Chapter 1 Understanding the Financial

1、Chapter 11Understanding the FinancialPlanning ProcessChapter 1Chapter 12LG1 THE REWARDS OF SOUND FINANCIAL PLANNINGWhat does living “the good life” mean to you? Does it mean having the flexibility to pursue your dreams and goals in life? Is it owning a home in a certain part of town, starting a comp

2、any, being debt free, driving a particular type of car, taking luxury vacations, or having a large investment portfolio? Chapter 13Todays complex, fast-paced world offers a bewildering array of choices. Rapidly changing economic, political, technological, and social environments make it increasingly

3、 difficult to develop solid financial strategies that are guaranteed to improve your lifestyle.bewilder biwildvt.使迷惑，使难住solid slida.固体的；实心的；结实的；可靠的 n.固体Chapter 14Moreover, the recent financial crisis dramatizes the need to plan for financial contingencies. Today a couple may need two incomes just to

4、 maintain an acceptable standard of living, andthey may have to wait longer to buy a home. Clearly, no matter how you define it, the good life requires sound planning to turn financial goals into reality.dramatize 同义词: feature present produce put on stagecontingency kntindnsin.意外事件，可能性Chapter 15The

5、best way to achieve financial objectives is through personal financial planning, which helps us define our financial goals and develop appropriate strategies to reach them. We cannot depend on employee or government benefitssuch as steady salary increases or adequate funding from employer-paid pensi

6、ons or Social Securityto retire comfortably. Creating flexible plans and regularly revising them is the key to building a sound financial future. Chapter 16Successful financial planning also brings rewards that include greater flexibility, an improved standard of living, wise spending habits, and in

7、creasedwealth. Of course, planning alone does not guarantee success; but having an effective, consistent plan can help you use your resources wisely. consistent knsistnta.坚持的，一贯的；一致的，符合的Careful financial planning increases the chance that your financial goals will be achieved and that you will have

8、sufficient flexibility to handle such contingencies as illness, job loss, and even financial crises.Chapter 17Improving Your Standard of LivingWith personal financial planning we learn to acquire, use, and control our financial resources more efficiently. It allows us to gain more enjoyment from our

9、 income and thus to improve our standard of livingthe necessities, comforts, and luxuries we have or desire. Chapter 18So our quality of life is closely tied to our standard of living. Although other factorsgeographic location, public facilities, local cost of living, pollution, traffic, and populat

10、ion densityalso affect quality of life, wealth is commonly viewed as a key determinant. Material items such as a house, car, and clothing as well as money available for health care, education, art, music, travel, and entertainment all contribute to our quality of life. philanthropicbenevolent bighea

11、rted charitable generous giving humanitarian kindly mercifulOf course, many so-called wealthy people live “plain” lives, choosing to save, invest, or support philanthropic organizations with their money rather than indulge themselves with luxuries.Chapter 19One trend with a profound effect on our st

12、andard of living is the two-income family. What was relatively rare in the early 1970s has become commonplace today, and the incomes of millions of families have risen sharply as a result. About 75% of married adults state that they and their mate share all their money, while some partners admit to

13、having a secret stash of cash. stash stv.藏匿，隐藏Two incomes buy more, but they also require greater responsibility to manage the money wisely.Chapter 110Spending Money WiselyUsing money wisely is a major benefit of financial planning. Whatever your income, you can either spend it now or save some of i

14、t for the future. Determining your current and future spending patterns is an important part of personal money management.The goal, of course, is to spend your money so that you get the most satisfaction from each dollar.Chapter 111Accumulating WealthIn addition to using current income to pay for ev

15、eryday living expenses, we often spend it to acquire assets such as cars, a home, or stocks and bonds. Our assets largely determine how wealthy we are. Personal financial planning plays a critical role in the accumulation of wealth by directing our financial resources to the most productive areas.Ch

16、apter 112Ones wealth depends on the total value of all the items that the individual owns.Wealth consists of financial and tangible assets. Financial assets are intangible, paper assets, such as savings accounts and securities (stocks, bonds, mutual funds, and so forth). They are earning assets that

17、 are held for the returns they promise. Tangible assets, in contrast, are physical assets, such as real estate and automobiles.Chapter 113These assets can be held for either consumption (e.g., your home, car, artwork, or jewelry) or investment purposes (e.g., a duplex purchased for rental income). I

18、n general, the goal of most people is to accumulate as much wealth as possible while maintaining current consumption at a level that provides a desired standard of living.Chapter 114LG2 THE PERSONAL FINANCIAL PLANNING PROCESSMany people erroneously assume that personal financial planning is only for

19、 the wealthy. However, nothing could be further from the truth. Whether you have a lot of money or not enough, you still need personal financial planning. Chapter 115If you have enough money, planning can help you spend and invest it wisely. If your income seems inadequate, taking steps to plan your

20、 financial activities will lead to an improved lifestyle. Personal financial planning is a systematic process that considers the important elements of an individuals financial affairs and is aimed at fulfillinghis or her financial goals.Chapter 116Steps in the Financial Planning ProcessIf you take a

21、 closer look at financial planning, youll see that the process translates personal financial goals into specific financial plans, which then helps you implement those plans through financialstrategies. The financial planning process involves the six stepsshown in Exhibit 1.3.Chapter 117Chapter 118Mo

22、ney and RelationshipsMoney can be one of the most emotional issues in any relationship, including that with a partner, your parents, or children. Most people are uncomfortable talking about money matters and avoid such discussions, even with their partners. However, differing opinions on how to spen

23、d money may threaten the stability of a marriage or cause arguments between parents and children. Learning to communicate with your partner about money is a critical step in developing effective financial plans.Chapter 119Chapter 120Chapter 121As we noted before, there are many distinct money person

24、ality types. One person may be analytical and see money as a means of control, another may use it to express affection, and yet another may use it to boost self-esteem. When couples have very different attitudes toward moneyfor example, if one person likes to prepare detailed budgets but the other i

25、s an impulse shopperconflicts are bound to arise.Chapter 122The best way to resolve money disputes is to be aware of your partners financial style, keep the lines of communication open, and be willing to compromise. Its highly unlikely that you can change your partners style (or your own, for that m

26、atter), but you can work out your differences. Financial planning is an especially important part of the conflict resolution process.Chapter 123LG3 FROM GOALS TO PLANS: A LIFETIME OF PLANNINGIn addition to discussing your financial goals and attitudes toward money with your partner, you must allocat

27、e responsibility for money management tasks and decisions. Many couples make major decisions jointly and divide routine financial decision making on the basis of expertise and interest. Chapter 124Others, such as Beth and Jack Norris, believe it is important for their entire family to work together

28、as a team to manage the family finances. They hold family financial meetings once every fewmonths to help their children understand how the household money is spent. These meetings also serve as a forum for their children to request a raise in allowance, a new bike, or funds for a school trip. The e

29、ntire family is involved in the decision-making process on how surplus funds will be allocated.Chapter 125Chapter 126Chapter 127LG4 THE PLANNING ENVIRONMENTFinancial planning takes place in a dynamic economic environment created by the actions of government, business, and consumers. Your purchase, s

30、aving, investment, and retirement plans and decisions are influenced by both the present and future state of the economy. Understanding the economic environment will allow you to make better financial decisions.Chapter 128The PlayersThe financial planning environment contains various interrelated gr

31、oups of players, each attempting to fulfill certain goals. Although their objectives are not necessarilyincompatible, they do impose some constraints on one another. There are three vital groups: government, business, and consumers. Exhibit 1.10 shows the relationshipsamong these groups.Chapter 129C

32、hapter 130Chapter 131LG5, LG6 WHAT DETERMINES YOURPERSONAL INCOME?An obvious and important factor in determining how well we live is the amount of income we earn. In the absence of any inheritance or similar financial windfall, your income will largely depend on such factors as your age, marital status, education,geographic location, and choice of c