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 fwhat fyou fwill faccomplish fstudying fpersonal ffinance.
Answer: fSeveral fthings fcan fbe faccomplished fby fstudying fpersonal ffinance. fRecognize fhow fto
fmanage funexpected fand fexpected ffinancial fevents. fPay fas flittle fas fpossible fin fincome ftaxes.
fUnderstand fhow fto feffectively fcomparison fshop ffor fvehicles fand fhomes. fProtect fwhat fwe fown.
fInvest fwisely. fAccumulate fand fprotect fthe fwealth fthat fwe fmay fchoose fto fspend fduring four
fnon-working fyears f(e.g., fretirement) for fdonate.
4. What fare fthe fbuilding fblocks fto fachieving ffinancial fsuccess?
Answer: fThe fbuilding fblocks ffor fachieving ffinancial fsuccess finclude fa ffoundation fof fregular
fincome fthat fprovides fthe fmeans fto fsupport fyour flifestyle fand fsave ffor fdesired fgoals fin fthe
ffuture. fThe ffoundation fsupports fa fbase fof fvarious fbanking faccounts, finsurance fprotection,
fand femployee fbenefits. fThen fwe fcan festablish fgoals, fa frecordkeeping fsystem, fa fbudget,
fand fan femergency fsavings ffund. fWe fwill falso fmanage fvarious fexpenses fsuch fas fhousing,
ftransportation, finsurance, fand fthe fpayment fof ftaxes. fWe fwill falso fneed fto fhandle fcredit,
fsavings, fand feducational fcosts. fFinally, fwe finvest fin fvarious finvestment falternatives fsuch fas
fmutual ffunds, fstocks, fand fbonds, foften ffor fretirement. fAs fa fresult fof fall fthese fbuilding
fblocks, fwe fare fmore fapt fto fhave fa ffinancially fsuccessful flife.
LO1.2 fUnderstand fhow fthe feconomy faffects fyour fpersonal ffinancial fsuccess.
1. Summarize fthe fphases fof fthe fbusiness fcycle.
Answer: fThe fbusiness fcycle fentails fa fwavelike fpattern fof frising fand ffalling feconomic factivity
fas fmeasured fby feconomic findicators flike funemployment frates for fthe fgross fdomestic
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 fwhat fyou fwill faccomplish fstudying fpersonal ffinance.
Answer: fSeveral fthings fcan fbe faccomplished fby fstudying fpersonal ffinance. fRecognize fhow fto
fmanage funexpected fand fexpected ffinancial fevents. fPay fas flittle fas fpossible fin fincome ftaxes.
fUnderstand fhow fto feffectively fcomparison fshop ffor fvehicles fand fhomes. fProtect fwhat fwe fown.
fInvest fwisely. fAccumulate fand fprotect fthe fwealth fthat fwe fmay fchoose fto fspend fduring four
fnon-working fyears f(e.g., fretirement) for fdonate.
4. What fare fthe fbuilding fblocks fto fachieving ffinancial fsuccess?
Answer: fThe fbuilding fblocks ffor fachieving ffinancial fsuccess finclude fa ffoundation fof fregular
fincome fthat fprovides fthe fmeans fto fsupport fyour flifestyle fand fsave ffor fdesired fgoals fin fthe
ffuture. fThe ffoundation fsupports fa fbase fof fvarious fbanking faccounts, finsurance fprotection,
fand femployee fbenefits. fThen fwe fcan festablish fgoals, fa frecordkeeping fsystem, fa fbudget,
fand fan femergency fsavings ffund. fWe fwill falso fmanage fvarious fexpenses fsuch fas fhousing,
ftransportation, finsurance, fand fthe fpayment fof ftaxes. fWe fwill falso fneed fto fhandle fcredit,
fsavings, fand feducational fcosts. fFinally, fwe finvest fin fvarious finvestment falternatives fsuch fas
fmutual ffunds, fstocks, fand fbonds, foften ffor fretirement. fAs fa fresult fof fall fthese fbuilding
fblocks, fwe fare fmore fapt fto fhave fa ffinancially fsuccessful flife.
LO1.2 fUnderstand fhow fthe feconomy faffects fyour fpersonal ffinancial fsuccess.
1. Summarize fthe fphases fof fthe fbusiness fcycle.
Answer: fThe fbusiness fcycle fentails fa fwavelike fpattern fof frising fand ffalling feconomic factivity
fas fmeasured fby feconomic findicators flike funemployment frates for fthe fgross fdomestic
