Instructor Manual: Garman, Personal Finance 15e, ©2027, 9798214057224;
Chapter 1: Thinking Like a Financial Planner
Instructor Manual
Garman, Personal Finance 15e, ©2027, 9798214057224;
Chapter 1: Thinking Like a Financial Planner
TABLE OF CONTENTS
Purpose and Perspective of the Chapter .................................................................................... 2
Chapter Objectives .......................................................................................................................... 2
What's New in This Chapter .......................................................................................................... 2
Chapter Outline ............................................................................................................................... 2
Additional Activities and Assignments ....................................................................................... 11
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted 1
to a publicly accessible website, in whole or in part.
, Instructor Manual: Garman, Personal Finance 15e, ©2027, 9798214057224;
Chapter 1: Thinking Like a Financial Planner
PURPOSE AND PERSPECTIVE OF THE CHAPTER
The purpose of this chapter is to help one recognize the keys to achieving financial
success. While one key element is to spend less and save more, there is more to
consider. Understanding the economy, inflation, and interest rates can help in making
better financial decisions. A basic understanding of the economy as well as the time
value of money helps as well.
CHAPTER OBJECTIVES
The following objectives are addressed in this chapter:
1. Recognize the keys to achieving financial success.
2. Understand how the economy affects our personal financial success.
3. Apply economic concepts in financial decisions.
4. Perform time value of money calculations in personal financial decision making.
WHAT'S NEW IN THIS CHAPTER
The following elements are improvements in this chapter from the previous edition:
• Added section entitled “Spend Less, Save, and Invest More.”
• Added section entitled “What Will Be Accomplished by Studying Personal
Finance.”
• Updated section on the economy
• Updated section on recessions, including discussions of the recession in the
last 20 years
• Updated discussion on the economy
• Added section entitled “Apply Economic Concepts in Financial Decisions”
• Added section entitled “Perform Time Value of Money Calculations”
[return to top]
CHAPTER OUTLINE
The following outline organizes activities (including any existing discussion questions
in PowerPoint slides or other supplements) and assessments by chapter (and
therefore by topic), so that you can see how all the content relates to the topics
covered in the text.
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted 2
to a publicly accessible website, in whole or in part.
, Instructor Manual: Garman, Personal Finance 15e, ©2027, 9798214057224;
Chapter 1: Thinking Like a Financial Planner
Introduction
Personal finance is the study of personal and family resources important to achieving
financial success and involves spending, saving, protecting, and investing resources.
Financial responsibility means you are accountable for your future financial well-
being and strive to make wise personal financial decisions.
Financial literacy means knowledge of facts, concepts, principles, and technological
tools used with money.
Financial capability means a combination of knowledge and ability to take action to
improve one’s financial conditions.
Financial well-being means where a person can fully meet current and ongoing
financial obligations, feel secure in their financial future, and make choices that allow
them to enjoy life.
To-Do Soon!
1. Get up to date on future economic conditions by going to conference-
board.org scroll down to “Economic Indicators” and read expectations
for economic growth.
2. Do some time value of money calculations until you are comfortable
using tables in Appendix A or a financial calculator.
3. Harness the power of compounding by starting to save a consistent
amount each month for a long-term goal.
4. When employed, take advantage of tax sheltering some income through
your employer’s retirement benefits program.
5. Use the concepts of marginal and opportunity costs when making
important financial decisions.
I. Recognize the keys to achieving financial success.
a. Key terms
• Personal finance is the study of personal and family resources
important for achieving financial success and involves
o Spending
o Saving
o Protecting
o Investing resources
• Financial responsibility
o You are accountable for your future financial well-being.
o You should strive to make wise personal financial
decisions.
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted 3
to a publicly accessible website, in whole or in part.
, Instructor Manual: Garman, Personal Finance 15e, ©2027, 9798214057224;
Chapter 1: Thinking Like a Financial Planner
• Financial literacy
o Knowledge of facts, concepts, principles, and technological
tools used with money.
• Financial capability means
o Combination of knowledge and ability to take action to
improve your financial condition.
• Financial well-being
o Where a person can fully meet current and ongoing
financial obligations, feel secure in their financial future,
and make choices that allow them to enjoy life.
b. Financial Planning Process
• Evaluate our financial health relative to your education and
career choice.
• Define our financial goals.
• Develop a plan of action to achieve our goals.
• Implement spending and saving plans to monitor and control
progress toward goals.
• Review your financial progress and make changes as
appropriate.
c. Achieving Financial Success
• Financial Success: Achievement of financial aspirations.
• Financial Happiness: Satisfaction about money matters.
• Financial security: The comfortable feeling that your resources
will be sufficient to meet your needs and most wants.
d. Spend less, save, and invest more
• Savings: Income not spent on current consumption.
• Investments: Assets purchased with the goal of providing
additional future income from the asset itself.
• Standard of living: The comfortable feeling that your resources
will be sufficient to meet your needs and most wants.
• Level of living: Refers to the level of wealth, comfort, material
goods, and necessities you are currently living.
e. What will be accomplished by studying personal finance?
• Recognize how to manage unexpected financial events.
• Pay as little as legally possible in income taxes while meeting
your income needs.
• Understand how to effectively comparison shop for vehicles and
homes.
• Protect your capacity to earn and what you own.
• Invest wisely.
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted 4
to a publicly accessible website, in whole or in part.
Chapter 1: Thinking Like a Financial Planner
Instructor Manual
Garman, Personal Finance 15e, ©2027, 9798214057224;
Chapter 1: Thinking Like a Financial Planner
TABLE OF CONTENTS
Purpose and Perspective of the Chapter .................................................................................... 2
Chapter Objectives .......................................................................................................................... 2
What's New in This Chapter .......................................................................................................... 2
Chapter Outline ............................................................................................................................... 2
Additional Activities and Assignments ....................................................................................... 11
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted 1
to a publicly accessible website, in whole or in part.
, Instructor Manual: Garman, Personal Finance 15e, ©2027, 9798214057224;
Chapter 1: Thinking Like a Financial Planner
PURPOSE AND PERSPECTIVE OF THE CHAPTER
The purpose of this chapter is to help one recognize the keys to achieving financial
success. While one key element is to spend less and save more, there is more to
consider. Understanding the economy, inflation, and interest rates can help in making
better financial decisions. A basic understanding of the economy as well as the time
value of money helps as well.
CHAPTER OBJECTIVES
The following objectives are addressed in this chapter:
1. Recognize the keys to achieving financial success.
2. Understand how the economy affects our personal financial success.
3. Apply economic concepts in financial decisions.
4. Perform time value of money calculations in personal financial decision making.
WHAT'S NEW IN THIS CHAPTER
The following elements are improvements in this chapter from the previous edition:
• Added section entitled “Spend Less, Save, and Invest More.”
• Added section entitled “What Will Be Accomplished by Studying Personal
Finance.”
• Updated section on the economy
• Updated section on recessions, including discussions of the recession in the
last 20 years
• Updated discussion on the economy
• Added section entitled “Apply Economic Concepts in Financial Decisions”
• Added section entitled “Perform Time Value of Money Calculations”
[return to top]
CHAPTER OUTLINE
The following outline organizes activities (including any existing discussion questions
in PowerPoint slides or other supplements) and assessments by chapter (and
therefore by topic), so that you can see how all the content relates to the topics
covered in the text.
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted 2
to a publicly accessible website, in whole or in part.
, Instructor Manual: Garman, Personal Finance 15e, ©2027, 9798214057224;
Chapter 1: Thinking Like a Financial Planner
Introduction
Personal finance is the study of personal and family resources important to achieving
financial success and involves spending, saving, protecting, and investing resources.
Financial responsibility means you are accountable for your future financial well-
being and strive to make wise personal financial decisions.
Financial literacy means knowledge of facts, concepts, principles, and technological
tools used with money.
Financial capability means a combination of knowledge and ability to take action to
improve one’s financial conditions.
Financial well-being means where a person can fully meet current and ongoing
financial obligations, feel secure in their financial future, and make choices that allow
them to enjoy life.
To-Do Soon!
1. Get up to date on future economic conditions by going to conference-
board.org scroll down to “Economic Indicators” and read expectations
for economic growth.
2. Do some time value of money calculations until you are comfortable
using tables in Appendix A or a financial calculator.
3. Harness the power of compounding by starting to save a consistent
amount each month for a long-term goal.
4. When employed, take advantage of tax sheltering some income through
your employer’s retirement benefits program.
5. Use the concepts of marginal and opportunity costs when making
important financial decisions.
I. Recognize the keys to achieving financial success.
a. Key terms
• Personal finance is the study of personal and family resources
important for achieving financial success and involves
o Spending
o Saving
o Protecting
o Investing resources
• Financial responsibility
o You are accountable for your future financial well-being.
o You should strive to make wise personal financial
decisions.
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted 3
to a publicly accessible website, in whole or in part.
, Instructor Manual: Garman, Personal Finance 15e, ©2027, 9798214057224;
Chapter 1: Thinking Like a Financial Planner
• Financial literacy
o Knowledge of facts, concepts, principles, and technological
tools used with money.
• Financial capability means
o Combination of knowledge and ability to take action to
improve your financial condition.
• Financial well-being
o Where a person can fully meet current and ongoing
financial obligations, feel secure in their financial future,
and make choices that allow them to enjoy life.
b. Financial Planning Process
• Evaluate our financial health relative to your education and
career choice.
• Define our financial goals.
• Develop a plan of action to achieve our goals.
• Implement spending and saving plans to monitor and control
progress toward goals.
• Review your financial progress and make changes as
appropriate.
c. Achieving Financial Success
• Financial Success: Achievement of financial aspirations.
• Financial Happiness: Satisfaction about money matters.
• Financial security: The comfortable feeling that your resources
will be sufficient to meet your needs and most wants.
d. Spend less, save, and invest more
• Savings: Income not spent on current consumption.
• Investments: Assets purchased with the goal of providing
additional future income from the asset itself.
• Standard of living: The comfortable feeling that your resources
will be sufficient to meet your needs and most wants.
• Level of living: Refers to the level of wealth, comfort, material
goods, and necessities you are currently living.
e. What will be accomplished by studying personal finance?
• Recognize how to manage unexpected financial events.
• Pay as little as legally possible in income taxes while meeting
your income needs.
• Understand how to effectively comparison shop for vehicles and
homes.
• Protect your capacity to earn and what you own.
• Invest wisely.
© 2027 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted 4
to a publicly accessible website, in whole or in part.
