Persona Fincance text suggestions

[mommyof4]

Greetings!

This fall, my husband will be teaching a personal finance class at a local community college. I am helping him choose his text book, and I was wondering if any of you had any suggestions. The course description states that the class will cover budgeting, savings accounts, savings bonds, borrowing, banking services, taxes, trusts, estates, investments , and social security.

Thank you!

[jpg7n16]

The standard textbook:
Amazon.com: Personal Finance (9780073382326): Jack Kapoor, Les Dlabay, Robert J. Hughes: Books

another book that I could find on Amazon but have not personally read:
Amazon.com: Personal Finance: Turning Money into Wealth (5th Edition) (9780136070627): Arthur J. Keown: Books


Both texts will cover all the topics you mentioned. So either could be used for his class.

[snafu]

I suggest DH prepare Case Studies for students to review. Students work in groups of 3, identify the problem, give an outline of options, close with specific details for solving problem allowing time for class discussion. That way students do the teaching and the learning stays with them. Have a look at MONEY magazines for Case Study format and how they advise clients.

[kork13]

I took a class that used this one: The Wall Street Journal: Complete Personal Finance Guidebook, by Jeff Opdyke. While by no means high-level or absolutely comprehensive, I found it useful and explained all of those topics (and then some) in simple enough terms that I could easily understand, yet detailed enough to feel that I understood them. If desired, there's also an accompanying workbook (we didn't use it, so I can't speak to that). I read that book cover to cover, and still have it today (how many textbooks can that really be said about?)

[jpg7n16]

By the way, how did he get into teaching personal finance? I've considered doing some teaching stuff myself, but didn't know where to begin.

[jIM_Ohio]

My text book would be the IRS publications...

for example teach the 1040 long form, and then discuss the income types on the front page.

depending on semester length, I would try to do something like this

Teach the whole 1040 long form (should take about 40-60 hours)
that implies the following:
1) Income
2) Tax credits
3) Adjustments
4) Deductions (schedule A)
5) some very basics on schedules B-C-D-E-F (I'd have to go back and check my HR block tax course to verify what schedules they cover).

Each of those subjects has personal finance associated with it. The way to measure how to apply knowledge is to see if students can put it on tax form.

Income- earned vs unearned (wages vs rentals vs interest for example)
Tax credits- having kids, Hope and lifetime learning would all be "big hits"
Adjustments- IRAs and HSAs (then also discuss Roth vs Traditional even though Roth is not on tax form)
Deductions- talk about mortgage interest, health care expenses, and similar
Deal with other schedules enough to know why rentals are not self employment income but on another schedule completely, and also cover them enough to know that the number from one form goes to 3 others forms on various lines (uor tax class emphasized this so it was easy to see which numbers were critical to understand and communicate with client).


Once you have all that covered, you can then do a deeper dive into various subjects like

a) budgeting
b) debt repayment
c) mortgages
d) depreciating vs appreciating assets

My favorite topic to discuss would be ROI

Meaning things cost money
they give you a return- some things are needed (like cars) and depending how you analyze it, it might have a negative ROI or a positive ROI.

For example if you have no job, the car is probably a negative ROI (lots of expenses, no income to show for expenses)
if you have a job, the car probably has a positive ROI (if car costs you $1000 and you have a job which pays you $10k, that is a positive ROI). If you have a car which costs you $20,000 and your job pays you $10k, that is a negative ROI.

You can do this for rental properties and other costs in the budget (like student loans).

[jpg7n16]

My text book would be the IRS publications...

They would be useful aides for the tax portion of the class when you get to it - but not as a textbook for the entire course of personal finance. (For a course on income taxation, that would be a appropriate)

For example, there is very little IRS info about proper insurance coverage, the concept of an emergency fund, budgeting, time value of money (compound interest), pitfalls of debt, how credit cards work, how bank accounts work, etc.

All of which are foundational for a good understanding of personal finance (and I would even say are more important than understanding income taxation) - none of which are covered by the IRS docs.


I mean, who cares if you know the difference between an above the line deduction and a below the line deduction, if you don't know how to create a proper budget?

[jIM_Ohio]

They would be useful aides for the tax portion of the class when you get to it - but not as a textbook for the entire course of personal finance. (For a course on income taxation, that would be a appropriate)

For example, there is very little IRS info about proper insurance coverage, the concept of an emergency fund, budgeting, time value of money (compound interest), pitfalls of debt, how credit cards work, how bank accounts work, etc.

All of which are foundational for a good understanding of personal finance (and I would even say are more important than understanding income taxation) - none of which are covered by the IRS docs.


I mean, who cares if you know the difference between an above the line deduction and a below the line deduction, if you don't know how to create a proper budget?

Is the course supposed to open people's horizons, or teach them to regurgitate a textbook?

I realize I am a little different... I teach for a living now and one thing which always helps is a story line. The tax return can create a good story line and open eyes as to various issues. My approach is to let the students drive the discussion more than require every page of a textbook to be read.

It takes maybe 2 hours to learn budgeting (assuming someone has the math skills). Income, expenses, debt (all as separate line items). That hardly makes for good discussion, and then prevents some discussions as well (because depending on income sources, some budgeting rules may or may not apply). This would then single out anyone which is self employed (for example) because their view of expenses is much different than someone which works for a corporation (is my experience).


However understanding income sources (a line item in budget) is a much more interesting discussion. Self employment income vs W-2 income, for example.

I would not need a text book, I could build power points to get my points across. This also means the student's reading is independent too- meaning homework is not use this text to read about budgeting or compound interest or similar, its go somewhere and read on something (on the web) and then be prepared to discuss it at length the following class period.


Income taxes one of 3 times per year everyone looks at finances... the 3 most often times people look at finances are

1) When they get a raise
2) When they file tax return
3) when a life event happens (college, kid born, retire)

If you teach from a text book, the life examples and broadness are limited to the textbook.
If you use the storyline approach (1040 form) every possibility is on the table for discussion (based on student's interest and instructor knowledge).

Here are examples

should take about 40-60 hours of class time plus 80-120 hours of homework
that implies the following:
1) Income
2) Tax credits
3) Adjustments
4) Deductions (schedule A)
5) some very basics on schedules B-C-D-E-F (I'd have to go back and check my HR block tax course to verify what schedules they cover).


For every subject there are 4 areas:

a) classroom discussion
b) homework
c) what you will be tested on
d) applying this to real life

in my case, d) is the tax return (it is the story which holds whole course together) It is NOT to focus, I just use that as glue to tie one lesson to another

for income, the following are my bullet points

a) classroom discussion is on what types of income exist (W-2, self employed, 1099, passive income, earned income) and further discussion is on each student- what income do they have, what income do their parents have. This gets them thinking about is my dad self employed, and what does that mean (maybe they even ask a parent when they go home).
b) homework- find 10 occupations of interest, and list the starting incomes of each. If occupation is self employed vs work for mega corp, suggest what the differences in income are (and save this for later).
c) you will be tested on being able to identify if a given situation is earned income vs passive, and if income is from a w-2 vs self employed.
d) use the tax return to show all the ways the IRS classifies income (if I missed anything in discussion of a) it will be flushed out here).

2) Tax credits
this is really a lesson on how a tax return is calculated and how to calculate tax owed. This is needed to be stronger glue to tie certain concepts together (like income vs investing).

a) discussion is on how tax return works (income minus adjustments minus deductions calculate tax add in credits)
a1) there is further political discussion on how this is modified every year and how some things change and some things stay the same.
b) homework- give 10 problems of various situations and have students calculate the tax returns for them (examples have only income and tax owed, and some have tax credits)
c) you will be tested on preparing a basic tax return which includes credits
d) list the tax credits you are eligible for

3) adjustments
This is really a discussion on investing
a) discussion is on compound interest and what that means
a1) make sure there is a brief discussion on it works both ways (with debt and with investing)
a2) discussion on types of investments (tax free vs taxable, Roth vs deductable)
b) homework is go to investing websites and take the investor questionaire and come back to class with the results (asset allocation). In addition homework is to research and present the various types of investment accounts based on income source (so tie this back to first section- if self employed, what are options, if you work for a non profit, what are options, if you are work for a corporation, what are options).
c) you will be tested on projecting a current set of deposits into an investing account and projecting a future cash value (by hand).
c1) be able to prepare a tax return with adjustments like HSA, 401k, IRA
c2) be able to divide a set of income into 401k+Roth+HSA and keep person in 15% tax bracket
c3) be able to list taxes paid in 2 different investing scenarios and decide which one is better
d) know what gets put on tax return as an adjustment (deductible IRA, HSA) and what other options exist (to reduce taxes) like a 401k.

4) Deductions
this is a brief discussion on debt and also a discussion on tracking expenses (as well as deductions)
a) discuss mortgages and how they work- different types, paying points, 15 year, 30 year, and what an amortization table is.
b) homework is calculate ammortization tables for 10 different situations
b1) calculate interest paid based on various inputs (some of situations have balloon payments, some pre-pay, some refinance to longer term, some refinance to shorter terms)
c) you will be tested on various mortgage types, and being able to calculate interest paid for a given set of conditions
d) list the places on a schedule A where mortgage interest and points are applied to tax return

5) other schedules
Make sure the other schedules are covered
the key concepts I can think of (off top of my head)
a) depreciation, passive income, investments and capital losses/capital gains, social security (self employment tax)
b) homework would include showing a history of the FICA tax, and what FICA is
b1) be able to put all of above on a tax return
b2) be able to figure out if something is a capital gain or loss
c) tested on these items depreciation, passive income, investments and capital losses/capital gains, social security (self employment tax)
d) fill out appropriate lines on the tax return schedules

I think I could do 1-5 in about 20-40 hours, 60 max
test 1 is not done until 1-5 are complete and its 25% of the grade.
there is a project assigned after test 1 for another 25% of grade- this project creates a fictional person, gives them an occupation and situation (which might be drawn from a hat) and the group has to solve the problems presented (some of problems would be on list below, but would include credit card debt, mortgage refinance decision, pay down debt or invest and similar problems)



Then I would come back to the gaps (as you pointed out)- I agree the 1040 is not the be all end all, its my glue which ties most of the issues together.

Budget
income
expenses
debt
investing
insurance coverage
credit

and then apply this standard to them


a) classroom discussion
b) homework
c) what you will be tested on (every single item you will need to quantify- does it have tax implications)
d) applying this to real life (this portion of class would not use tax return as much)


While a textbook might help here, most of the testing at this point comes from questions I create from classroom discussion.

For example credit

a) discussion on types of credit- (some already discussed include mortgages)
credit cards
investment interest (margin)
mortgage interest
car financing
and also discuss concept of paying off multiple debts at same time of various interest rates
and also discuss how to calculate interest paid (compounded daily vs monthly vs yearly)
b) homework- calculate interest paid for 20 different problems (credit cards, car payments etc)
c) know if something has a tax benefit or not, and be able to calculate the tax benefit if one exists
d) Debt snow ball is where I would focus discussion

I would talk about debt, leverage, if something is tax deductible and then also introduce the caveats of what a person which owned a small business could do (debt interest is a business expense=deductible) and what a person can do (interest is not deductible).

Without the tax return at beginning, the whole small business discussion and debt is tough. For this I would love to bring in a guest speaker which owned their own business and explain some of this as it pertains to them.

Another example
insurance

a) discuss types permanent vs term
b1) find a rate for a specific policy (like 30 yo female non smoker 200k term)- the next class everyone would discuss the rates they found
b2) be able to calculate permanent vs term and invest the difference
c) term+invest the difference calculation
d) how much insurance do you need?

If you have a business, do you need more insurance- liability insurance, disability insurance etc...



**my thought is that its more important to know 25% of the text book and be able to apply 75-95% of what you know, as opposed to covering 95% of the text book, but only having 10-25% of that be available to real life**


In addition, this approach allows for "slanty line theory", which means if the class comes in with people of different backgrounds, it brings them to a common ground quickly without boring some of the advanced students early in class.

For example if a course started with the budget as the basic principle, but 2/3 of the class already knew what a budget was, the first lectures would be boring and those 2/3 would be uninvolved, by using the 1040 form, every student could be challenged to whatever level of comfort they had (someone new to taxes could focus on income only, where as someone which knew about tax returns, but not some of the more abstract income types, they could focus on those and learn something new). With adult learning, its not as important as with little kids, but it really helps keep the discussions engaging, which is my approach to teaching.

[jpg7n16]

Is the course supposed to open people's horizons, or teach them to regurgitate a textbook?

That was a very long response to a guy who just said that tax documents are better suited for tax classes. Nothing personal.

If you teach it the right way, any textbook can have a storyline to it. And then the personal finance textbooks would cover the gaps the tax docs miss.

Like so:
What do I have? (Assets, Liabilities, Net Worth)
What do I make? (Income, how income tax works)
How do I keep more of what I make? (Budgeting, debt management, tax reduction strategies)
How do I protect what I have? (Emergency funds, Insurance: property, home, health, disability, life)
Should I borrow to have more? (Smart debt decisions)
How do I grow what I have? (Investments, compound interest, time value of money, inflation)
Will I have enough to live on when I can't or don't want to work anymore? (Retirement planning)
What happens to my stuff when I die? (Estate planning)
How can I help others with my money while I'm alive? (Gifting strategies, charities)

That's how I'd teach it anyways...

All are relatable important topics in personal finance. And the texts mentioned above will cover all those topics, but the tax docs won't by themselves.

But if you despise textbooks, I can't really help you there. It's just a book. It's what you learn from that book that matters. A good teacher can use a textbook as a tool of learning - not mindless regurgitation.


My opinion is that tax docs should be used to aide the textbooks. Not the other way around. Just an opinion.

[jIM_Ohio]

That was a very long response to a guy who just said that tax documents are better suited for tax classes. Nothing personal.

If you teach it the right way, any textbook can have a storyline to it. And then the personal finance textbooks would cover the gaps the tax docs miss.

Like so:
What do I have? (Assets, Liabilities, Net Worth)
What do I make? (Income, how income tax works)
How do I keep more of what I make? (Budgeting, debt management, tax reduction strategies)
How do I protect what I have? (Emergency funds, Insurance: property, home, health, disability, life)
Should I borrow to have more? (Smart debt decisions)
How do I grow what I have? (Investments, compound interest, time value of money, inflation)
Will I have enough to live on when I can't or don't want to work anymore? (Retirement planning)
What happens to my stuff when I die? (Estate planning)
How can I help others with my money while I'm alive? (Gifting strategies, charities)

That's how I'd teach it anyways...

All are relatable important topics in personal finance. And the texts mentioned above will cover all those topics, but the tax docs won't by themselves.

But if you despise textbooks, I can't really help you there. It's just a book. It's what you learn from that book that matters. A good teacher can use a textbook as a tool of learning - not mindless regurgitation.


My opinion is that tax docs should be used to aide the textbooks. Not the other way around. Just an opinion.

I am sure my response came across in a way not intended, just gave enough detail to point out my teaching technique. I did not disagree necessarily with anything you posted, just wanted to point out where my head was at.

I did not check either of links you gave
I have seen some finance textbooks

If the 3 times people look at finances most are

1) getting a raise
2) filing income taxes
3) life event

my focus to anyone I would need to "sell" this to would be that

a) you can make money doing 2) and have a career doing 2), so having that as a backdrop for a portion of the class is helpful IMO- for example if this was taught at a community college, then half the people went to take a tax course as follow up, that is success (because it shows interest in the subject matter).
b) the book is just a book- this comes up with our training "all the time", however the discussions which come up in class are often tough to duplicate, so therefore a class without textbooks is better than a class with textbooks is my professional experience. Nearly every textbook at my desk (at work) is collecting dust and has been for close to 5-10 years. Yet I have discussions with customers every week and those I remember.
c) the subjects which impact people the most should be the ones covered...there is a statistic which suggests if 75% of the material impacts 75% of the students, you have possibly solved 50% of their problems... for example on your list I see a few things which are not "as important" as some of the tax concepts I had listed- estate planning and charities on your list are not as important as knowing deductions and adjustments and how to calculate their worth to a person (for example don't get a big mortgage just for the deduction). But getting that deep requires a decent knowledge of the tax return, and schedule A probably applies to most people at some point in their life- so its worth covering the logic that $10,000 in interest is only saving $2500 in taxes (for example). Your list also has some things I did not include (and IRS would not include directly) like net worth, assets and liabilities (however some of this is indirectly on small business tax forms).

Similar, on your list, its tough to see where to put in the following concepts:

1) is it better to invest in a Roth or 401k?
2) should I pay down my mortgage or invest for retirement?
2a) if my 401k is maxed, same question?
3) if I have lots of debt, how do I pay it down (discuss snow ball vs paying highest interest first, vs paying off depreciating assets first vs paying off appreciating assets).
4) Is it better to max HSA or invest more in 401k?

those are all real world questions anyone dealing with finances will need to decipher. Many of those have tax implications, so again having taxes be the backdrop of the financial decisions helps aid the discussions.







Both lists could be taught with or without a textbook and be effective with an engaging speaker.

Both lists could have a textbook and a dud for an instructor and be a failure.

Cheers