1. Personal Finance Putting It All Together
Bill Klinger

2. Personal Finance Review Estates
Order of distribution of assets
Types of wills
Taxes
What are the most important things you’ve gotten out of the course?
What will you do differently?

3. Current View Income statement Balance sheet Create a savings target
How much are you saving?
Balance sheet
How much are you worth?
Create a savings target
Minimum 15%
Think 20%

4. Financial Plan Things Short-term Medium-term Long-term Emergencies
Purchases
E.g. car, refrigerator
Medium-term
E.g. home, business
Long-term
Retirement

5. Financial Plan Needs Short-term Medium-term Long-term
Emergencies (~3 months of expenses)
Purchases
E.g. refrigerator, TV
Medium-term
E.g. home (down payment)
Business
Car (no loans)
Long-term
Retirement
8x using Fidelity estimate
Could be 25x using 4% Rule

6. Financial Plan Investments
Short-term
Liquid
Cash
Medium-term
Liquidity / return trade-off
Long-term
Know your risk level
Establish and use asset allocation

7. Financial Planning Financing
Credit cards
Pay off!
Loans
Don’t borrow for things that go down in value
Mortgage
Read and understand it
Know the financials

8. Financial Plan Where to invest? Build cash reserve first
Use your planned asset allocation
Get employer contribution in 401(k)
Max out Roth IRA contribution
Put additional in 401(k)

9. Protecting Your Assets
Health insurance
Auto / home insurance
Life insurance

10. Retirement and Estate Plans
Know your goal
Track it
Name beneficiaries
Update
Have a will
Have a health care proxy

11. Financial Advice BE CAREFUL Advisor may have conflicts of interest
May get commissions and fees for selling you things
Ask if advisor is a ‘fiduciary’
Means they legally have to look out for your interests first
Ask how advisor is compensated
Flat fee is best
Consider
Certified Financial Planner, CFP
Robo-advisor
Lawyer for trusts

12. WSJ Rules on Personal Finance
Ignore economic and financial forecasts. Ignore “expert” stock picks. Keep it simple.
Buy individual stocks only as a gamble.
Put most of your long-term portfolio into equities.
Invest globally, not just in the U.S.
Buy Treasuries, too:
Never buy a lottery ticket.
Know thyself.
Buy high-deductible home and car insurance.

13. WSJ Rules on Personal Finance - 2
Protect yourself from disaster.
Save early, save often.
Use those free shelters.
Make the most of what you have.
Plan for a long life.
Don’t carry a balance from month to month unless you are planning to default and file for bankruptcy.
Cut the waste.
Beware of buying your employer’s stock.

14. WSJ Rules on Personal Finance - 3
Tune out advertising.
Don’t spend money showing off.
Protect your nest egg.
Teach your children about money.
Value your money.
Share.

15. Harold Pollack Prof. U. of Chicago

16. Financial Advice
You know enough to be an intelligent investor. Don’t let someone else intimidate you.

17. In Class In groups of two
Chapter 21 Review Questions, Financial Planning Exercises