GITMAN/ JOEHNK/ BILLINGSLEY
APPLIED PERSONAL
FINANCE
MSc. Dinh Thuy Tien – Faculty of Banking and
Finance
tiendt@ftu.edu.vn
Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in
part.
READING MATERIALS
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Textbook(s)
▪ Lawrence J. Gitman, Michael D. Joehnk and Randy Billingsley (2011) Personal
Financial Planning. South-Western, Cengage Learning,12E.
Optional reading(s)
▪ Eric Tyson (2006) Personal Finance for dummies, Wiley Publishing, Inc., 5E.
▪ Thomas E. Garman and Raymond E. Forgue (2010) Personal Finance. Cengage
Learning, 10E.
▪ Anna Lo Prete, (2022) Digital and financial literacy as determinants of digital payments
and personal finance, Economics Letters, Volume 213, 110-378, ISSN 0165-1765,
https://doi.org/10.1016/j.econlet.2022.110378.
▪ Vishaal Baulkaran, (2022) Personal bankruptcy and consumer credit delinquency: The
case of personal finance education, International Review of Financial Analysis, Volume
81, 102098, ISSN 1057-5219, https://doi.org/10.1016/j.irfa.2022.102098.
COURSE OBJECTIVES
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Provide application methods in managing personal finance, ranging from personal finance
planning to personal finance decision-making.
Equip learners with fundamentals of applied personal finance, using some personal
finance applications and skills necessary in planning, managing such basic personal assets
as cash, deposits, automobile or real asset purchasing, personal credit managing,
consumer loans managing
Provide understanding regarding life insurances, healthcare insurance, automobile or
house insurances, which support learners in planning their future personal finance.
Introduce some investment methods, such as: equities, fixed – income securities, real
estates and practice using some applications, so that learners can apply to make personal
finance decisions.
Make a retirement plan and manage their personal income plan, personal assets after
retirement.
COURSE CONTENT
Chapter 1. Understanding the Financial Planning Process
Chapter 2. Using financial statements and budgets
Chapter 3. Preparing your taxes
Chapter 4. Managing your cash and savings
Chapter 5. Making Automobile and housing decisions
Chapter 6&7. Using credit and using customer loans
Chapter 8&9. Ensuring your life and health
Chapter 11&12&13. Investment planning
EVALUATION
Exams
Scale
Participation
Attendance
10%
Mid-term exam
Group presentation
and assignment
40%
Final exam
Individual assigment
50%
GITMAN/ JOEHNK/ BILLINGSLEY
APPLIED PERSONAL
FINANCE
1
Understanding the
Financial Planning
Process
MSc. Dinh Thuy Tien – Faculty of Banking and Finance
tiendt@ftu.edu.vn
Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in
part.
LEARNING OUTCOMES
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Identify the benefits of using personal financial planning techniques to
manage your finances
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Describe the personal financial process and define your goals
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Explain the life cycle of financial plans, the role they play in achieving your
financial goals, how to deal with special planning concerns, and the use of
professional financial planners
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Examine the economic environment’s influence on personal financial planning
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Evaluate the impact of age, education, and geographic location on personal
income
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Understand the importance of career choices and their relationship to personal
financial planning
Rewards of Sound Financial Planning
What 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 company, being debt
free, driving a particular type of car, taking luxury vacations, or having a
large investment portfolio?
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Improving your standard of living
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Spending money wisely
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Accumulating wealth
Rewards of Sound Financial Planning
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Financial literacy is the knowledge of facts, concepts, principles, and
technological tools that are fundamental to being smart about money.
handle day-to-day financial matters
avoid the consequences of poor financial decisions that could take years to
overcome
make informed and confident personal money decisions.
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Personal finance is the study of personal and family resources considered
important in achieving financial success; it involves how people spend,
save, protect, and invest their financial resources.
Topics include financial and career planning, budgeting, tax management,
cash management, credit cards, borrowing, major expenditures, risk
management, investments, retirement planning, and estate planning
Rewards of Sound Financial Planning
Exhibit 1.1 Organizational Planning Model
Personal Financial Planning
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Systematic process that considers important elements of an individual’s
financial affairs to fulfill financial goals
Exhibit 1.3 The Six-Step Financial Planning Process
Financial Goals
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Results that an individual wants to attain
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Utility and cost are to be considered when evaluating alternative qualities of
life, spending patterns, and forms of wealth accumulation
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Money and utility are linked to psychological concepts of values, emotion,
and personality
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Financial planning is an important part of the conflict resolution process
Target Dates on Financial Goals
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Goal dates: Target dates in the future when certain financial objectives are
expected to be completed
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Long-term goals: Indicates wants and desires for a period covering about 6
years out to the next 30 or 40 years
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Short-term financial goals: Set each year and cover a 12-month period
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Intermediate goals: Bridge the gap between short- and long-term goals
Target Dates on Financial Goals
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Think about your standard of living/lifestyle
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Think about what you can do to achieve the lifestyle that you want
Target Dates on Financial Goals
Exhibit 1.4 The Personal Financial Planning Life Cycle
Types of Financial Planning
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Asset acquisition
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Liability and insurance
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Savings and investment
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Employee benefit
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Tax
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Retirement and estate
Exhibit 1.5 How a $1,000 Investment Grows Over Time
Financial Planning Concerns
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Managing two incomes
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Managing employee benefits
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Managing finances in tough economic times
Financial Planning Concerns
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Government: Source of revenue for business and wages for consumers
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Business: Important part of the circular flow of income that sustains a free
enterprise system
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Consumers: Consumer choices determine the kinds of goods and services that
businesses provide
Financial Planning Concerns
Exhibit 1.6 The Financial Planning Environment
Phases of Economic Cycles
Exhibit 1.7 Economic Cycles
Phases of Economic Cycles
Source: Adapted from William Boyes and Michael Melvin, Economics, 8th ed. (Cengage, 2011), p. 135.
Exhibit 1.7 Economic Cycles
Phases of Economic Cycles
Factors that Determine the Personal Income
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Place of residence
Difference in salaries earned
Difference in living costs
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Career
Social, demographic, economic, and technological trends influence decisions
regarding the fields that offer best opportunities for future
Steps for Career Planning
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Place of residence
Difference in salaries earned
Difference in living costs
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Career
Social, demographic, economic, and technological trends influence decisions
regarding the fields that offer best opportunities for future
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Identify interests, skills, needs, and values
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Set specific long- and short-term career goals
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Develop and use an action plan to achieve those goals
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Review and revise career plans as the situation changes