Personal Financial Planning

Course Number: BUSADMIN 3400
Course Name: Personal Financial Planning (Online)
Course Description:    A study of the major financial decisions encountered by individuals. The course explores a variety of consumer problems found in a modern, complex economy. Subjects covered include the financial planning process, money management, consumer borrowing, insurance planning, budgeting, investments, and retirement and estate planning.
Prerequisites:    Junior Standing
Level: Undergraduate
Credits: 3
Format: Online
Program: Bachelor of Science in Business Administration
Bachelor of Science in Criminal Justice

Registration Instructions

NOTE: The information below is representative of the course and is subject to change.  The specific details of the course will be available in the Desire2Learn course instance for the course in which a student registers.

Additional Information

Course Outcomes
Upon completion of this course, you should be able to

  • Develop a personal financial plan and identify the factors that influence personal financial planning decisions.
  • Develop a system of financial records and use them to determine your financial position and control expenditures.
  • Identify the sources, terms and costs of consumer credit.
  • Describe the elements of a credit score and how credit scores can be improved.
  • Develop realistic investment goals that are consistent with your financial plan and risk tolerance.
  • Distinguish between the different types of investment vehicles available (stocks, bonds, mutual funds), describe their major characteristics, and identify potential information sources for evaluating potential investments.
  • Prepare a basic retirement plan and estate plan.
  • Identify the biggest financial mistakes households can make and how they can be avoided.

Unit Descriptions
Course Organization and Assignment Descriptions

Unit 1
Overview
Personal Financial Planning involves creating and implementing a plan based on your goals given your unique circumstances. One size does not fit everyone and the goal is to accumulate wealth so that we can do the things that are important to us. To accomplish this task, we will need to learn basic time value of money concepts. This unit serves as a basis for subsequent units.

Outcomes
Upon completion of this unit, you should be able to

  • Explain why personal financial planning is so important.
  • Calculate various time value of money problems.
  • Describe the five basic steps of personal financial planning.
  • Calculate your net worth.
  • Analyze where your money comes from and where it goes using an income statement.
  • Identify and understand the major features of federal income tax that affect all taxpayers.

Unit 2
Overview
Every time we purchase a discretionary item we make a decision to forego saving or investing that money to achieve our future goals. We do not tend to think of it in those terms, but in reality that is the tradeoff. The focus of this unit is to make smart purchasing decisions and smart credit decisions. In this unit, we will learn how to manage our cash and other liquid assets, to control and manage credit cards, to effectively use debt and to make informed home and automobile decisions.

Outcomes
Upon completion of this unit, you should be able to

  • Make good home and automobile buying decisions.
  • Understand the various costs of credit and which to use sparingly.
  • Manage your cash and understand why you need liquid assets.
  • Calculate the costs of buying a home.

Unit 3
Overview
Protecting your assets with insurance is a key component in personal financial planning. There are many categories of insurance: health care, disability, long-term care, life, automobile, and homeowner's. The focus of this unit is to present information necessary to make smart insurance decisions: determining which policies are important for your situation and the type of coverage needed.

Outcomes
Upon completion of this unit, you should be able to

  • Understand the importance of insurance.
  • Determine your life insurance needs and design a life insurance program.
  • Design a health care insurance program and understand what provisions are important to you.
  • Understand long-term care and disability insurance and determine if it is important to you.
  • Understand homeowner's insurance and automobile insurance and determine what kind of insurance is best for you.

Unit 4
Overview
For most students, investing is the most interesting part of personal financial planning. The focus of this unit is to learn about how markets function and different investment choices such as stocks, bonds, and mutual funds.

Outcomes
Upon completion of this unit, you should be able to

  • Manage investment risk.
  • Understand how financial markets function.
  • Appropriately allocate your assets.
  • Knowledgeably select mutual funds.
  • Differentiate between mutual funds and Exchange Traded Funds (ETFs).
  • Explain why you should not invest in gold, gems, or collectibles.

Unit 5
Overview
In this unit, we will explore the basics of retirement planning. Retirement planning is very difficult to do because it is often very far away and/or events beyond our span of control impact our retirement. For example, if you are a citizen of Greece and are 43 years of age, you are anticipating retiring in two years under the current rules. However, that retirement may be delayed if the government changes the retirement age for all Greeks to 50 or 60 years of age. While we are unable to forecast macroeconomic or political events, we can learn basic retirement planning concepts so that we can best prepare for our retirement years.

Outcomes
Upon completion of this unit, you should be able to

  • Understand the basics of retirement planning.
  • Discriminate between different retirement plans.

Lesson Descriptions

Lesson 1.1 Introduction
The financial planning process is a five step process that is used to help individuals achieve their financial goals.  It is very important that couples discuss their financial goals, make decisions consistent with those goals, and re-evaluate annually. If you haven’t had this conversation with your significant other, you need to add this to your calendar. A personal balance sheet and personal income statement are tools that are used to identify where your money is being spent and to determine your net worth. We want to increase our net worth and we accomplish this by increasing our assets and/or decreasing our liabilities.

Lesson 1.1 Outcomes
Upon completion of this lesson, you should be able to

  • Explain why personal financial planning is so important.
  • Describe the five basic steps of personal financial planning.
  • Set your financial goals.
  • Explain how career management and education can determine your income level.
  • List 10 principles of personal finance.
  • Calculate your level of net worth using a balance sheet.
  • Analyze where your money comes from and where it goes using an income statement.
  • Use ratios to identify your financial strengths and weaknesses.
  • Set up a record-keeping system to track your income and expenditures.
  • Implement a financial plan or budget that will provide for the level of savings needed to achieve your goals.
  • Decide if a professional financial planner will play a role in your financial affairs.
  • Explain the personal finance lessons learned in the recent economic downturn.

Lesson 1.2 Introduction
The time value of money is one of the most powerful forces on the planet according to Albert Einstein and this chapter is among the most important in this course. Please take the time to learn why saving early is so very important and that we are unable to “play catch up” when saving for a long-term goal. You will also learn about amortized loans in this chapter which accounts for the vast majority of mortgage loans in this country.

Lesson 1.2 Outcomes
Upon completion of this lesson, you should be able to

  • Explain the mechanics of compounding.
  • Understand the power of time and the importance of the interest rate in compounding.
  • Calculate the present value of money to be received in the future.
  • Analyze where your money comes from and where it goes using an income statement.
  • Define an annuity and calculate its compound or future value.

Lesson 1.3 Introduction
In this lesson, we will learn the basics about federal income tax. Taxes are significant and are unlikely to decrease. Having a basic understanding of the major federal income tax features that affect all taxpayers is important. This chapter just touches on the basics since tax law is very complicated and ever-changing.

Lesson 1.3 Outcomes
Upon completion of this lesson, you should be able to

  • Identify and understand the major federal income tax features that affect all taxpayers.
  • Describe other taxes that you must pay.
  • Understand what is taxable income and how taxes are determined.
  • Choose the tax form that is right for you, file and survive an audit if necessary.
  • Calculate your income taxes.
  • Minimize your taxes.

Lesson 2.1 Introduction
Managing your credit card usage is an underrated skill that requires discipline. Think of it as the financial equivalent of eating your vegetables. However, living within your means is the only way you can accomplish your financial goals. Your financial institution may offer free credit advice or free credit reports, so please take advantage of these free services if offered.

Lesson 2.1 Outcomes
Upon completion of this lesson, you should be able to

  • Manage your cash and understand why you need liquid assets.
  • Automate your savings.
  • Choose from among the different types of financial institutions that provide cash management services.
  • Compare the various cash management strategies.
  • Compare rates on the different liquid investment alternatives.
  • Establish or use a checking account.
  • Transfer funds electronically and understand how electronic funds transfers (ETFs) work.
  • Calculate the cost of a consumer loan.
  • Pick an appropriate source for your loan.
  • Know how credit cards work.
  • Understand the costs of credit.
  • Describe the different types of credit cards.
  • Know what determines your credit card worthiness and how to secure a credit card.
  • Manage your credit cards and open credit.

Lesson 2.2 Introduction
Planned borrowing, such as student loans or consumer loans, is necessary for many people to buy large items or pay for schooling. In this lesson, we learn about the different types of loans and which ones to avoid, such as payday loans. We also learn how to calculate the cost of loans so you can be an informed consumer.

Lesson 2.2 Outcomes
Upon completion of this lesson, you should be able to

  • Understand the various consumer loans.
  • Calculate the cost of a consumer loan.
  • Pick an appropriate source for your loan.
  • Control your debt.

Lesson 2.3 Introduction
Making smart buying decisions is an important part of financial planning. In this lesson, we learn tips regarding buying a home and a car – two of the largest purchases we make. We will analyze the difference in cost between renting and buying a home and determine how much of a house you can afford. Lastly, we will learn about the different mortgage loans available and which might be best for your situation.

Lesson 2.3 Outcomes
Upon completion of this lesson, you should be able to

  • Make good buying decisions.
  • Choose a vehicle that suits your needs and budget.
  • Choose housing that meets your needs.
  • Decide whether to rent or buy housing.
  • Calculate the costs of buying a home.
  • Get the most out of your mortgage

Lesson 3.1 Introduction
Now that we have managed our spending and borrowing, it is time to focus on life and health insurance. There are many different types of life insurance and they can be very confusing products to analyze. The cheapest life insurance is term insurance. However, the cost increases as you age, so it isn’t considered ‘permanent’ life insurance. Disability insurance, which insures against becoming unable to work, is an underutilized insurance product. You are far more likely to become disabled than to die, so it may be useful if you have dependents that rely on your salary. 

Lesson 3.1 Outcomes
Upon completion of this lesson, you should be able to

  • Understand the importance of insurance.
  • Determine your life insurance needs and design a life insurance program.
  • Describe the major types of coverage available and the typical provisions that are included.
  • Design a health care insurance program and understand what provisions are important to you.
  • Describe disability insurance and the choices available to you.
  • Explain the purpose of long-term care insurance and the provisions that might be important to you.

Lesson 3.2 Introduction
Reading your automobile insurance policy isn’t easy and this chapter will help you understand what kind of coverage you currently have. In addition, this chapter explains the different types of homeowner’s insurance policies. If you rent, a renter’s policy will cover your assets inside the residence and it is relatively inexpensive. Lastly, if you have a large enough emergency fund, consider increasing the deductible on your homeowner’s and automobile policy because it will reduce your annual premiums.

Lesson 3.2 Outcomes
Upon completion of this lesson, you should be able to

  • Understand, buy, and maintain homeowner’s insurance in a cost-effective way.
  • Recover on a liability or loss to your property.
  • Buy the automobile insurance policy that is right for you.
  • File a claim on your automobile insurance.

Lesson 4.1 Introduction
Investing should only be done once you have your emergency fund in place and your insurance needs are met. Investors need to match the maturity of the financial goal and the type of asset used to save for that goal. In this lesson, you will learn about how to manage your risk, allocate assets, understand how difficult it is to beat the market, and locate different sources of information to trade securities.

Lesson 4.1 Outcomes
Upon completion of this lesson, you should be able to

  • Set your goals and be ready to invest.
  • Calculate interest rates and real rates of return.
  • Manage risk in your investments.
  • Allocate your assets in the manner that is best for you.
  • Understand how difficult it is to beat the market.
  • Identify and describe the primary and secondary securities markets.
  • Trade securities using a broker.
  • Locate and use several different sources of investment information to trade securities.

Lesson 4.2 Introduction
Stock investments represent the largest percentage of most investor’s asset allocation. In this lesson, we learn about Anne Scheiber, a very frugal IRS employee, who was able to accumulate an enormous portfolio by saving early, often and making some great stock picks! The gains in the stock market can be enormous, but there is quite a bit of risk as well. Only invest funds that you won’t need for the next ten years — stock returns have outperformed all other asset classes over long time frames. You will learn about different investment strategies, factors that cause stock prices to go up and down, and learn about risks associated with investing. This is usually a favorite lesson – so enjoy!

Lesson 4.2 Outcomes
Upon completion of this lesson, you should be able to

  • Invest in stocks.
  • Understand how stocks are valued and what causes them to go up and down in price.
  • Employ different investment strategies.
  • Understand the risk associated with investing in stocks.

Lesson 4.3 Introduction
Bond investments have a place in everyone’s portfolio. In this lesson, we learn about the various types of bonds and how to calculate the value of bond. In addition, this lesson covers other alternative investments such as real estate and metals, gems, and collectibles. Speculating in metals, gems, and collectibles is something most investors should stay away from unless they have special knowledge about these types of assets. Lastly, preferred stock is an investment option that has features that are stock-like (no maturity) and features that are bond-like (pays a fixed dividend). Many preferred stocks pay nice dividends which makes them valuable in a portfolio.

Lesson 4.3 Outcomes
Upon completion of this lesson, you should be able to

  • Invest in the bond market.
  • Understand basic bond terminology and compare the various types of bonds.
  • Calculate the value of a bond and understand the factors that cause bond value to change.
  • Compare preferred stock to bonds as an investment option.
  • Understand the risks associated with investing in real estate.
  • Know why you shouldn't invest in gold, silver, gems, or collectibles.

Lesson 4.4 Introduction
Mutual funds offer instant diversification and professional management or they follow a certain index. These advantages make them highly desirable by most investors. However, professional management is not cheap nor is it risk-free. As many as 67 percent of mutual fund managers do not outperform the market; investors need to analyze their funds carefully. In this lesson, you will learn how to differentiate among types of mutual funds, exchange traded funds (ETF)s, and investment trusts, calculate mutual fund returns, classify mutual funds according to objectives, and select a mutual fund that is consistent with your investment objectives.

Lesson 4.4 Outcomes
Upon completion of this lesson, you should be able to

  • Weigh the advantages and disadvantages of investing in mutual funds.
  • Differentiate between types of mutual funds, ETFs, and investment trusts.
  • Calculate mutual fund returns.
  • Classify mutual funds according to objectives.
  • Select a mutual fund that's right for you.

Lesson 5.1 Introduction
Retirement planning may seem very far away for you, but the time to begin planning for it is today! Individuals need to begin setting aside funds for their retirement because social security and employer-funded pension plans do not offer large enough payouts to meet the needs of most retirees. If you begin early, you can let the time value of money work for you and deposit less funds. In short, begin setting aside monies for your retirement today and make it part of your budget.

Lesson 5.1 Outcomes
Upon completion of this lesson, you should be able to

  • Understand the changing nature of retirement planning.
  • Set up a retirement plan.
  • Contribute to a tax-favored retirement plan to help fund your retirement.
  • Choose how your retirement benefits are paid out to you.
  • Put together a retirement plan an effectively monitor it.

Grading Criteria for Activities

Assignment Possible Points
Lesson Quizzes (13 @ 20 pts. each) 260 points
Individual Discussion Answers (10 @ 5 pts. each) 50 points
Individual Assignments (3 @ 20 pts. each) 60 points
Capstone Team Project 40 points
Discussion of another team's financial plan 10 points
Total: 420 points

Grading Scale
A 93% - 100%
A- 90% - 92%
B+ 87% - 89%
B 83% - 86%
B- 80% - 82%
C 70% - 79%
D 60% - 69%
F 0 - 59%

 

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