Solution Manual for Personal Financial Planning 15th Edition by Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk all chapters complete newest edition updated 2025

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1. Understanding the Financial Planning Process.
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2. Developing Your Financial Statements and Plans.
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3. Preparing Your Taxes.
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Part II: MANAGING BASIC ASSETS. SP SP SP SP




4. Managing Your Cash and Savings.
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5. Making Automobile and Housing Decisions.
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Part III: MANAGING CREDIT. SP SP SP




6. Using Credit.
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7. Using Consumer Loans.
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Part IV: MANAGING INSURANCE NEEDS. SP SP SP SP




8. Insuring Your Life.
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9. Insuring Your Health.
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10. Protecting Your Property.
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Part V: MANAGING INVESTMENTS. SP SP SP




11. Investment Planning.
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12. Investing in Stocks and Bonds.
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13. Investing in Mutual Funds and Real Estate.
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Part VI: RETIREMENT AND ESTATE PLANNING.
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14. Planning for Retirement.
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15. Preserving Your Estate.
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Understanding the FinancialPlanningProc SP SPSP P
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ess Chapter 1 SP SP




How Will This Affect Me? SP SP SP SP




The heart offinancialplanning is making sure your values line up with how you spend and save. That me
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ans knowing where you are financiallyand planning onhow to get where you want to be in the future no
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matter what life throws at you. For example, how should your plan handle the projection that Social Sec
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uritycosts mayexceed revenues by 2035? And what ifthe government decides to raise tax rates to help c
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over the federal deficit? An informed financial plan should reflect such uncertainties and more.
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This chapter overviews the financial planning process and explains its context. Topics include how fi
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nancialplans change to accommodate your current stage in life and the role that financial planners can
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play in helping you achieve your objectives. After reading this chapter you will have a good perspecti
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ve on how to organize your overall personal financial plan.
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LEARNINGGOALS P
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LG1 Identify the benefits of using personal financial planning techniques to manage your finance
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s.

,Key concept in this section is the planning model as displayed in Exhibit 1.1. Your standard of living i
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s greatly impacted by your spending habits and your commitment to saving. Your spending is measur
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ed byyour propensity to consume. Wealth is the total value ofall property you own less the amount t
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hat you owe to others.
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ACTIVITY: Ask the studentsto assumethat theyhave just inherited $100,000. What willyou do with
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the money? Write down three ways you will spend or use the money.
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, Askthe students to share one itemwiththe class and record what theysayso that the entire class can refle
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ct on the answers. Hopefully, at least a few will mention investing even if only $10,000 ofthe amount.
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Use their answers to discuss taking care of current needs versus future needs.
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Focus ontheir propensityto consume and its impact onaccumulating wealth. Point out the FinancialPla
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nning Tip, ―Be SMART inPlanning Your FinancialGoals.‖ SP SP SP SP P
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Use Exhibit 1.2 to show how the average person earns and spends their money and Exhibit 1.6to help the
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student identify where they are now. SP SP SP SP SP




LG2 Describe the personalfinancialplanning processand define yourgoals.
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DwightEisenhower,army generaland president, isquotedassaying ―Plansareuseless;Planning is pric
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eless‖. The process of planning allows you to focus on the issues that are most important and to be read
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y when things change.
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Exhibit 1.3 lists the Six Step Financial Planning Process. The first and most important is defining you
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r financial goals. Exhibit 1.6 lists goals by age to demonstrate how goals change overtime. Use the exa
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mples inExhibit 1.5 to ask studentsifthe assumptions are realistic. Yes, the answer is inthe exhibit, but
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manywillnot have read chapter at this point. For your use, the assumptions are:
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Assumption 1: Saving a few thousand dollarsa year should provideenoughto fund mychild‘s colleg SP SP SP SP SP SP SP SP SP SP SP P
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e Education.
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Assumption 2: Anemergency fund lasting 3 monthsshould beadequate. SP SP P
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Assumption 3: I will be able to retire at 65 and should have plentyto live on in retirement. Assum SP SP SP SP SP SP SP SP SP SP SP SP SP P
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ption 4: I‘mrelying on the rule ofthumb that I will need only70 percent of mypre-
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retirement income to manage nicely in retirement.
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There are several worksheets in the book. Worksheet 1.1 gives the student a format to write downtheir
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PersonalFinancialGoals. There is power inwriting downgoals[and most anyother plan]. Recording t
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he goal and then reviewing three months later will help you to keep focus on the goal.
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LG3 Explain the life cycle of financial plans, their role in achieving your financial goals, how to
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dealwith special planning concerns, and theuse of professional financial planners.
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Exhibit 1.7 can help focus the attention on how goals differ between the various stages of life. Section
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1-3b lists various decisions that you will have to make over your life. The section 1-
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3c addresses Special Planning Concerns. Worksheet 1.2 focuses on the financial benefit to the family
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ofthe second income. Ifthe second income is froma minimumwage job, it may not be a goodfinancial
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decision. Ofcourse having a job, evena minimumwage job, maygive theperson psychic income that SP P
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will override the financial impact.
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While perhaps off topic, I recall a high school science teacher who was a smoker. He walked throught
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heamount ofmoney he spent onpurchasing tobacco products. That computation had a
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