Personal Finance 2nd Edition

Book Preface

This book offers students a comprehensive and engaging treatment of personal finance, while incorporating unique themes, an application-driven pedagogy, and a definitive action plan. Unlike other texts on the market, it offers a frank and timely discussion of living within one’s means and incorporating personal values and priorities into a personal financial plan. The intent is to help readers set priorities that guide their financial decisions, rather than the other way around. This book establishes a path toward financial freedom that is less about accumulating wealth and more about building a future tailored to individual goals which can increase happiness and reduce stress. As we move into our second edition, we have put much time, effort, and love into making this edition easy for students and instructors to use. We reorganized the order of our chapters, moving up our discussion of planning and budgeting (now Chapter 2) and postponing the more challenging and math-heavy time value of money coverage until later, in Chapter 4. We condensed five units into three more tightly cohesive units, to give students a better sense of related topics and their overall importance in financial planning. Much of the book has been rewritten, and all of the examples and features are up-tothe- minute accurate, reflecting the constant changes we see in personal finance topics. We hope that you will find this updated version of the text to be just the reference you need as you start out on your financial journey.

GOALS AND THEMES
As we began to write, and throughout the development of the book, we focused on three main goals and themes: responsible financial decision making, alignment of personal and financial goals, and the importance of maintaining a personal financial plan.

Responsible Financial Decision-Making
Almost every personal finance instructor has the same central goal: to help students become financially literate so they can take and keep control of their finances. Before they can develop their own financial plan, however, it is crucial that students understand the key terms, concepts, and principles of financial planning. To address that need, the text offers a comprehensive table of contents and pedagogical features, providing students with the foundation they need to make responsible financial decisions. Extensive assessment tools built right into the bookkeep students on the right track toward mastering the material. The
central goal is to make this material relevant and easy to master so that students can take control of their finances and be responsible decision makers. To help students learn how to make responsible choices with their finances, the textbook includes:
• Learning objectives that shape the organization and goals of each chapter. These objectives link to individual sections of the book and are referenced in the review and assessment materials, allowing instructors to assign the most important concepts in personal finance in a deliberate and complete fashion and test students’ mastery of that content.
• Concept checks in the Making $ense boxes at the end of each section that test students’ retention of key content.
• Quality end-of-chapter concept questions and quantitative practice problems, along with a running case for concept application, that allow additional opportunities for assessment and review.

Alignment of Personal and Financial Goals
Financial success means different things to individuals with different priorities. Personal Finance recognizes this fact and sets itself apart from the field by helping students direct their finances according to their individual values and goals. Many personal finance books presuppose maximized wealth accumulation as the students’ outright goal. While maximizing wealth may well be in the long-term interests of many, not everyone is going to be wealthy—nor is everyone motivated by the pursuit of wealth. By recognizing that students need, want, and are fulfilled by different things, this book encourages students to take a closer look at their own lives and priorities as they set their financial plans and to consider the opportunity costs of their decisions in terms of both their financial and their personal goals.