Astronauts bring moon rocks back to their children, kindergarten teachers get hugs, and Broadway stars get showered with flowers. And while those may all be valuable perks, each group may feel a slight envy for MBAs in finance, who enjoy the best perk of all — expertise in planning for their own financial future and retirement.
Students in the Texas A&M University-Corpus Christi Online Master of Business Administration with a Concentration in Finance study finance extensively. In addition to a core business curriculum, the program offers Multinational Finance, Investment & Portfolio Theory, and Financial Markets & Institutions courses. Perhaps the most valuable finance concentration course, Personal Financial Planning offers long-term professional and personal benefits.
Over the course of seven weeks, students learn about the financial planning process including the following:
- Cash, debt and savings management.
- Housing decisions.
- Insurance and risk management.
- Investment alternatives.
- Retirement and estate planning.
Here is a brief preview of the broad areas covered in the Personal Financial Planning course, and why each is so vital in making informed decisions for your family, as well as your clients.
Cash, Debt and Savings Management
You just received a $5,000 holiday bonus check. Should you put it in your IRA, pay down credit card debt or stash it in an emergency fund? Or should you proportion the money according to your priorities? If the interest you pay on your debt is higher than the interest you would earn on your investments after taxes, you lose money by investing. Of course, you have no idea what the market will do this coming year, so how can you make an informed decision? Many people never learn, but this course teaches you how to make consistently informed decisions.
Housing Decisions
Common wisdom until recently was to buy a house as soon as you could afford one. Why pay down a landlord’s mortgage when you could pay down your own? That conventional thinking was challenged in the recent housing bust, during which thousands of people lost their homes and filed for bankruptcy. The factors that determine when to buy a home, when to upgrade to a bigger home, where to buy, how much to put down, and how much to mortgage are complex. Investment properties require an even more sophisticated calculus. It pays to get educated on housing investment decisions, and this course provides a great foundation.
Insurance and Risk Management
Life insurance, car insurance, homeowners insurance and health insurance are all useful tools to manage risk and protect against loss. As with most personal financial decisions, the devil is in the details. In healthcare, should you pay higher premiums and a lower deductible, or the reverse? In life insurance, do you need a term or whole plan? How much liability insurance do you need on your car if you have a small business? Combine the wrong decision with an unfortunate event and you could undo every other financial move you make.
Investments and Alternatives
What should your asset allocation mix be among stocks, bonds and cash? Among stocks, you have to consider diversifying among large, mid and small caps, as well as value and growth stocks, and dividend and non-dividend producing equities. You can hold them all in mutual funds for active management or exchange traded funds (ETFs) to lower management expenses. With bonds, you can invest in corporate bonds and government bonds. What makes the yield higher on some than on others? Should you hold alternative investments like rare coins, art or real estate? When you understand how these choices work together to maximize returns while minimizing risks, you can make more confident choices — and not panic during inevitable downturns.
Taxes
What is more valuable — a dollar earned or a dollar saved? A dollar saved is up to 40 percent more valuable because it is not taxed. Tax considerations influence so many of life’s most important decisions including those concerning marriage, children, income taxes, charitable donations, investments and purchases that you can deduct. Many people — if not the majority of Americans — do not understand taxation and cannot make strategic tax planning decisions. The long-term result is a steady drip, or even a continuous leak in savings, which compounds over time.
Retirement and Estate Planning
If you have retirement accounts, you need to plan for disbursements from those accounts over time. Do you draw down aggressively and risk outliving your funds or do you take just enough to get by and leave what is left over to your heirs? If you own anything of value at all, you have an estate. You also have an estate plan, whether you design one of your own or the state determines what to do with your assets when you pass on. Of course, you want to understand wills, trusts, and the estate tax system in order to avoid that scenario. The course provides a strong introduction to these concepts.
The information in the Personal Financial Planning course provides a lifelong foundation of knowledge that can enable you to meet your objectives and enjoy a happy retirement. Whether you want to pay down student loans, save for your child’s education, finance a fixer-upper, purchase a portfolio of insurance plans, or invest in real estate for an early retirement, the Personal Financial Planning course builds the knowledge you need to make confident decisions.
Learn more about the TAMU-CC online MBA in Finance program.
Sources:
Bankrate: Should You Pay Debt Before Saving?
Bankrate: The Basics of Estate Planning
Tax Foundation: 2017 Tax Brackets
Forbes: Should You Buy a House or Rent? The Economics of Homeownership
