SOLUTION MANUAL
Personal Finance, 14th Edition
By E. Thomas Garman, Chapter 1 - 17
,TABLE OF CONTENTS
Part I: FINANCIAL PLANNING.
1. Understanding Personal Finance.
2. Career Planning.
3. Financial Statements, Goals, and Budgets.
Part II: MONEY MANAGEMENT.
4. Managing Income Taxes.
5. Managing Checking and Savings Accounts.
6. Building and Maintaining Good Credit.
7. Credit Cards and Consumer Loans.
8. Vehicles and Other Major Purchases.
9. Obtaining Affordable Housing.
Part III: INCOME AND ASSET PROTECTION.
10. Managing Property and Liability Risk.
11. Planning for Health Care Expenses.
12. Life Insurance Planning.
Part IV: INVESTMENTS.
13. Investment Fundamentals.
,14. Investing in Stocks and Bonds.
15. Mutual and Exchange-Traded Funds.
16. Real Estate and High-Risk Investments.
17. Retirement and Estate Planning.
Solution and Answer Guide
GARMAN/FOX, PERSONAL FINANCE 14E, CHAPTER 1: THINKING LIKE A FINANCIAL PLANNER
TABLE OF CONTENTS
Answers to Chapter Concept Checks ........................................................................................... 2
What Do You Recommend Now? ................................................................................................. 4
Let’s Talk About It......................................................................................................................................................... 5
Do the Math ................................................................................................................................... 6
Financial Planning Cases ............................................................................................................... 8
Extended Learning....................................................................................................................... 10
, ANSWERS TO CHAPTER CONCEPT CHECKS
LO1.1 Recognize the keys to achieving financial success.
1. Explain the five steps in the financial planning process.
Answer: There are five fundamental steps to the personal financial planning process: (1) evaluate
your financial health to your education and career choice; (2) define your financial goals; (3)
develop a plan of action to achieve your goals; (4) implement spending and saving plans to
monitor and control progress toward your goals; and (5) review your financial progress and make
changes as appropriate.
2. Distinguish among financial success, financial security, and financial happiness.
Answer: Financial success is the achievement of financial aspirations that are desired, planned,
or attempted. Success is defined by the individual or family that seeks it. Financial success may be
defined as being able to live according to one’s standard of living. Financial security is that
comfortable feeling that your financial resources will be adequate to fulfill any needs you have as
well as your wants. Financial happiness is the experience you have when you are satisfied with
money matters. People who are happy about their finances will see a spillover into positive
feelings about life in general.
3. Summarize swhat syou swill saccomplish sstudying spersonal sfinance.
Answer: sSeveral sthings scan sbe saccomplished sby sstudying spersonal sfinance. sRecognize show
sto smanage sunexpected sand sexpected sfinancial sevents. sPay sas slittle sas spossible sin sincome
staxes. sUnderstand show sto seffectively scomparison sshop sfor svehicles sand shomes. sProtect swhat
swe sown. sInvest swisely. sAccumulate sand sprotect sthe swealth sthat swe smay schoose sto sspend
sduring sour snon-working syears s(e.g., sretirement) sor sdonate.
4. What sare sthe sbuilding sblocks sto sachieving sfinancial ssuccess?
Answer: sThe sbuilding sblocks sfor sachieving sfinancial ssuccess sinclude sa sfoundation sof
sregular sincome sthat sprovides sthe smeans sto ssupport syour slifestyle sand ssave sfor sdesired
sgoals sin sthe sfuture. sThe sfoundation ssupports sa sbase sof svarious sbanking saccounts,
sinsurance sprotection, sand semployee sbenefits. sThen swe scan sestablish sgoals, sa
srecordkeeping ssystem, sa sbudget, sand san semergency ssavings sfund. sWe swill salso smanage
svarious sexpenses ssuch sas shousing, stransportation, sinsurance, sand sthe spayment sof staxes.
sWe swill salso sneed sto shandle scredit, ssavings, sand seducational scosts. sFinally, swe sinvest sin
svarious sinvestment salternatives ssuch sas smutual sfunds, sstocks, sand sbonds, soften sfor
sretirement. sAs sa sresult sof sall sthese sbuilding sblocks, swe sare smore sapt sto shave sa
sfinancially ssuccessful slife.
LO1.2 sUnderstand show sthe seconomy saffects syour spersonal sfinancial ssuccess.
1. Summarize sthe sphases sof sthe sbusiness scycle.
Answer: sThe sbusiness scycle sentails sa swavelike spattern sof srising sand sfalling seconomic
Personal Finance, 14th Edition
By E. Thomas Garman, Chapter 1 - 17
,TABLE OF CONTENTS
Part I: FINANCIAL PLANNING.
1. Understanding Personal Finance.
2. Career Planning.
3. Financial Statements, Goals, and Budgets.
Part II: MONEY MANAGEMENT.
4. Managing Income Taxes.
5. Managing Checking and Savings Accounts.
6. Building and Maintaining Good Credit.
7. Credit Cards and Consumer Loans.
8. Vehicles and Other Major Purchases.
9. Obtaining Affordable Housing.
Part III: INCOME AND ASSET PROTECTION.
10. Managing Property and Liability Risk.
11. Planning for Health Care Expenses.
12. Life Insurance Planning.
Part IV: INVESTMENTS.
13. Investment Fundamentals.
,14. Investing in Stocks and Bonds.
15. Mutual and Exchange-Traded Funds.
16. Real Estate and High-Risk Investments.
17. Retirement and Estate Planning.
Solution and Answer Guide
GARMAN/FOX, PERSONAL FINANCE 14E, CHAPTER 1: THINKING LIKE A FINANCIAL PLANNER
TABLE OF CONTENTS
Answers to Chapter Concept Checks ........................................................................................... 2
What Do You Recommend Now? ................................................................................................. 4
Let’s Talk About It......................................................................................................................................................... 5
Do the Math ................................................................................................................................... 6
Financial Planning Cases ............................................................................................................... 8
Extended Learning....................................................................................................................... 10
, ANSWERS TO CHAPTER CONCEPT CHECKS
LO1.1 Recognize the keys to achieving financial success.
1. Explain the five steps in the financial planning process.
Answer: There are five fundamental steps to the personal financial planning process: (1) evaluate
your financial health to your education and career choice; (2) define your financial goals; (3)
develop a plan of action to achieve your goals; (4) implement spending and saving plans to
monitor and control progress toward your goals; and (5) review your financial progress and make
changes as appropriate.
2. Distinguish among financial success, financial security, and financial happiness.
Answer: Financial success is the achievement of financial aspirations that are desired, planned,
or attempted. Success is defined by the individual or family that seeks it. Financial success may be
defined as being able to live according to one’s standard of living. Financial security is that
comfortable feeling that your financial resources will be adequate to fulfill any needs you have as
well as your wants. Financial happiness is the experience you have when you are satisfied with
money matters. People who are happy about their finances will see a spillover into positive
feelings about life in general.
3. Summarize swhat syou swill saccomplish sstudying spersonal sfinance.
Answer: sSeveral sthings scan sbe saccomplished sby sstudying spersonal sfinance. sRecognize show
sto smanage sunexpected sand sexpected sfinancial sevents. sPay sas slittle sas spossible sin sincome
staxes. sUnderstand show sto seffectively scomparison sshop sfor svehicles sand shomes. sProtect swhat
swe sown. sInvest swisely. sAccumulate sand sprotect sthe swealth sthat swe smay schoose sto sspend
sduring sour snon-working syears s(e.g., sretirement) sor sdonate.
4. What sare sthe sbuilding sblocks sto sachieving sfinancial ssuccess?
Answer: sThe sbuilding sblocks sfor sachieving sfinancial ssuccess sinclude sa sfoundation sof
sregular sincome sthat sprovides sthe smeans sto ssupport syour slifestyle sand ssave sfor sdesired
sgoals sin sthe sfuture. sThe sfoundation ssupports sa sbase sof svarious sbanking saccounts,
sinsurance sprotection, sand semployee sbenefits. sThen swe scan sestablish sgoals, sa
srecordkeeping ssystem, sa sbudget, sand san semergency ssavings sfund. sWe swill salso smanage
svarious sexpenses ssuch sas shousing, stransportation, sinsurance, sand sthe spayment sof staxes.
sWe swill salso sneed sto shandle scredit, ssavings, sand seducational scosts. sFinally, swe sinvest sin
svarious sinvestment salternatives ssuch sas smutual sfunds, sstocks, sand sbonds, soften sfor
sretirement. sAs sa sresult sof sall sthese sbuilding sblocks, swe sare smore sapt sto shave sa
sfinancially ssuccessful slife.
LO1.2 sUnderstand show sthe seconomy saffects syour spersonal sfinancial ssuccess.
1. Summarize sthe sphases sof sthe sbusiness scycle.
Answer: sThe sbusiness scycle sentails sa swavelike spattern sof srising sand sfalling seconomic
