Personal Finance For Beginners In 30 Minutes, Volume 2: How to build savings and investments to secure your financial future

By Ian Lamont

Five years from now, what are you going to do when a major expense pops up? In ten years, will you still be renting an apartment? Thirty years from now, will you have enough money for retirement? Planning your current finances is hard enough, but looking ahead to the future can be downright frightening! Personal Finance For Beginners In 30 Minutes, Volume 2, is here to help. In 30 short minutes, you’ll get a quick but solid lesson in planning your financial future. Using plain English and lots of examples, the book explains:

* How to fund a special savings account for emergencies and other unexpected costs
* Compound interest and how it can help you save more
* Tips for buying a home
* Mortgage basics, from ARMs to points
* IRA and 401(k) retirement accounts
* How to fund retirement accounts, with examples
* The pros and cons of mutual funds
* Low-risk mutual funds for your retirement portfolio
* Disability and life insurance basics
* Four types of legal documents you should prepare now

If you've been delaying planning your future finances, now is the time to get started on the practical steps that can put real money in your pocket when you need it most! Years from now, you'll thank yourself for taking some of the practical steps described in Personal Finance For Beginners In 30 Minutes, Volume 2. Buy it now!

(For tips on how to control spending, reduce debt, and better manage your day-to-day finances, please refer to Personal Finance For Beginners In 30 Minutes, Volume 1).

Personal Finance For Beginners In 30 Minutes, Volumes 1 and 2 are authored by Ian Lamont, an award-winning business and technology journalist and graduate of MIT Sloan. He has written for more than a dozen online and print publications, and served as the managing editor of The Industry Standard. His writing and editorial work has garnered industry awards from the Society of American Business Editors and Writers and the American Society of Business Publication Editors.

• Language: English
• Publisher: Ian Lamont
• Release date: Feb 23, 2015

Ian Lamont

Ian Lamont is an award-winning business and technology journalist and the founder of i30 Media Corporation. He has written for more than a dozen online and print publications and has also served as the managing editor of The Industry Standard. His writing and editorial work has garnered industry awards from the Society of American Business Editors and Writers and the American Society of Business Publication Editors. Lamont has written several In 30 Minutes guides, including Dropbox In 30 Minutes, Google Drive & Docs In 30 Minutes, and Excel Basics In 30 Minutes. He is a graduate of the Boston University College of Communication and MIT's Sloan Fellows Program.

Book preview

Introduction

Five years from now, what are you going to do when a major expense pops up?

Ten years from now, will you still be paying a landlord for a place to live?

Thirty years from now, how are you going to support yourself as a senior citizen?

Most people don’t put a lot of thought into these questions. Setting up an emergency fund, buying a home, and saving for retirement are unfamiliar topics filled with uncertainty. And, if you don’t know what to do, the answers to these questions are almost too depressing to consider.

Personal Finance For Beginners In 30 Minutes, Vol. 2, is intended to help you figure these things out. In just a half an hour, you’ll have a better understanding of:

Special savings accounts, which can be tapped when an emergency or sudden expense pops up.

Home ownership basics, from evaluating whether you should by a home to how mortgages work.

Retirement accounts, the tax-protected savings vehicles that have replaced pensions for most people.

Legal documents that will help you and your family better manage situations involving catastrophic illness or death.

Besides explaining how these accounts, processes, and documents work, Personal Finance For Beginners In 30 Minutes, Vol. 2 also shows you some of the practical steps involved in setting them up. Thirty minutes from now, when you finish reading the guide, you’ll have the following basic knowledge:

How to set up and fund a special savings account.

The types of paperwork you’ll need to apply for a mortgage.

How to establish a 401(k) account or an IRA, and various no-brainer steps you can use to fund them.

How to evaluate mutual funds for your retirement accounts.

Legal documents you should consider preparing in case of death or serious illness, even if you are healthy now.

Meet Frank, Jordan, And Stephanie

If you read Vol. 1 of the guide, you’re already familiar with Frank, Jordan, and Stephanie. They are the three coworkers who served as examples for good (and bad) spending habits, ranging from cable TV to restaurant meals.

While they have the same salaries ($50,000 per year), they have far different spending habits, which in turn impacts how much money they can save:

Frank’s finances were in terrible shape for years, thanks to bad habits such as going out to lunch almost every weekday and failing to pay many of his bills on time. At one point he was even evicted from his apartment! While Frank has changed some of his bad habits, his ability to save is still limited. As we’ll see later in the book, this will make it harder for Frank to contribute to a retirement account.

Jordan’s finances are also in bad shape. She loves to shop and have the best things in life, including fancy electronics and an expensive wardrobe. Jordan’s excessive spending forced her to take on a second job working in a restaurant. She also maxed out her credit cards. As discussed in Vol.1, there are many ways for big spenders to cut costs, ranging from dumping unused cable TV packages, switching to used cars, and being smarter about which credit cards to pay off first. By following some of this advice, Jordan has been able to reduce her flexible expenses by a few thousand dollars per year, which will make it easier for her to create a special savings account and divert some of her earnings to a workplace retirement account.

Stephanie has always been careful with her spending. Some might even say she’s a cheapskate! She splits rent with her sister, prepares bag lunches to bring into work, and has never owned a new car in her life. Stephanie had enough cash to start contributing to a 401(k) account five years ago, and as a result has already saved nearly $30,000. If she keeps it up, and financial markets continue a moderate rise over the next 30 years, her retirement account could grow to well over $1 million before she reaches age 60 (see Chapter 3, Stephanie Goes For The Match, And A Roth IRA). Of the three colleagues, she’ll also most likely have sufficient funds for a down payment on a new home (see Down Payments And Mortgage Requirements in Chapter 2).

Frank, Jordan, and Stephanie (not their real identities) are based on real people. Their salaries are the same, yet their spending and savings habits are very different. These three colleagues provide excellent what if scenarios for this guide. We’ll see more from them in the pages that follow.

Disclaimer

Personal Finance For Beginners In 30 Minutes, Vol. 2 is not a substitute for professional financial advice, and the contents of this guide are not a recipe for guaranteed financial security. A recession, market correction, housing bubble, natural disaster or war could spell financial disaster and wipe out many thousands of dollars worth of equity in your home or mutual funds held in a workplace 401(k) or IRA.

That said, the consequences of not setting up a special savings account, or failing to take advantage of the many retirement savings vehicles available to working Americans, could also spell disaster. As I stress later in this guide, Social Security is not enough to retire on. People need to do some basic planning and start saving if they want a chance of having a more secure financial