathematical applications relevant to

personal financial situations.

YOUR EMPLOYMENT RIGHTS

My Life boxes appear next to material that my life 4