Money for Life

Back Cover of Money For Life

Who needs Money For Life?

Anyone who wants to learn the fundamentals of money management!

This is the real-world information you wished you had learned in school! You’ll learn:

• How to monitor your finances and build up cash reserves

• How compounding works and how to use it to your advantage

• How debt works and how to pay it down

• How insurance works and why you need it

• How  stocks, bonds, funds, and retirement accounts work

• Why everyone should plan for their estate

Praise for Money For Life

“Finally! A book on financial principles and wealth planning for non-math majors. Money For Life is packed with easy-to-understand examples and real-world practicality. I recommend it.”

—Joel Boggess, Author of Finding Your Voice

“In her straight forward, easy-to-read-style, Marilynn Hood takes her readers on a journey through the world of personal finance. She does a masterful job of covering everything from managing debt and estate planning to the risks and returns of investing. Money For Life is filled with extremely helpful, step-by-step instructions, and each chapter is capped off with a ’30-Minute Living’ action plan, which adds to the practicality and common sense approach of this book.”

—Paul Busch, Professor of Marketing, Texas A&M University

“Had I read this book years ago, I would have been armed with powerful financial knowledge that could have saved me thousands of dollars over the years.”

—Cara Polk, Owner of Living Well Designs, livingwelldesigns.com

Author’s Note:

I wish I could have had a class like this when I was going through school! —

That’s what I heard over and over from parents during my years of teaching personal finance at the college level. Well, it’s not too late for anyone to learn and apply the underlying principles of personal finance!

What’s in the book? Below is a listing of the chapter titles followed by a brief description of the contents of each chapter.

Contents—Money For Life

• Chapter 1: Getting Started with Financial Planning

• Chapter 2: Evaluating Your Current Position

• Chapter 3: Planning Your Future Expenditures

• Chapter 4: Understanding Your Cash Accounts

• Chapter 5: Funding Your Cash Accounts

• Chapter 6: Managing Your Debt

• Chapter 7: Understanding Your Debt

• Chapter 8: Insuring Your Life

• Chapter 9: Insuring Your Heath

• Chapter 10: Insuring Your Property

• Chapter 11: Understanding Your Retirement Accounts

• Chapter 12: Understanding the Risks and Returns of Investing

• Chapter 13: Investment Overview and Investing in Bonds

• Chapter 14: Investing in Stocks and Funds

• Chapter 15: Planning for Your Estate: Property and Estate Taxes

• Chapter 16: Planning for Your Estate: Yourself and Your Loved Ones

Chapter 1: Getting Started with Financial Planning

Today is a good day to get started setting your financial house in order! The first chapter in Money For Life is designed to do just that—get you started.

Topics covered in this chapter include:

1. An overview of the entire financial planning process—the steps you need to take, from finding out where you are now all the way to planning for your estate.

2. Financial goals—why you need them and how to set your own goals so you’ll be much more likely to achieve them!

3. Spending habits—when you understand what you are actually doing with your money, then you can start channeling it toward you your goals. Learn your spending habits by tracking, categorizing and evaluating your expenses.

Chapter 2: Evaluating Your Current Position

How do you get where you want to go? You first have to know where you are now! This chapter explains how to prepare your personal financial statements so you’ll know where you stand. Then you’ll use these beginning statements as anchor points to chart the progress you’re making in achieving your financial goals!

Topics covered in this chapter include:

1. Measuring your net worth—create your personal balance sheet and find your current wealth position. Ideally, your net worth should increase through time.

2. Determining your cash surplus or deficit—create your personal income statement for the month. Having a surplus each pay period is key to building wealth.

3. Terminology—personal finance makes more sense when you understand the lingo.

4. Frequently asked questions—to address issues that often arise during the process of preparing personal financial statements.

Chapter 3: Planning Your Future Expenditures

Pave the way for your financial goals to become reality by planning how you will spend your money. This chapter explains how to prepare your personal budget, which will serve as your future spending plan and will be a key tool in achieving financial success!

Topics covered in this chapter include:

1. Budget basics—create your budget and then fine-tune it.

2. Budget deficits—find ideas for handling them, because they’re bound to occur.

3. Unexpected expenses—create a contingency plan, just in case.

4. Windfalls—plan now for any extra cash that comes your way. Don’t let it slip through your fingers!

Chapter 4: Understanding Your Cash Accounts

Key to staying on budget and on target to reaching your financial goals is having adequate cash reserves. A variety of accounts can serve as places to store your cash. This chapter explains the importance of building cash reserves and examines the types of accounts that are available, their features, and how you might use them.

Topics covered in this chapter include:

1. Checking and savings accounts—these familiar standbys are basic to good money management.

2. Money market deposit accounts and money market mutual funds—understand the similarities as well as the important differences between these two types of accounts.

3. Asset management accounts—why these accounts appeal to investors.

4. Certificates of deposit—the various types that are available.

5. Treasury bills and savings bonds—these U.S. Treasury offerings have served generations of savers.

Chapter 5: Funding Your Cash Accounts

How do you build adequate cash reserves? This chapter explores various techniques that can help you meet the challenge and accumulate the cash your need. Included is an explanation of laddering, a useful technique whether you’re seeking a little higher return or need access to regular cash inflows.

Topics covered in this chapter include:

1. How much should you keep in your cash reserves?—the answer to this important question varies according to your particular situation in life.

2. Strategies for funding—ways to help you actually build your reserves.

3. Banking institutions—the different types available and their features.

4. Returns on cash accounts—every little bit extra counts.

Chapter 6: Managing Your Debt

Debt is a tool. Learn to use it wisely so that it can help you build wealth rather than destroy it. This chapter examines ways to manage and control your debt.

Topics in this chapter include:

1. Using debt—the basic guidelines to follow.

2. Analyzing the budget—find where you’re overspending and keep your budget on track.

3. Why do you spend?—understand the psychology behind your spending.

4. Impulse spending—suggestions for keeping your spending under control.

5. Paying down debt—make your game plan for systematically paying off your debt.

Chapter 7: Understanding Your Debt

Debt is easier to manage and control when you understand how it works. This chapter explains the features of commonly held forms of debt.

Topics in this chapter include:

1. Secured versus unsecured debt—how the differences in these two forms of debt affect you.

2. Credit cards—consumer laws may have changed, but this form of debt remains costly for those who carry a balance.

3. Student loans—a brief overview.

4. Home mortgages—learn how the interest is calculated so you can get the most bang for your buck in paying down these long-term loans.

5. Tax deductions for the home mortgage—they may not be as beneficial as you think.

6. Credit—how to establish credit and maintain it.

7. Paying down debt—things you’ll want to consider.

Chapter 8: Insuring Your Life

Who needs life insurance? You do, if you have loved ones who depend on your income. Life insurance helps preserve your family’s well being. This chapter explains the underlying principles of insurance and then explores the various forms of life insurance.

Topics in this chapter include:

1. The concept of insurance—how insurance works and the factors that determine your premiums.

2. Term life insurance—this basic type of insurance comes in several forms.

3. Cash value life insurance—learn the key differences in these types of policies.

4. Which type of life insurance is right for you?—important things to consider when purchasing life insurance or changing your coverage.

Chapter 9: Insuring Your Heath

Protect your greatest assets—your health and your ability to work. This chapter discusses the various types of insurance that provide coverage for the health and well-being of your physical body.

Topics in this chapter include:

1. Health insurance—the basic types and how they work.

2. Disability insurance—don’t be underinsured in this area. You’re more likely to be disabled than to die during your working career.

3. Long-term care insurance—it’s not just for nursing homes anymore.

4. Terminology—understand the language used in your policies so you can understand your coverage.

Chapter 10: Insuring Your Property

Preserve your wealth by protecting your property from loss or destruction. This chapter discusses insurance for the two most widely held types of property, automobiles and homes, as well as the liability issues that property can create.

Topics in this chapter include:

1. Auto insurance—almost every state requires liability insurance, but it may not be enough.

2. Policy premiums—factors that help determine the amount of your premiums.

3. Homeowner’s insurance—know what’s covered by your policy, and just as importantly, what’s not covered.

4. Choosing an insurance company—size matters, and so does the financial strength of the company.

Chapter 11: Understanding Your Retirement Accounts

Retirement accounts shelter your money from taxes. They help you grow your wealth so you can provide for your future. This chapter explores the various types of retirement accounts that are available, their features and how you can utilize them.

Topics in this chapter include:

1. Retirement in America—changes in Social Security, Medicare and the retirement plans offered by employers mean you’ll want to save even more for your future.

2. Employer-sponsored retirement accounts—understand the important differences between defined benefit and defined contribution plans, the two major types.

3. Individual retirement arrangements—IRAs allow you to set aside even more money.

4. Roth IRAs—the unique features of this type of IRA make it an excellent tool for planning for your retirement and your estate as well.

5. Self-directed retirement programs—designed for the self-employed, these accounts allow you to potentially tax shelter much more than you could by using an IRA.

Chapter 12: Understanding the Risks and Returns of Investing

Risk comes in many forms, and every investment involves risk of some type. This chapter examines the various types of risk involved in investing, the kinds of returns you can expect and how your returns are taxed.

Topics in this chapter include:

1. Saving and investing—techniques you can use so you can set aside even more.

2. Risk and return—these two investment features are positively related. That means if you want a greater return, you’ll likely have to accept a greater amount of risk.

3. Risks of investing—understand the various types of investment risk, the securities that are susceptible to each risk and ways you can reduce your exposure.

4. Returns of investing—learn the two major ways you can expect to profit from investing.

5. Taxation—all investment earnings are not taxed the same. Understand the differences in taxation so you can plan how to keep more of what you make.

Chapter 13: Investing in Bonds

Bonds are best known for providing income and stabilizing portfolios. This chapter explores the types of bonds available, their features, and the specific risks involved when investing in bonds.

Topics in this chapter include:

1. Secured debt—this type of debt offers more protection in case the issuing company goes bankrupt, but it offers lower returns as well.

2. Unsecured debt—this lower-rated type of debt is riskier to hold, but it offers the potential for higher returns.

3. Municipal bonds—why investors in higher tax brackets benefit more from holding these bonds than those in lower tax brackets.

4. Bond ratings—these important ratings can help investors determine the level of risk involved.

5. Changes in interest rates—learn why bond prices change when the prevailing interest rates change and why this principle is so important for bond investors to understand.

Chapter 14: Investing in Stocks and Funds

Stock investing can be the most rewarding, but with it comes higher risk. Funds, whether they’re mutual funds or exchange traded funds, can help diversify away some of that risk. This chapter discusses the features of preferred stock, common stock and funds and how investors can profit by holding them.

Topics in this chapter include:

1. Preferred stock—this security generates income similar to debt, but you need to know the important differences.

2. Common stock—sharing in the ownership of a company can be profitable, but you must do your homework first.

3. Funds—with so many types available, it’s important to select one that’s right for your needs.

4. Expenses—look for the loads, fees, and other expenses that can eat into a fund’s profitability.

Chapter 15: Planning for Your Estate: Property and Estate Taxes

Plan now how you would like for your property to be distributed, but understand the impact estate taxes can have. This chapter discusses the various means that can be used to pass property to others and the issues involved.

Topics in this chapter include:

1. Gifts—pass property to others while you’re still alive using the annual exclusion amount.

2. Trusts—manage your property either before or after death with these useful tools.

3. Wills—leave your testimony so that your property and loved ones are properly cared for.

4. Will substitutes—pass certain items automatically by the way you title your property and name the beneficiaries on your accounts and policies.

5. The laws of your state—die without a valid will and the laws of the state where you live will determine how your property passes.

6. Estate taxes—learn how federal estate taxes are determined and which assets suffer the greatest “shrinkage” when inherited.

Chapter 16: Planning for Your Estate: Yourself and Your Loved Ones

In addition to planning for your property, you need to plan for your own care and provide for the important people in your life. This chapter discusses planning for various end-of-life issues.

Topics in this chapter include:

1. Planning for your loved ones—caring for the special people in your life, such as your children, family and friends, and providing for special interests, such as charities, schools, and hospitals.

2. Planning for your finances—establishing powers of attorney, assembling important documents, and designating important people.

3. Planning for your health—creating a living will, a medical power of attorney, and other health care directives.

4. Paying for elder care—using your savings, long-term care insurance, Medicaid, and Medicare.

5. Planning your final disposition—making your wishes known, naming the people to contact, providing burial instructions, etc.

6. Creating an estate planning checklist—working through this comprehensive list helps you organize your finances for the present as well as for the future.