Personal Financial Planning by Lawrence J. Gitman - Book Report/Review Example

 Personal Financial Planning by Lawrence J. Gitman The book that I selected for review is ‘Personal Financial Planning’. The authors of the book are Lawrence J. Gitman, Michael D. Oehnk, and Randall S. Billingsley. The book consists of six parts and each of those parts has two to three chapters. The book relates with personal financial planning in a way that all material included in this book talks about different issues related to finance, such as, foundations of financial planning, management of basic assets, management of credit, and management of insurance needs. I have gained a huge amount of knowledge about financial planning through this book. Every part and every chapter of the book has provided me with in-depth information about different financial issues that hold critical value in the life of any individual. I would say that I have a very basic knowledge of personal finalcial planning before reading this book. However, after reading this book thoroughly, I have gained an insight into a wide range of financial issues, which can help me manage my personal and professional life in a better way. From the first part of the book, I learned about the foundations of financial planning. This part contained three important chapters, which included understanding the financial planning process, developing financial statements and plans, and preparing taxes. In the first chapter, I learned about the overall financial process and issues associated with it. I learned about the ways to spend money wisely by anticipating the currents needs. I also learned about the relationship between money and happiness. Some core concepts that I understood in this chapter included wealth, financial assets, tangible assets, steps in the financial planning process, role of money in a person’s life, three types of financial goals, employee benefits planning, and tax planning. The next chapter was even more interesting for me as compared to the previous one as it helped me understand the concept of financial planning in a practical way. In this chapter, I learned the way to develop my personal financial statements and plans. I understood different types of financial plans and statements, as well as the way to prepare a balance sheet. I also learned the ways to prepare personal income and expense statements. I understood the way to develop an effective record keeping system and the ways to use ratios for the interpretation of financial statements. Moreover, I understood the concept of time value of money and learned the way to construct a cash budget. The third chapter was about preparation of taxes. In this chapter, I learned about the federal income tax principles, the ways to calculate the personal taxable income, as well as the calculation and filing of taxes. The tax return worksheets helped me develop a practical understanding of these issues. Moreover, I also learned about the concept of effective tax planning and the process of tax calculation. From the second part of the book, I learned about the management of basic assets. This part consisted of fourth and fifth chapters of the book. The fourth chapter was about the management of personal cash and savings. In this chapter, I learned about the role of cash management in the process of personal finance planning. I also learned about the phenomenon of today’s financial services marketplace. Some other practices that helped me develop a good understanding of core financial issues included the way to maintain a checking account and establishing a personal saving program. The fifth chapter included in this part of the book was about automobile and housing decisions. This chapter helped me learn the ways to lease a car and buy it if needed. I also learned about property buying process. I understood the difference between lease and purchase decisions based on costs of both decisions. Similarly, I understood the difference between rent and buy decision based on cost. Moreover, I learned about financing of transactions and the concepts of home affordability analysis and mortgage refinancing analysis. From the third part of the book, I learned about the management of credit. This part consisted of sixth and seventh chapters of the book. The sixth chapter was about the use of credits. In this chapter, I learned about the basic concept of using credit. I also learned about open account credit, credit cards, open forms of credit, and the way to use the credit effectively. The seventh chapter was about the use of consumer loans. In this chapter, I learned about the ways to manage credit and obtaining single-payment and installment loans. I also learned about the basic features of consumer loans. From the fourth part of the book, I learned about the management of insurance needs. This part consisted of eighth, ninth, and tenth chapters of the book. The eighth chapter was about life insurance in which I learned about insurance concepts and policies, key features of life insurance, the need to buy life insurance, the way to buy life insurance. The ninth chapter was about health insurance in which I learned about health insurance plans and decisions, long-term care insurance, and disability income insurance. In the tenth chapter, I learned about the ways to protect my personal property. This chapter highlighted the concepts of property insurance, automobile insurance, homeowner’s insurance, and settlement of claims. From the fifth part of the book, I learned about the management of investments. This part consisted of eleventh, twelfth, and thirteenth chapters of the book. The eleventh chapter was about investment planning in which I learned about the basic objectives and benefits of making investments, the way to become informed investor, online investment process, and the concept of securities markets. The twelfth chapter was about investment in stocks and bonds in which I learned about the ways to invest in common stocks and bonds, as well as the risks and benefits of such investments. In the thirteenth chapter, I learned about the way to invest in real estate and mutual funds. This chapter made me aware of the types of fund services, as well as the risks and benefits of investing in real estate and mutual funds. From the sixth part of the book, I learned about retirement and estate planning. This part consisted of fourteenth and fifteenth chapters of the book. The fourteenth chapter was about retirement planning in which I got an understanding of social security needs, retirement programs, annuities, and pension plans. In the fifteenth chapter, I learned about preserving of estate. This chapter made me aware of the principles of estate planning, as well as the way to calculate estate taxes. Moreover, I also gained an insight into federal unified transfer taxes and estate planning techniques. Works Cited Gitman, Lawrence, Michael Oehnk, and Randall Billingsley. Personal Financial Planning. 12th ed. Mason: South-Western Cengage Learning, 2011. Print. Read More