SOLUTION MANUAL FOR #z #z
Personal Financial Planning 15th Edition by Randy
#z #z #z #z #z #z
Billingsley, Lawrence J. Gitman, Michael D. Joehnk
#z #z #z #z #z #z #z
Understanding the #z
Financial Planning Process
#z #z #z
Chapter 1
#z #z
How #zWill #zThis #zAffect #zMe?
The #zheart #zof #zfinancial #zplanning #zis #zmaking #zsure #zyour #zvalues #zline #zup #zwith #zhow #zyou #zspend
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#zwhere #z you #zwant #zto #zbe #zin #zthe #zfuture #zno #zmatter #zwhat #zlife #zthrows #zat #z you. #zFor #zexample,
#zhow #zshould #z your #zplan #zhandle #zthe #zprojection #zthat #zSocial #zSecurity #zcosts #zmay #zexceed
#zrevenues #zby #z2035? #zAnd #zwhat #zif #zthe #zgovernment #zdecides #zto #zraise #ztax #zrates #zto #zhelp #zcover
#zthe #zfederal #zdeficit? #zAn #zinformed #zfinancial #zplan #zshould #zreflect #zsuch #zuncertainties #zand
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#zreading #zthis #zchapter #z you #zwill #zhave #za #zgood #zperspective #zon #zhow #zto #zorganize #z your #zoverall
#zpersonal #zfinancial #zplan.
LEARNING GOALS #z
LG1 #zIdentify #zthe #zbenefits #zof #zusing #zpersonal #zfinancial #zplanning #ztechniques #zto #zmanage
#zyour #zfinances.
Key #zconcept #zin #zthis #zsection #zis #zthe #zplanning #zmodel #zas #zdisplayed #zin #zExhibit #z1.1. # z Your
#zstandard #zof #zliving #zis #zgreatly #zimpacted #zby #zyour #zspending #zhabits #zand #zyour #zcommitment #zto
#zsaving. # z Your #zspending #zis #zmeasured #zby #zyour #zpropensity #zto #zconsume. # z Wealth #zis #zthe
#ztotal #zvalue #zof #zall #zproperty #z you #zown #zless #zthe #zamount #zthat #z you #zowe #zto #zothers.
ACTIVITY: # z Ask #zthe #zstudents #zto #zassume #zthat #zthey #zhave #zjust #zinherited #z$100,000. # z What
#zwill #zyou #zdo #zwith #zthe #zmoney? # z Write #zdown #zthree #zways #z you #zwill #zspend #zor #zuse #zthe
© #z2021 #zCengage #zLearning®. #zMay #znot #zbe #zscanned, #zcopied #zor #zduplicated, #zor #zposted #zto #za #zpublicly #zaccessible
#zwebsite, #zin #zwhole #zor #zin #zpart, #zexcept #zfor #zuse #zas #zpermitted #zin #za #zlicense #zdistributed #zwith #za #zcertain
#zproduct #zor #zservice #zor #zotherwise #zon #za
password-protected #zwebsite #zor #zschool-approved #zlearning #zmanagement #zsystem #zfor #zclassroom #zuse.
, money.
#z
Ask the students to share one item with the class and record what they say so that the entire class
can reflect on the answers. Hopefully, at least a few will mention investing even if only $10,000
of the amount. Use their answers to discuss taking care of current needs versus future needs.
Focus on their propensity to consume and its impact on accumulating wealth. Point out the
Financial Planning Tip, ―Be SMART in Planning Your Financial Goals.‖
Use Exhibit 1.2 to show how the average person earns and spends their money and Exhibit 1.6 to
help the student identify where they are now.
LG2 Describe the personal financial planning process and define your goals.
Dwight Eisenhower, army general and president, is quoted as saying ―Plans are useless; Planning
is priceless‖. The process of planning allows you to focus on the issues that are most important
and to be ready when things change.
Exhibit 1.3 lists the Six Step Financial Planning Process. The first and most important is
defining your financial goals. Exhibit 1.6 lists goals by age to demonstrate how goals change
over time. Use the examples in Exhibit 1.5 to ask students if the assumptions are realistic. Yes,
the answer is in the exhibit, but many will not have read chapter at this point. For your use, the
assumptions are:
Assumption 1: Saving a few thousand dollars a year should provide enough to fund my child‘s
college Education.
Assumption 2: An emergency fund lasting 3 months should be adequate.
Assumption 3: I will be able to retire at 65 and should have plenty to live on in retirement.
Assumption 4: I‘m relying on the rule of thumb that I will need only 70 percent of my pre-
retirement income to manage nicely in retirement.
There are several worksheets in the book. Worksheet 1.1 gives the student a format to write
down their Personal Financial Goals. There is power in writing down goals [and most any other
plan]. Recording the goal and then reviewing three months later will help you to keep focus on
the goal.
LG3 Explain the life cycle of financial plans, their role in achieving your financial goals,
how to deal with special planning concerns, and the use of professional financial planners.
Exhibit 1.7 can help focus the attention on how goals differ between the various stages of life.
Section 1-3b lists various decisions that you will have to make over your life. The section 1-3c
addresses Special Planning Concerns. Worksheet 1.2 focuses on the financial benefit to the
family of the second income. If the second income is from a minimum wage job, it may not be a
good financial decision. Of course having a job, even a minimum wage job, may give the person
psychic income that will override the financial impact.
While perhaps off topic, I recall a high school science teacher who was a smoker. He walked
through the amount of money he spent on purchasing tobacco products. That computation had a
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LG5 #zEvaluate #zthe #zimpact #zof #zage, #zeducation, #zand #zgeographic #zlocation #zon #zpersonal #zincome.
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Your #zincome #zlevel #zdepends #zon #zyour #zage, #zeducation, #zand #zcareer #zchoice.
Fact: #zAll #zthree #zof #zthese #zvariables #zare #zimportant #zdeterminants #zof #zyour #zincome #zlevel,
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Personal Financial Planning 15th Edition by Randy
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Billingsley, Lawrence J. Gitman, Michael D. Joehnk
#z #z #z #z #z #z #z
Understanding the #z
Financial Planning Process
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Chapter 1
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How #zWill #zThis #zAffect #zMe?
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#z
Ask the students to share one item with the class and record what they say so that the entire class
can reflect on the answers. Hopefully, at least a few will mention investing even if only $10,000
of the amount. Use their answers to discuss taking care of current needs versus future needs.
Focus on their propensity to consume and its impact on accumulating wealth. Point out the
Financial Planning Tip, ―Be SMART in Planning Your Financial Goals.‖
Use Exhibit 1.2 to show how the average person earns and spends their money and Exhibit 1.6 to
help the student identify where they are now.
LG2 Describe the personal financial planning process and define your goals.
Dwight Eisenhower, army general and president, is quoted as saying ―Plans are useless; Planning
is priceless‖. The process of planning allows you to focus on the issues that are most important
and to be ready when things change.
Exhibit 1.3 lists the Six Step Financial Planning Process. The first and most important is
defining your financial goals. Exhibit 1.6 lists goals by age to demonstrate how goals change
over time. Use the examples in Exhibit 1.5 to ask students if the assumptions are realistic. Yes,
the answer is in the exhibit, but many will not have read chapter at this point. For your use, the
assumptions are:
Assumption 1: Saving a few thousand dollars a year should provide enough to fund my child‘s
college Education.
Assumption 2: An emergency fund lasting 3 months should be adequate.
Assumption 3: I will be able to retire at 65 and should have plenty to live on in retirement.
Assumption 4: I‘m relying on the rule of thumb that I will need only 70 percent of my pre-
retirement income to manage nicely in retirement.
There are several worksheets in the book. Worksheet 1.1 gives the student a format to write
down their Personal Financial Goals. There is power in writing down goals [and most any other
plan]. Recording the goal and then reviewing three months later will help you to keep focus on
the goal.
LG3 Explain the life cycle of financial plans, their role in achieving your financial goals,
how to deal with special planning concerns, and the use of professional financial planners.
Exhibit 1.7 can help focus the attention on how goals differ between the various stages of life.
Section 1-3b lists various decisions that you will have to make over your life. The section 1-3c
addresses Special Planning Concerns. Worksheet 1.2 focuses on the financial benefit to the
family of the second income. If the second income is from a minimum wage job, it may not be a
good financial decision. Of course having a job, even a minimum wage job, may give the person
psychic income that will override the financial impact.
While perhaps off topic, I recall a high school science teacher who was a smoker. He walked
through the amount of money he spent on purchasing tobacco products. That computation had a
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LG4 #zExamine #zthe #zeconomic #zenvironment’s #zinfluence #zon #zpersonal #zfinancial #zplanning.
For #zolder #zfolks, #zthe #zfinancial #zcrisis #zof #z2008-2009 #zis #zfresh #zin #zour #zmemory. # z To #zthe #zstudent
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