CONTENTS
Guide
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Adams Media
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Copyright 2020 by Simon & Schuster, Inc.
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First Adams Media hardcover edition October 2020
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Library of Congress Cataloging-in-Publication Data has been applied for.
ISBN 978-1-5072-1435-0
ISBN 978-1-5072-1436-7 (ebook)
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From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations
Contains material adapted from the following titles published by Adams Media, an Imprint of Simon & Schuster, Inc.: The EverythingPersonal Finance in Your 20s & 30s Book, 3rd Edition by Howard Davidoff, JD, CPA, LLM, copyright 2012, ISBN 978-1-4405-4256-5; Debt 101 by Michele Cagan, CPA, copyright 2020, ISBN 978-1-5072-1266-0.
INTRODUCTION
One of the most important things you can do is to get and keep control of your personal finances. Your finances arent separate from the rest of your life; they provide a structure for you. Once you get a handle on them, youll feel less stress and more empowerment, and you can set about achieving the goals you want to fulfill. In this book youll discover that money management isnt complicated; it comes down to being self-aware and disciplined. Personal Finance 101 gives you advice ranging from how to cut your spending to what kind of insurance you should buy. It offers plans for:
- Debt relief
- Retirement planning
- Budgeting
- Credit issues
Once youve set your personal financial goals, you need to figure out how to fulfill them. This means establishing where youre at and how to get where you need to be. Such a course can mean everything from establishing your net worth to fixing your credit card debt. From life-changing decisions (buying a house) to annual tasks (paying your taxes), arranging your personal finances in an orderly manner can make your life easier.
Personal Finance 101 provides you with a road map to responsible management of your money. When you develop good financial habits, youll find that its easy to stay on that road. It may even take you to some exciting places you hadnt anticipatedwhether its traveling to new places or expanding your lifestyle.
Good money management will not only take stress out of your life; it will put many more options within your reach. Youll start by evaluating the state of your finances. From there, youll learn important financial habits and how they can help you lead a more secure, more productive, and more stable life!
Chapter 1 Your Financial Road Map
The first, and most basic, part of getting your finances under control is setting your goals and taking stock of what you have. Once youve done that, youre in a position to move forward and maximize your financial gains. But first things first!
SETTING FINANCIAL GOALS
What You Want to Achieve
All successful organizations have short- and long-term goals and a written plan for reaching them. If you want to be financially successful, you should have your own goals and plans. The first steps are to determine your financial status today and then decide what you want to achieve for your future and how youre going to accomplish it.
WHY FINANCIAL GOALS ARE IMPORTANT
You wouldnt start out on a long trip into unfamiliar territory without a road map, yet many people go through life without a concrete plan for their financial future. In fact, most people spend more time planning a single vacation than they spend on financial planning. The road you take to financial freedom can lead directly to your destination or to a dead end. Specific financial goals and written plans for meeting them help you focus your efforts on the end result.
Start Early
Starting to save and invest when youre young is a huge advantage. If you invest $5,000 one time at the age of twenty, and that investment earns an average 7 percent interest per year, at retirement (age seventy) you will have over $163,000. The same one-time amount invested at the age of forty would total less than $41,000.
Goals are like the wheels on your car; they keep you moving in the direction you want to go, and you wont get very far without them. If you havent already started planning for your future, nows the time to begin, no matter what your age.
Saving and investing will give you the most powerful financial tool available: time. In fact, the smartest thing you can do when youre young is save and invest. Ultimately, youll be able to save and invest smaller amounts at a time and will still come out far ahead of the person who starts a decade or two later. But even as you grow older, developing a clear saving and investing plan will give you a considerable advantage. As the saying goes, Most people dont plan to fail, they just fail to plan. Without planning, even the best of intentions go nowhere. Start mapping out your route now. Your entire future depends on it.