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- Herausgeber: John Wiley & Sons
- Kategorie: Ratgeber
- Sprache: Englisch
Just the essentials you need to know to better manage your money
Money Management Essentials For Dummies is your cheat sheet on becoming financially secure, now and into the future. Small and value-priced for the budget conscious, this book offers strategies for anyone to say goodbye to excess debt and prepare to achieve their goals. You'll discover the easy steps you can start taking today to get to a place of stability with your money. Create an emergency fund, manage outstanding debt, get good insurance, invest your money, and set financial goals—with this easy-to-follow guidance. This Essentials For Dummies guide will help you set yourself up for financial success.
- Understand how effective money management leads to financial security
- Build up enough savings that you can survive life's curveballs
- Make an achievable plan for managing debt
- Start investing your money and planning your estate
Need easy-to-understand information to help get on track financially? Money Management Essentials For Dummies is the guide for you.
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Seitenzahl: 283
Veröffentlichungsjahr: 2025
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Money Management Essentials For Dummies®
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Table of Contents
Cover
Title Page
Copyright
Introduction
About This Book
Foolish Assumptions
Icons Used in This Book
Where to Go from Here
Chapter 1: Knowing What Financial Security Means to You
What Is Financial Security, and Why Should You Care?
Making Money Decisions Amid Changing Circumstances
Chapter 2: Establishing a Financial Safety Net
Preparing for Unplanned Events
Inventorying Your Resources
Knowing When to Tap Your Resources
Chapter 3: Reducing and Repaying Debt
Managing Your Feelings About the Debt You Owe
Paying Off High-Interest Debt: A Heroic Feat
Avoiding New Debt: The Art of Saying No
Chapter 4: Protecting Yourself with Insurance
Health Insurance (Even Superheroes Need Checkups)
Maximizing Medicare Benefits
Protecting Your Income with Long-term Disability Insurance
Providing for Loved Ones through Life Insurance
Shielding Your Assets from Unexpected Twists
Chapter 5: Lowering Your Tax Bill
Knowing Your Income Tax Rate
Making Your Income Tax Rate Work for You
Trimming Employment Income Taxes
Taxing Issues Regarding Children
Meeting Quarterly Tax Filing Requirements
Chapter 6: Investing for the Long Haul
Retirement Accounts and the Magic of Compound Interest
Patience and Persistence: The Tortoise Beats the Day Trader
Diversification: Not Putting All Your Eggs in One Basket
Chapter 7: Setting Financial Goals Beyond Paying Bills
Dreaming of Financial Independence
Knowing What’s Most Important to You
Avoiding Over-Saving
Chapter 8: Estate Planning: Leaving a Legacy
Wills, Trusts, and Estate Planning
Power of Attorney: Appointing Your Financial Sidekick
Advanced Directives: Making Medical Decisions Ahead of Time
Chapter 9: Staying Financially Resilient in a Volatile World
Riding Economic Ups and Downs Without Losing Your Hat
Adaptability: The Financial Chameleon’s Superpower
Chapter 10: Continuing Your Financial Education
Identifying Reliable Sources of Financial Information
Observing the Mass Media
Chapter 11: Ten Ways to Prevent Identity Theft and Fraud
Save Phone Discussions for Friends Only
Never Respond to Emails Soliciting Information
Review Your Monthly Financial Statements
Secure All Receipts
Close Unnecessary Credit Accounts
Regularly Review Your Credit Reports
Freeze Your Credit Reports or Place an Alert
Keep Personal Info Off Your Checks
Protect Your Computer and Files
Safeguard Your Mail
Index
About the Authors
Connect with Dummies
End User License Agreement
List of Tables
Chapter 5
TABLE 5-1 2025 Federal Income Tax Brackets and Rates
TABLE 5-2 Special Tax Credit for Retirement Plan Contributions
Chapter 6
TABLE 6-1 Why You’re Buying Your Own Stocks
TABLE 6-2 Allocating Long-Term Money
List of Illustrations
Chapter 4
FIGURE 4-1: Insurance needs worksheet.
Guide
Cover
Table of Contents
Title Page
Copyright
Begin Reading
Index
About the Authors
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More Bestselling For Dummies Titles by Eric Tyson
Investing For Dummies®
A Wall Street Journal bestseller, this book walks you through how to build wealth in stocks, real estate, and small business as well as other investments. Also check out the recently released Investing in Your 20s and 30s For Dummies.
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Personal Finance in Your 20s For Dummies®
This hands-on, friendly guide provides you with the targeted financial advice you need to establish firm financial footing in your 20s and to secure your finances for years to come. When it comes to protecting your financial future, starting sooner rather than later is the smartest thing you can do.
Real Estate Investing For Dummies®
Real estate is a proven wealth-building investment, but many people don’t know how to go about making and managing rental property investments. Real-estate and property management expert Robert Griswold and Eric Tyson cover the gamut of property investment options, strategies, and techniques.
Small Business For Dummies®
This practical, no-nonsense guide gives expert advice on everything from generating ideas and locating start-up money to hiring the right people, balancing the books, and planning for growth. You’ll get plenty of help ramping up your management skills, developing a marketing strategy, keeping your customers loyal, and much more. And, find out to use the latest technology to improve your business’s performance at every level. Also available from co-authors Eric Tyson and Jim Schell, Small Business Taxes For Dummies.
Money Management Essentials For Dummies®
Published by: John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030-5774, www.wiley.com
Copyright © 2025 Eric Tyson & John Wiley & Sons, Inc. All rights reserved, including rights for text and data mining and training of artificial technologies or similar technologies.
Published simultaneously in Canada
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Introduction
Most people value financial security and independence. In this book, I help you consider what being financially secure and independent means to you. Then I show how you can manage your money to attain your personal and financial goals (most people have more than a few!).
Unfortunately, your financial well-being can be undermined by things outside of your control. Upsetting events include macro-events like the COVID-19 pandemic (2020) or financial crisis (2008), or individual life changes or personal crises, such as job loss, divorce, caring for elderly parents, and so on. Throughout this book, I share ideas that help you ride the economic roller coaster without losing your hat.
About This Book
This book provides the know-how you need to feel more confident about managing your money. It covers the essentials of sound personal financial management: living within your means, building a financial safety net, saving and investing in wise, proven investments, and securing catastrophic insurance.
You can read this book from cover to cover if you want, or you can read a particular chapter or part without having to read what comes before it. Handy cross-references direct you to other places in the book for more details on a particular subject.
Foolish Assumptions
Whenever I approach writing a book, I consider a particular audience for that book. Because of this, I must make some assumptions about who the readers are and what those readers are looking for. Here are a few assumptions I’ve made about you:
You want the best for you and yours and would like to make the most of your money. While you understand that there are no guarantees, you’d like to best prepare your financial situation to weather a wide range of adverse conditions.
You’d like to be able to make smarter money-management decisions when news and information hits, especially in the midst of a crisis.
You’d like to be positioned to be able to invest at least some of your money when otherwise attractive investments have declined in value.
If any of these descriptions hits home for you, you’ve come to the right place.
Icons Used in This Book
The icons in this book help you find particular kinds of information that may be useful to you.
This icon points out something that can save you time, headaches, money, or all of the above!
This icon flags concepts and facts that I want to ensure that you remember as you make personal finance decisions.
With this information, I try to direct you away from blunders and mistakes that others have made when making important personal finance and related decisions.
Where to Go from Here
If you have the time and desire, I encourage you to read this book in its entirety. It provides you with the essential information you need to cultivate financial resilience in an often volatile world. You also can pick and choose the information you read based on your individual needs. Just scan the table of contents or index for the topics that interest you the most.
Chapter 1
Knowing What Financial Security Means to You
IN THIS CHAPTER
Defining and reaching for financial security
Tapping opportunities during tough times
Achieving financial independence and feeling financially secure are admittedly subjective assessments. A nest egg of $200,000 may seem like a lot to some people but not to a high-income earner who is accustomed to spending $100,000+ annually.
Now, for many people the feeling of financial security isn’t simply a matter of how much money you have to your name. Numerous other factors may contribute to feeling secure financially, which I help you to understand.
In this chapter, I help you determine what financial security means to you, assess where you are now, and begin to think through how you can manage your money to accomplish your goals. I also discuss how to best position yourself to benefit from the inevitable opportunities that present themselves during tough economic times.
What Is Financial Security, and Why Should You Care?
A good place to begin is by defining what financial security means to you and what is and isn’t important to you. Then I help you think through and understand where you are now and consider some fundamental aspects of managing your money that many people find challenging, such as making sense of financial trends, confronting procrastination, and dealing with insurance.
Defining what you value
If saving money is a good habit, the more you save, the better, right? Well, no, not really, unless your sole goal is to amass as much money in various accounts as possible. But what if you’re not spending enough to eat a healthy diet? How about some time and money so that you can regularly rest and enjoy some recreation? What about some spending for the special people in your life?
Think about all the big decisions in your life: choosing and finding a job, a place to live, a spouse, and so on. For most people, there’s a financial component to all of these. When thinking about personal goals, nearly all of them take money to accomplish. Money is inextricably linked to the rest of your life. Making the best financial decisions starts with the big picture and the rest of your life in mind — in other words, holistically.
Suppose like many people, you are working and earning money. You’d like to save and invest some of that and not have to continue working full-time for the rest of your life. But you probably have some other competing uses for your money. These may include things like saving to buy a home or start a business, expenses for your family, a future vacation, and so on.
Money shares some similarities with food. If you don’t have enough, you likely notice the insufficiency of your resources. Having more than enough with some reserves and extras usually provides most people with some peace of mind. Different people, though, have different views of how much extra they may want to have.
The virtue of a capitalistic economy is that within reason, if you’re willing to work hard and seek to improve yourself and your work, over time you should be able to see your money grow. The progress and advancement of technology and society generally increase the purchasing power of your money over time.
Some folks lose sight of the differences between necessities and luxuries, especially in affluent and upper-middle class communities and circles. We can always find people with bigger homes and more expensive cars who have taken more exotic vacations. The bar can continually be set higher and higher in terms of how much money we “need.”
The continual improvement of products and services, particularly those that incorporate a lot of technology, leads to more folks taking for granted how “luxurious” some of today’s choices are compared with those of the past. Consider what’s happened with personal computers and smartphones. Today, consumers buy smartphones that have many of the same functionalities and can access far more information than personal computers could a generation or two ago. And you can buy today’s smartphones for less than the cost of personal computers from a generation or two ago. Today’s smartphones are like a handheld personal computer, a phone (that can easily travel with you), and a quality camera all rolled into one!
Automobiles have far more features, especially safety features like air bags and anti-lock brakes, compared to those from a generation or two ago. Today’s cars are dramatically more fuel efficient, too.
Just walk through most homes and apartments today and you’ll find all sorts of devices like microwave ovens, printers, HDTVs, washers and dryers, dishwashers, and so on, which are far better and relatively less costly than in prior generations. And in some cases, these devices didn’t exist or weren’t widespread not that many generations ago.
So, I urge you to step back and think about what it is that you value and to recognize how “luxurious” are so many of the choices and options that we have in modern American society. With many products and services, we get far more for our money than folks did a generation or two ago.
That said, we can all think of some expense categories like higher education, housing in some higher-demand cities (such as New York City and San Francisco) and portions of the healthcare industry where the rate of price increases (inflation) may exceed increases in typical wages and the general cost of living. These categories are the exception, not the rule, and you can take steps and actions to mitigate and blunt some or even much of the excessive price increases through the strategies I discuss in this book.
Especially in our consumption-oriented society, some folks may get carried away with working and earning more and amassing more money. Life is short, and you can’t take your money with you in the end. So, there’s something to be said for balancing work, earning and saving money, and having sufficient time for family, friends, and your activities and hobbies.
Assessing your current personal financial health
What’s your current personal financial health? There are numerous ways to measure that. When I’ve worked with clients as a financial counselor and as an educator, I’ve found the following exercises to be valuable:
Net worth analysis:
Your ability to accomplish important financial goals, such as buying a home and someday retiring from full-time work, depends upon your net worth. To derive your net worth, you total up your financial assets and subtract your financial liabilities. I typically exclude a person’s home in this analysis unless they plan to tap some portion of their home’s equity, by trading down to a lower-priced property.
Spending analysis:
You should know where your money goes in a typical month or year, especially if you’d like to save a greater portion of your employment income. Analyzing your historic spending can tell you just that.
Saving analysis:
Over the past year, what portion of your work income were you able to save? Many people don’t know the answer to that important question, and if you don’t, you can’t really know whether you’re on track to accomplish your financial and personal goals.
Your investment portfolio:
Can your investment portfolio be improved? Do you understand your current investments? How do your current holdings stack up in terms of costs/fees and performance within their respective peer groups? Do your current investment holdings match your risk and return preferences?
Your home:
If you currently rent or own a home but are looking to sell and buy another, that takes some advance planning and analysis. Since housing costs can consume a significant portion of your income and budget, you should ensure that a change in your housing situation fits with your financial and personal goals and planning.
Insurance review:
You should have insurance to protect you against losses that could be financially catastrophic to you and your loved ones. I know from my counseling work that many folks have gaps in their insurance coverage and are wasting money on overpriced or unnecessary policy features.
Employee benefits review:
Plenty of employees don’t bother to read and review their employee benefits, which typically include various insurance coverages and possibly a retirement savings plan. Employee benefits can actually be quite valuable and should be coordinated with your overall financial plan.
These elements form a personal financial plan. You can hire a competent and ethical financial planner to assemble such a plan for you, but you should beware that many folks sell products on commission or charge hefty ongoing money management fees. Others aren’t interested or experienced enough to help you with nuts-and-bolts issues like analyzing your spending. This book helps you manage your money and get your personal finance house in order.
Grasping financial lingo and trends
Personal financial knowledge and literacy is an enormous obstacle for too many people, including those who have invested tremendous time, energy, and money into their formal educations. Unfortunately, such education rarely includes the essential topic of money management.
Ubiquitous gurus are another common obstacle. Everywhere you look, especially online and in the media, there are plenty of anointed experts predicting what will supposedly happen with the economy, financial markets, and all sorts of other economic variables. Listening to all these supposed experts and their often-conflicting opinions can paralyze you or make you feel that you need to hire them (or others like them) to manage your money since it appears that they know so much more than you do.
In reality, it’s important that you develop a personal financial plan of action that suits your goals, needs, and concerns and doesn’t involve jumping into and out of investments based upon short-term noise or news events. This is what this book can help you do.
Trying not to avoid money
One big obstacle is that just about everybody avoids dealing with some aspect of money. For some, it’s as simple as avoiding looking regularly at their checking account and verifying transactions and the account balance or making decisions about where to invest saved money. Others neglect needed insurance coverage, perhaps out of fear of confronting their own mortality and vulnerabilities. Some people are plagued by broader problems such as feelings of guilt and shame about money or feeling that money seems dirty and evil.
The fact that money-related issues aren’t always at the top of your priority list may well be a good sign. Perhaps you spent the past weekend with friends and family or were engrossed in a captivating book or a newly discovered streaming series. But continually avoiding money or some aspect of your finances can result in unnecessary long-term pain.
Some personal finance procrastinators can get away with their ways for a number of years. However, whether it’s in the short term or the long term, eventually, problems do occur from avoiding dealing with money and related decisions, and sometimes the damage can be catastrophic.
Some money avoiders don’t plan ahead and save toward future goals. Often, the reality hits home when they contact the Social Security Administration (SSA) or get an update from the SSA and discover what monthly retirement benefit amount they’ll get at full retirement age (which is around age 66 to 67 for most people). The reality for many people means the realization that they’ll have to continue working into their seventies in order to maintain the modest standard of living to which they’ve become accustomed.
Several issues typically cause a lack of retirement funds. Many money avoiders could save more money, but they typically aren’t motivated and organized enough to do so. Generally, they haven’t bothered to conduct even basic retirement analysis to understand how much they should be saving to reach their retirement goal (or even think about if and when they want to retire).
Because money avoiders dislike dealing with money, what they’re able to save often gets ignored and languishes in low- or no-interest bank accounts. Avoiders also tend to fall prey to the worst salespeople, who push them into mediocre or poor investments with high fees. When avoiders choose their own investments, they often do so based on superficial research and analysis, which can lead to piling money into frothy investments when they’re popular. Discomfort causes avoiders to bail out when things look bleak.
Money avoiders, more often than not, lack wills and other legal documents that should specify to whom various assets shall pass and who is responsible for what (for example, administering the estate and raising minor children) in the event of their untimely demise. When money is to pass to heirs through an estate, the absence of documents can lead to major legal and family battles.
Dealing with insurance
Because insurance is an admittedly dreadful and unpalatable topic for most people, many folks avoid insurance-related issues. And while well-intentioned and commission-hungry insurance agents get some people to plug insurance gaps, these salespeople may not direct you to a policy best suited to your needs. In fact, brokers may sell you costly insurance (such as cash value life insurance) that provides them with a higher commission and you with less insurance than you need.
Insurance gaps come to light when a disability or a protracted illness occurs. Too often, we believe that these problems only happen to elderly people, but they don’t. In fact, statistically, you are far more likely to miss work for an extended period of time due to a disability or lengthy illness than you are to pass away prematurely.
If others are dependent upon you financially, you likely need certain coverages that would provide for them in the event of your untimely passing, as well.
In Chapter 4, I cover the types of insurance you need to protect yourself and your assets.
Making Money Decisions Amid Changing Circumstances
When broader economic and financial crises strike, for sure bad things happen. Some people lose their jobs. Stock prices and home values generally fall. This can create opportunities for those who have cash and courage to step up and buy otherwise good investments at depressed prices.
Having a good-size cash reserve for difficult times makes sense. But how large should that reserve be? If you keep too much in cash, your investment returns will suffer. Keeping too little in cash can cause your reserves to be pinched during tough times and can leave you with little, if anything, to invest when investment prices are down.
Most people with some cash find it hard to step up and make investments while the news is filled with so much gloom. And there’s the natural tendency to worry about things getting even worse. In Chapter 9, I offer insight into how you can maintain financial resilience amid changing circumstances.
Chapter 2
Establishing a Financial Safety Net
IN THIS CHAPTER
Navigating personal crises and life changes
Looking at the resources you already have
Understanding federal safety net programs
In this chapter, I discuss how to quickly inventory and marshal your own resources when you’re in the midst of a crisis and, if necessary, find someone to lean on — like a loved one you can trust — during tough times. I also inventory the government-administered social safety net programs for which you may be eligible.
I hope that your life will have far more positive events and surprises than the negative things discussed in this chapter. But I can tell you that good things come out of bad events.
Preparing for Unplanned Events
Personal crises and unplanned life changes (including happy life events) often affect your finances, so you want to manage your money for these unknowns as best you can. Establishing a financial safety net and plan before events happen can greatly ease the burden of navigating stressful situations and help ensure that you land on your feet.
Here are some general tips that apply to all types of life changes:
Stay in financial shape.
An athlete is best able to withstand physical adversities during competition by prior training and eating well. Likewise, the sounder your finances are to begin with, the better you’ll be able to deal with life changes
Remember that changes require change.
Even if your financial house is in order, a major life change — starting a family, buying a home, starting a business, divorcing, retiring — should prompt you to review your personal financial strategies. Life changes affect your income, spending, insurance needs, and ability to take financial risk.
Don’t procrastinate.
With a major life change on the horizon, procrastination can be costly. You (and your family) may overspend and accumulate high-cost debts, lack proper insurance coverage, or take other unnecessary risks. Early preparation can save you from these pitfalls.
Manage stress and your emotions.
Life changes often are accompanied by stress and other emotional upheavals. Don’t make snap decisions during these changes. Take the time to become fully informed and recognize and acknowledge your feelings. Educating yourself is key. You may want to hire experts to help but don’t abdicate decisions and responsibilities to advisors — the advisors may not have your best interests at heart or fully appreciate your needs.
Building emergency reserves
Conventional wisdom says that you should have approximately six months’ worth of living expenses put away for an emergency. This particular amount may or may not be right for you, because it depends, of course, on how expensive the emergency is. Why six months, anyway? And where should you put it?
How much of an emergency stash you need depends on your situation. I recommend saving the following emergency amounts under differing circumstances (in Chapter 5, I recommend preferred places to invest this money):
Three months’ living expenses:
Choose this option if you have other accounts, such as a 401(k), or family members and close friends whom you can tap for a short-term loan. This minimalist approach makes sense when you’re trying to maximize investments elsewhere (for example, in retirement accounts) or you have stable sources of income (employment or otherwise).
Six months’ living expenses:
This amount is appropriate if you don’t have other places to turn to for a loan or you have some instability in your employment situation or source of income.
Up to one year’s living expenses:
Set aside this much if your income fluctuates wildly from year to year or if your profession involves a high risk of job loss, finding another job can take you a long time, and you don’t have other places to turn for a loan.
If your only current source of emergency funds is a high-interest credit card, first save at least three months’ worth of living expenses in an accessible account before funding a retirement account or saving for other goals.
Navigating a personal crisis
This section provides a checklist of important items to keep in mind as you’re navigating a personal crisis that is impacting your finances. Use this list to remind yourself of key things to do and consider when you’ve encountered tough times:
Be prepared for tough times.
This preparation can include having an emergency reserve and flexible spending so that you can more easily reduce your spending. Try to minimize the amount of spending that you engage in that is locked in, for example, through contracts for an extended period of time.
When trouble hits, set aside time to consider and discuss the situation with family or someone you can trust.
Spend time brainstorming on your topics of concern, including ways to reduce your spending.
Make note of benefits you lose through an employer and develop a plan to replace needed catastrophic insurance.
You always need health insurance, and until you’re financially independent, disability insurance. If others are dependent upon your employment income, you should also have term life insurance.
Be flexible and keep an open mind.
A crisis can lead to opportunities for change and may include things like moving or simply changing your approach to certain aspects of your life and finances.
Be prepared to negotiate and advocate for yourself and situation.
This can include things like your housing and being able to meet the terms of your mortgage repayment or rental payments for a lease or dealing with an insurance company claim. If you have a hard time doing these things, enlist the support of someone who is comfortable and adept at doing this.
Take time for your mental health and decision making.
