Introduction 1
About This Book 2
Foolish Assumptions 3
Icons Used in This Book 3
Beyond the Book 4
Where to Go from Here 4
Part 1: Getting Started with Personal Finance 5
Chapter 1: Embracing Financial Literacy 7
Understanding Everything Financial Literacy Includes 8
Starting with the basics: Budgeting and transaction accounts 9
Making your money work for you: Investing 9
Protecting your income and assets: Insurance 9
Talking Money at Home 10
Identifying Unreliable Sources of Information 11
Understanding the dangers of free financial content online 11
Recognising the dangers of following financial gurus (and celebrities) 12
Publishers pandering to advertisers 13
Developing Good Financial Habits 14
Chapter 2: Establishing a Financial Foundation 15
Understanding Your Cash Flow 16
Uncovering where your money goes 16
Sizing up your income 17
Using Different Accounts 18
Current accounts 19
Savings accounts 20
Investment accounts 21
Budgeting to Boost Your Savings 22
Understanding and Improving Your Credit Score 23
Deciphering how lenders use credit reports and scores 23
Obtaining your credit reports 24
Chapter 3: Establishing and Achieving Goals 27
Creating Your Own Definition of Wealth 28
Acknowledging what money can't buy 28
Managing the balancing act 29
Prioritising Your Savings Goals 30
Knowing what's most important to you 31
Valuing pensions 31
Building Emergency Reserves 33
Saving to Buy a Home or Business 34
Funding Kids' Educational Expenses 34
Saving for Big Purchases 35
Preparing for Planned Borrowing 35
Preparing for Retirement/Financial Independence 36
Figuring out what you need for retirement/financial independence 38
Understanding retirement building blocks 39
Crunching numbers for your retirement 42
Making up for lost time 43
Part 2: Spending Less, Saving More 45
Chapter 4: Managing Where Your Money Goes 47
Examining Overspending 48
Having access to credit 48
Misusing credit cards 49
Taking out car loans 49
Spending to feel good 50
Assessing Your Spending 52
Tracking spending the "low-tech" way 52
Tracking your spending on websites and apps 55
Chapter 5: Reducing Your Spending 57
The Keys to Successful Spending 57
Living within your means 58
Looking for the best value 58
Making credit cards work for you when you're shopping 60
Avoiding rent-to-own 60
Smarter Spending 61
Managing food costs 62
Saving on shelter 64
Cutting transportation costs 66
Lowering your energy costs 68
Controlling clothing costs 69
Repaying your debt 70
Making space for fun and recreation 70
Lowering your phone bills 71
Curtailing personal-care costs 72
Chapter 6: Understanding Types of Borrowing 75
Choosing Carefully When You Really Must Borrow 76
Knowing why people typically borrow 76
Making sure you have a plan to repay 77
Understanding why debt consolidation is usually bad news 77
Exploring Types of Borrowing 78
Credit cards 79
Buy now, pay later 80
Secured versus unsecured loans 81
Overdrafts 82
Payday loans and why you should avoid them 82
Cost comparison for borrowing options 83
Chapter 7: Dealing with Debt 85
Using Savings to Reduce Your Consumer Debt 86
Understanding how you gain 86
Debt snowball or debt avalanche? 87
Decreasing Debt When You Lack Savings 87
Reducing your credit card's interest rate 87
Understanding credit-card terms and conditions 88
Cutting up your credit cards 89
Paying off student loans 90
Exploring Solutions to Debt Problems 91
Sorting it yourself 91
Understanding debt management plans (DMPs) 92
Understanding Debt Relief Orders (DROs) 93
Understanding Individual Voluntary Arrangements (IVAs) 93
Declaring bankruptcy 94
Comparing debt solutions 95
Finding Reputable and Free Sources of Debt Support 97
Stopping the Spending/Consumer Debt Cycle 97
Resisting the credit temptation 98
Identifying and treating a compulsion 99
Chapter 8: Maximising Your Savings 101
Working Out How Much to Save 102
Regular savings versus lump sums 102
Earning the most interest possible 102
Saving for Short-Term Goals 103
Saving for Longer-Term Goals 104
Understanding How Inflation Eats Your Savings 105
Saver Mike's inflation battle 105
Paying tax on your savings 106
Making the most of ISAs 107
Part 3: Building Wealth Through Investing 109
Chapter 9: Managing and Reducing Your Tax 111
Understanding the Tax You Pay 112
Focusing on your total tax 112
Recognising the importance of your marginal tax rate 113
Understanding the 60 percent tax trap 114
Defining taxable income 114
Analysing recent tax law changes 115
Making the Most of Your Tax-Free Allowances 116
Paying into a pension 117
Deducting self-employment expenses 117
Salary sacrifice schemes 119
Contributing to charities 119
Tax-Friendly Investing 120
Using ISAs to save and invest tax free 120
Dividend, savings, and capital gains tax allowances 121
Backing young companies for tax breaks with EIS and VCTs 122
Estate Planning 122
Managing inheritance tax 122
Wills, living wills, and powers of attorney 124
Where to Go for Help with Tax 125
Obtaining HMRC assistance 125
Finding an accountant 126
Deciding whether you need a financial adviser 126
Looking for tax resources online 126
Dealing with a Tax Investigation 127
Chapter 10: Considering Important Investment Concepts 129
Establishing Your Goals 129
Understanding the Primary Investments 130
Looking at lending investments 130
Exploring ownership investments 132
Shunning Gambling and "Get-Rich-Quick" Vehicles 132
Forsaking futures, options, and other derivatives 132
Ditching day trading 133
Sidestepping get-rich-quick schemes 134
Understanding Investment Returns 134
Sizing Investment Risks 135
Comparing the risks of stocks and bonds 136
Focusing on the risks you can control 137
Discovering low-risk, high-return investments 138
Diversifying Your Investments 138
Spreading the wealth: Asset allocation 139
Allocating money for the long term 140
Sticking with your allocations: Don't trade 141
Investing lump sums via pound cost averaging 142
Leaving You with Some Final Advice 143
Chapter 11: Understanding Your Investment Choices 145
Slow and Steady Investment: Bonds 145
Building Wealth with Ownership Vehicles 147
Selecting stocks 147
Investing in individual stocks 148
Investing internationally in stocks 149
Owning shares in your employer 150
Investing in funds 150
Generating wealth with property 152
Investing in small business 156
Off the Beaten Path: Investment Odds and Ends 159
Precious metals 159
Bitcoin, Ethereum, and other cryptocurrencies 160
Collectibles (including NFTs) 162
Peer-to-peer lending and crowdfunding 163
Avoiding scams 163
Chapter 12: Investing in Funds 165
Understanding the Benefits of Funds and ETFs 165
Exploring Various Fund Types 167
Fund structures 167
Bond funds 168
Equity funds 169
Mixing bonds and equities: Balanced funds 170
Global funds 170
Index funds 171
Specialty (sector) funds 172
Socially responsible and ESG investing 173
Learning How to Invest in Funds 174
Online investment platforms 174
Apps 174
Stockbrokers 174
Financial advisers 175
Choosing a Managed Portfolio or Going DIY 175
Selecting the Best Funds 176
Understanding fund literature 176
Keeping costs low 177
Adding up how much investing costs 177
Evaluating historic performance 179
Determining your needs and goals 179
Deciphering Your Fund's Performance 180
Dividends 180
Share price changes 181
Evaluating and selling your funds 181
Chapter 13: Investing for Retirement 183
Why Invest in Pensions 183
Free money from the government 184
Free money from your employer 184
Are pensions safe? 185
Looking at Types of Pensions 185
Workplace pensions 185
Self-employed pensions 186
Defined contribution pensions 187
Defined benefit pensions 187
How much money do I need? 187
Understanding the State Pension 187
Plugging gaps in your National Insurance record 188
Annuities explained 188
Allocating Your Money in Pensions 189
Prioritising pension contributions 190
Setting up a pension 190
Allocating money when your employer selects the investment options 190
Allocating money in plans you design 192
Transferring Pensions 194
Consolidating small pension pots 195
Moving money from an employer's plan 195
Taking money out of pensions 195
Understanding drawdown 196
Exploring pension alternatives 197
Chapter 14: Investing for Children 199
Investing for Children versus Saving in Cash 199
Exploring Ways to Invest for Children 200
Understanding Junior ISAs and Child Trust Funds 201
Deciding whether to invest for a child through your own ISA 201
Considering pensions for children 202
Estimating University Costs 204
Working Out the Student Finance System 205
Strategising to Pay for Educational Expenses 206
Estimating university costs 206
Setting realistic savings goals 207
Tips for getting loans, grants, and scholarships 207
Chapter 15: Investing in Property: Your Home and Beyond 209
Deciding Whether to Buy or Rent 210
Assessing your timeline 210
Determining what you can afford 210
Calculating how much you can borrow 211
Comparing owning versus renting costs 212
Considering the long-term costs of renting 213
Recognising advantages to renting 214
Financing Your Home 214
Understanding the two major types of mortgage 215
Choosing between fixed- and variable-rate mortgages 216
How willing and able are you to take on financial risk? 216
Avoiding the house deposit blues 217
Considering a 30- to 40-year mortgage 219
Deciding whether to overpay your mortgage 219
Finding the best lender 220
Increasing your approval chances 222
Finding the Right Property 223
Casting a broad net 223
Finding out actual sale prices 224
Researching the area 224
Working with estate agents 224
Presenting yourself as a serious buyer 225
Making an Offer 225
Negotiating 101 226
Getting a survey 226
Appointing a conveyancer 227
Planning for stamp duty and other costs 228
After Your Purchase 228
Remortgaging 228
Considering equity release 229
Selling your house 229
Chapter 16: Working with Financial Planners 231
Surveying Your Financial Management Options 231
Doing nothing 232
Doing it yourself 232
Hiring financial help 232
Deciding Whether to Hire a Financial Planner 234
How a good financial adviser can help 235
Why advisers aren't for everyone 236
Finding a Good Financial Planner 236
Soliciting personal referrals 237
Seeking advisers through associations 237
Interviewing Financial Advisers: Asking the Right Questions 238
How and what do you charge? 238
Do you also perform tax or legal services? 238
What work and educational experience qualifies you to be a financial planner? 239
Can you provide references from clients with needs similar to mine? 239
Will you provide specific strategies and product recommendations that I can implement on my own if I choose? 240
Learning from Others' Mistakes 240
Part 4: Insurance: Protecting What You Have 241
Chapter 17: The Three Laws of Buying Insurance 243
Law I: Insure for the Big Stuff; Don't Sweat the Small Stuff 244
Buy insurance to cover financial catastrophes 244
Take the highest excess you can afford 246
Avoid small-potato policies 246
Law II: Buy Broad Coverage 248
Law III: Shop Around and Buy Direct 250
Finding policies with comparison sites 250
Using insurance brokers or financial advisers 250
Looking at employer and other group plans 251
Dealing with Insurance Problems 251
Knowing what to do if you're denied cover 251
Getting your due on claims 253
Chapter 18: Insurance on You: Life, Income, and Health 257
Providing for Your Loved Ones: Life Insurance 258
Determining how much life insurance to buy 258
Comparing the types of life insurance 260
Buying term insurance 261
Preparing for the Unpredictable: Income Protection Insurance 263
Understanding income protection insurance 263
Getting to grips with critical illness cover 264
Deciding whether you need cover 265
Determining how much cover you need 266
Identifying other features you need in income protection insurance 266
Deciding where to buy income protection insurance 267
Getting the Care You Need: Health Insurance 267
Choosing the best health plan 268
Buying health insurance 269
Chapter 19: Covering Your Assets 271
Insuring Your Home 271
Buildings insurance: The cost to rebuild 272
Special discounts 272
Contents insurance: For your things 273
Personal liability insurance: Cover for when others are harmed 274
The excess: Your cost with a claim 274
Buying buildings and contents insurance 274
Car Insurance 101 275
Third-party only 275
Third-party, fire, and theft 275
Fully comprehensive 276
Uninsured driver cover 276
Insuring Your Pets 277
The main types of pet insurance policy 277
Ways to save on pet insurance 278
Part 5: the Part of Tens 279
Chapter 20: Survival Guide for Ten Life Changes 281
Starting Out: Your First Job 282
Changing Jobs or Careers 283
Getting Married 285
Buying a Home 286
Having Children 287
Starting a Small Business 289
Caring for Ageing Parents 290
Divorcing 291
Receiving a Windfall 293
Retiring 294
Chapter 21: Ten Free Resources 297
MoneyHelper 297
Pension Wise 298
Citizens Advice 298
FCA ScamSmart 298
Gov.UK 298
StepChange 299
MoneySavingExpert 299
The Open University 299
Which? 300
Boring Money 300
Glossary 301
Index 311
