Econ 254: Personal Finance

Fall 2021 0.5 credits

Professor: Emma Rasiel: ebr4@duke.edu
Classes: Mondays, 5:15 – 6:30
Office hours: TBD

Course Format
This half-credit course is taught partially in the classroom and partially online, with some synchronous and
some asynchronous content. In person classes will take place approximately every second Monday from
5:15 – 6:30. On other Mondays, you will have active online learning material to work through.

All class materials, as well as calendar information (synchronous vs asynchronous), will be provided in the
Lessons tab in Sakai. I may make changes, during the semester, as to whether we will meet in the
classroom or not on certain Mondays. I will always provide that information at least a week in advance.
However, please don’t make alternative plans for any Monday from 5:15 – 6:30, in case I decide that we
need to meet in person on that particular Monday.

What is this course about, and what will I learn?

Personal finance is the process of planning and handling personal financial activities such as budgeting;
borrowing; saving; and investing.
In this course, you will learn the fundamentals of personal financial management: how to create and stay
within a budget; how debit and credit cards work; how to borrow, manage, and pay off student debt; how
to build a credit history to obtain the best possible rates on future loans (such as mortgages); best practices
for cybersecurity; how to manage your taxes; and how to invest for your future.

After completing this course, you will understand:

• When and how to borrow money, and why having a good credit history is so important
• How to manage a budget to ensure that you don’t spend beyond your means
• Why it’s important to start saving for the future as early as possible
• How to safeguard your financial and personal information, and why it’s essential to do so
• How to invest wisely for the longrun

Course policies

Attendance in the synchronous sessions:

You are expected to attend every in-person class and to arrive on time. Satisfactory attendance will have an
impact on whether you obtain a passing grade (“S”) in the class.
Completion of the asynchronous materials:
You are also expected to stay current with all assigned asynchronous online material. Most asynchronous
assignments include videos with pop-up multiple choice questions – your passing grade will also depend on
timely and satisfactory completion of those questions.
What is the expected course schedule? (This schedule is subject to changes in terms of topics covered)

Course Outline
Introduction
• Course goals
• Course requirements

Creating a Budget
• Why create a budget?
• Definitions: income vs expenses, fixed vs variable; wants vs needs
• Creating the budget template to track income and expenses
• Setting financial goals (short term and long term)
• Prioritizing needs vs wants
• The importance of savings and emergency funds
• Budget “game”: Starbux vs Mr Coffee
• Creating a financial plan to achieve the goals:
• Strategies
• Tips for avoiding predictably irrational decision-making

Banking
• Decision factors in selecting your bank
• Checking vs savings accounts
• Debit cards and how to use them
• Bank account fees and charges and how to avoid them
• Online banking: services and alerts

Interest Rates
• Simple interest
• Compound interest & the “miracle of compounding”
• Benefits of saving early
• Implications for longrun financial security

Debt
• Definitions & debt structures: secured vs unsecured, collateral, amortization, default
• Simple interest loans
• Amortizing loan cashflows
• Introduction to credit scores and how they affect interest rates on debt
• How to build a credit score
• Impact of the state of the economy on debt interest rates
• Debt do’s and don’ts
Credit Cards
• Credit card pros and cons
• Issuers vs networks
• How credit cards work
• Reading your credit card bill: minimum payments, interest calculations, credit score impact
• Rules of thumb for responsible credit card usage
• Security and data breaches
• Teaser rates and debt transfers
• Reading the small print (and why it matters)
Houses & Mortgages

• More on Credit History

• What is a FICO score
• How does your score affect your cost of borrowing
• Mortgages
• Amortization redux
• FICO score implications for monthly mortgage payments
• House buying in different cities
• Fees, taxes, & house price variations

Insurance

• Essential insurance products: home, health, auto

• Inessential insurance: product insurance, flight insurance, and other unnecessary insurance
• Insurance purchase rules of thumb

Cybersecurity

• Identity theft and how to protect yourself

• Credit card fraud and how to avoid it
• Common scams aimed at college students
• A brief introduction on how fintech is disrupting financial marketplace

Investing for the long run

• Review compound interest and time value of money
• Measuring “rate of return” and “risk”; and the relationship between them
• Common retirement account structures (and why you should care, even as a teenager)
• A brief introduction to life cycle investing for retirement
• Overcoming “inertia” and “hyperbolic discounting”
• A brief history of evolution in financial products and how investing for the future has changed
• How to start a retirement fund
• Mutual funds and ETFs
• Other financial vehicles