SOLUTION MANUAL Personal Finance, 14th Edition By E. Thomas Garman, Chapter 1 - 17

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SOLUTION MANUAL w
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Personal Finance, 14th Edition
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w w By E. Thomas Garman, Chapter 1 - 17
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TABLE OF CONTENTS ww ww w w




Part I: FINANCIAL PLANNING.
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1. Understanding Personal Finance. ww ww




2. Career Planning. ww




3. Financial Statements, Goals, and Budgets.
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Part II: MONEY MANAGEMENT.
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4. Managing Income Taxes. ww ww




5. Managing Checking and Savings Accounts.
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6. Building and Maintaining Good Credit.
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7. Credit Cards and Consumer Loans.
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8. Vehicles and Other Majory Purchases.
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9. Obtaining Affordable Housing. ww ww




Part III: INCOME AND ASSET PROTECTION.
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10. Managing Property and Liability Risk.
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11. Planning for Health Care Expenses.
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12. Life Insurance Planning.
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Part IV: INVESTMENTS.
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13. Investment Fundamentals. ww




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14. Investing in Stocks and Bonds. w w w w w w w w




15. Mutual and Exchange-Traded Funds. ww ww ww




16. Real Estate and High-Risk Investments.
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17. Retirement and Estate Planning. ww ww w w




SolutionandAnswerGuide w w w




GARMAN/FOX, w w PERSONAL w w w w FINANCE w w w w 14E, w w CHAPTER w w w w 1: w w THINKING w w w w LIKE w w w w AY w w FINANCIAL
w wPLANNER
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TABLE OF CONTENTS
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Answers w w to w w Chapter w w Concept w w Checks .............................................................................2
What w w Do w w You w w Recommend w w Now? ..................................................................................4
Let’s w w Talk w w About w w It ...............................................................................................................5
Do w w the w w Math............................................................................................................................6
Financial w w Planning w w Cases .........................................................................................................8
Extended w w Learning ................................................................................................................... 10




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ANSWERS TO CHAPTER CONCEPT CHECKS W W W W W W W W




LO1.1 w w Recognize w w the w w keys w w to w w achieving w w financial w w success.
1. Explain w w the w w five w w steps w w in w w the w w financial w w planning w w process.

Answer: There are five fundamental steps to the personal financial planning
w w w w w w w w w w w w w w w w w w w w



w wprocess:
(1) evaluate
w w your financial health to your education and career choice;
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(2) define your financial goals; (3) develop a plan of
w w w w w w action to achieve ww w w w w w w w w w w w w w w w w w w



w your
w goals; (4) implement spending and saving plans to monitor
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w and control progress toward your goals; and (5) review your financial
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progress and make changes as appropriate.
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2. Distinguish w w among w w financial w w success, w w financial w w security, w w and w w financial w w happiness.

Answer: Financial success w is the achievement of financial aspirations that
w w w w w w w w w w w w w w w w w



are desired, planned,
w w w w or attempted. Success is defined
ww by the individual w w w w w w w w w w w w w w w w



w orw family that
w w seeks it. w w w w w w



Financial success may be definedw w as being able to live according to
w w w w w w w w w w w w w w w w w w w w



w one’s
w standard ofy living. Financial
w w security is that comfortable feeling w w ww w w w w w w w w w w w w



that your financial resources will be adequate
w w w w w w to fulfill any needs w w w w w w ww w w w w w w w w



w you
w have as w well w as your wants. Financialw happiness
w is the w w w w w w w w w w w w w w ww



w experience
w you have when you are satisfied
w w with money matters. w w w w w w w w w w w w w w w w



w People
w who are happy about
w their
w finances will see w a wspillover ww w w w w w w w w w w w w w w



w into
w positive feelings
w wabout life in general. w w w w w w w w ww




3. Summarize w w what w w you w w will w w accomplish w w studying w w personal w w finance.

Answer: Several things can be accomplished by studying personal finance.
w w w w w w w w w w w w w w w w w w



w Recognize how to
w manage unexpected and expected
w w financial events. ww w w w w w w w w w w w w



w Payw as little as
w possible
w in income taxes.
w Understand
w how to w w w w w w w w ww w w w w w w



w effectively comparison
w shop for vehicles and w homes. w Protect what we w w w w w w w w w w w w ww w w



own. Invest wisely. Accumulate and
w w w w protect the wealth that we may choose
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to spend during our non-working years (e.g., retirement) or donate.
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4. What w w are w w the w w building w w blocks w w to w w achieving w w financial w w success?

Answer: The building blocks for
w w achieving financial success include a
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foundation ofy regular
w w income that provides
w w the means to support
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w your
w lifestyle andw savew for desired goals in the future. The w w w w w w w w ww w w w w w w w w



w foundation supports a base of various banking
w w waccounts, insurance w w w w w w w w w w w w ww



protection,
w w and employee benefits. Then we can
w w establish goals, a w w w w w w w w w w w w w w w w



recordkeeping
ww system, a budget, and an emergency savings fund. We
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will also manage various expenses such as housing,
w w w w w w transportation, ww w w w w w w w w w w



insurance,
w w and the payment of taxes. We will also need to handle
w w w w w w w w w w ww w w w w w w w w w w



w credit, savings, and
w educational costs. Finally,
w w we invest in various w w w w w w w w w w w w w w ww



investment alternatives such as mutual funds, stocks, and bonds, often for
w w w w w w w w w w w w w w w w w w w w w w



w retirement.
w As a result of all these building
w wblocks, we are w w w w w w w w w w w w w w w w w w



w more
w apt to have a financially successful life.
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LO1.2 w w Understand w w how w w the w w economy w w affects w w your w w personal w w financial w w success.
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