Financial Security For Dummies (For Dummies (Business & Personal Finance))

307 Pages·2021·11.969 MB·English

by  Eric Tyson

Financial
Security

Financial
Security
by Eric Tyson, MBA
Author of Personal Finance For Dummies
Financial Security For Dummies®
Published by:
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Copyright © 2022 by Eric Tyson.
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Published simultaneously in Canada
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Library of Congress Control Number: 2021946586
ISBN 978-1-119-78078-6 (pbk); ISBN 978-1-119-78079-3 (ebk); ISBN 978-1-119-78080-9 (ebk)
Contents at a Glance
Financial Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Part 1: Understanding Financial Security . . . . . . . . . . . . . . . . . . . . . 5
CHAPTER 1: Navigating the (Bumpy) Road to Financial Independence . . . . . . . . . . . . . 7
CHAPTER 2: Understanding Capitalism and Economic Downturns . . . . . . . . . . . . . . . 17
CHAPTER 3: Coping with Personal Crises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Security
Part 2: Crisis Mode: Accessing Safety Nets
and Emergency Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53
CHAPTER 4: Your Safety Nets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
CHAPTER 5: Digging Out and Forging Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Part 3: Being a Smart Consumer of Economic
Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
CHAPTER 6: So Many Numbers! Making Sense of Economic Reports . . . . . . . . . . . . . 89
CHAPTER 7: Says Who? Weighing “Experts’” Advice . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
CHAPTER 8: Following Financial Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
Part 4: Keeping Your Personal Finance
House in Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133
CHAPTER 9: Getting on the Right Road with Spending and Saving . . . . . . . . . . . . . . 135
CHAPTER 10: Investing Wisely and Securely . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161
CHAPTER 11: Getting and Maintaining Proper Insurance . . . . . . . . . . . . . . . . . . . . . . . 195
Part 5: Prepping for Future Armageddon . . . . . . . . . . . . . . . . . . . 223
CHAPTER 12: What Pundits Scare People About . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225
CHAPTER 13: Preparing Yourself for Unexpected Future Crises . . . . . . . . . . . . . . . . . 241
Part 6: The Part of Tens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 251
CHAPTER 14: Tens Ways to Improve Your Personal Safety . . . . . . . . . . . . . . . . . . . . . . 253
CHAPTER 15: Ten Ways to Address Over-Saving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265

Table of Contents
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
About This Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Foolish Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Icons Used in This Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Beyond the Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Where to Go from Here . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
PART 1: UNDERSTANDING FINANCIAL SECURITY . . . . . . . . . . .5
Navigating the (Bumpy) Road to Financial
CHAPTER 1:
Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Reaching for Financial Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Defining what you value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Assessing where you are . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Grasping financial lingo and trends . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Trying not to avoid money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Making use of insurance: A necessary evil . . . . . . . . . . . . . . . . . . . . 12
Coping with Crises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Everyone faces challenges, obstacles, and setbacks . . . . . . . . . . . . 13
Common crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Making Decisions Based on Changing Circumstances . . . . . . . . . . . . . . 15
Understanding Capitalism and Economic
CHAPTER 2:
Downturns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Understanding Our Economic System . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Capitalism strengths and criticism . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
History of growth and downturns . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Touring Past Crises: What Happened and Why . . . . . . . . . . . . . . . . . . . 25
Why pilot training has relevance for your tour . . . . . . . . . . . . . . . . . 25
The Panic of 1907 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
The Great Depression . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
World War II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Arab oil embargo and Watergate/Nixon’s resignation . . . . . . . . . . . 29
9/11 terrorist attacks and recession . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2008 financial crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
2020 COVID-19 Pandemic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Mistakes Made . . . and Lessons to Carry With You . . . . . . . . . . . . . . . . 35
Table of Contents vii
CHAPTER 3: Coping with Personal Crises . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
When a Crisis Comes Calling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Losing your job or a significant source of income . . . . . . . . . . . . . . 40
Facing a medical crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Caring for elderly parents unexpectedly . . . . . . . . . . . . . . . . . . . . . . 44
Splitting from your spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Coping with the death of a spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Dealing with a natural disaster . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Success Plans for Personal Crises and Life Changes . . . . . . . . . . . . . . . 49
Keeping your big picture in mind . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Considering a comprehensive checklist . . . . . . . . . . . . . . . . . . . . . . . 50
PART 2: CRISIS MODE: ACCESSING SAFETY
NETS AND EMERGENCY MEASURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
CHAPTER 4: Your Safety Nets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Taking Stock of Your Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Surveying your accessible money and spending options . . . . . . . . 56
Finding assistance from family . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Ensuring adequate insurance coverage . . . . . . . . . . . . . . . . . . . . . . . 58
Surveying Societal Safety Nets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Health insurance subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Unemployment insurance benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Federal refundable tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .64
Help with housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
For more information on safety net programs. . . . . . . . . . . . . . . . . 66
CHAPTER 5: Digging Out and Forging Ahead . . . . . . . . . . . . . . . . . . . . . . . 67
Turning Your Eye toward Recovery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Knowing how long it will take to regain stable
financial footing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Coping with frustration and moving on . . . . . . . . . . . . . . . . . . . . . . . 69
Thinking (and Researching) Before Making Financial Moves . . . . . . . . 70
Wise financial actions to take . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Boneheaded financial actions to avoid . . . . . . . . . . . . . . . . . . . . . . . 70
Leaning on an Expert for Help . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Knowing how experts can help . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Being careful in a time of need . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Finding financial advisors and planners . . . . . . . . . . . . . . . . . . . . . . . 72
Being aware of budget counselors . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Investing in investment managers . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
Looking into real estate agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Making note of tax preparers and advisors . . . . . . . . . . . . . . . . . . . .79
Dealing with insurance agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Tuning in to attorneys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
viii Financial Security For Dummies