Personal Finances

Learning Objectives

1. Offer advice to someone who is burdened with debt.
2. Offer advice to someone whose monthly bills are too high.
3. Define personal finances and financial planning.
4. Explain the financial planning life cycle.
5. Discuss the advantages of a college education in meeting short- and long-term financial goals.
6. Describe the steps you’d take to get a job offer and evaluate alternative job offers, taking benefits into account.
7. Understand the ways to finance a college education.
8. Explain compound interest and the time value of money.
9. Discuss the value of getting an early start on your plans for saving.
10. Identify the three stages of the personal-finances planning process.
11. Explain how to draw up a personal net-worth statement, a personal cash-flow statement, and a personal budget.
12. Discuss the trend in the U.S. savings rate.
13. Define a subprime loan and explain the difference between a fixed-rate mortgage and an adjustable-rate mortgage.
14. Discuss what can go wrong with a subprime loan at an adjustable rate. Discuss what can go wrong with hundreds of thousands of subprime loans at adjustable rates.
15. Define risk and explain some of the risks entailed by personal financial transactions.