Solution Manual for Personal Financial Planning, 16th Edition 2024 by Randy Billingsley, Lawrence J. Gitman, Verified

Solution Manual for Personal Financial
Planning 16th Edition by Billingsley & Gitman,
All Chapters 1 – 15

, TableofContents u
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PartI:FOUNDATIONS OFFINANCIALPLANNING.
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1. UnderstandingtheFinancialPlanningProcess. u
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2. DevelopingYourFinancial StatementsandPlans. u
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3. PreparingYour Taxes. u
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PartII:MANAGINGB ASICASSETS.
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4. ManagingYourCashandSavings. u
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5. MakingAutomobileandHousingDecisions. Par
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tIII:MANAGINGCREDIT.
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6. UsingCredit. u
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7. UsingConsumerLoans. u
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PartIV: MANAGINGINSURANCENEEDS.
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8. InsuringYourLife. u
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9. InsuringYourHealth. u
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10. ProtectingYourProperty. PartV: u
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MANAGINGINVESTMENTS. u
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11. InvestmentPlanning. u
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,12. InvestinginStocks andB onds.
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13. InvestinginMutual FundsandReal Estate. Part
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VI:RETIREMENTANDESTATEPLANNING.
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14. PlanningforR etirement.
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15. PreservingYourE state. u
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Chapter1UnderstandingtheFinancialPlanningProcess u
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HowWill ThisAffect Me? u7 u7 u
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The heart offinancialplanning is making sure your values line up with how you spend and save. That
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meansknowing where you are financiallyandplanning onhowto get where you want tobe in the futu
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re no matter what life throws at you. For example, how should your planhandle the projection that S
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ocialSecuritycostsmayexceedrevenues by 2035? And what if the government decidesto raisetax ra
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testo help cover the federal deficit? An informed financial planshouldreflect suchuncertainties and
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more.

This chapter overviewsthe financial planningprocessand explains itscontext. Topics include ho
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wfinancialplanschangeto accommodate your current stageinlifeandtherole that financial planne
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rscanplay in helping you achieve your objectives. After reading this chapter you will have agoodper
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spective on howto organize your overall personal financial plan. u7 u7 u7 u7 u7 u7 u7 u 7 u7




LEARNINGGOALS u
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LG1 Identify thebenefitsofusingpersonalfinancial planning techniquestomanage your financ
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es.

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 impactedby yourspending habits and yourcommitmentto saving.Your spending is measured by
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your propensity to consume. Wealth isthetotal valueof allproperty you own less the amount tha
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t you owe toothers.
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ACTIVITY: Askthe studentstoassumethat theyhave just inherited $100,000. What will you do wi u 7 7u u7 7u u7 7u u7 7u u7 u7 u7 u7 u7 u 7 u7 u7




ththemoney? Write down three ways you will spend or use themoney.
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, Ask the students to share one item with the class and record what they say so that the enti
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re class can reflect on the answers. Hopefully, at least a few will mention investing even if
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only $10,000 of the amount. Use their answers to discuss taking care of current needsversusf
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Focusontheir propensitytoconsumeand its impactonaccumulating wealth. Point outthe Financi7u 7u u7 7u 7u 7u u7 u7 7u u7 u7 u7 u7 7u u 7




alPlanning Tip,―Be SMART inPlanning Your FinancialGoals.‖
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UseExhibit 1.2 toshowhowtheaverageperson earnsandspendstheir moneyand Exhibit
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1.6tohelp the student identify where they are now.
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LG2Describe thepersonalfinancialplanning processand define yourgoals.
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DwightEisenhower,armygeneralandpresident,isquotedassaying―Plansareuseless; Planning is p 7u 7u 7u 7u 7u 7u 7u 7u 7u 7u 7u 7u u 7 u7 u7




riceless‖. The process of planning allows you to focus on the issues that are most important and to be u7 u7 u7 u7 u7 u7 u7 u7 u7 u7 u7 u7 u7 u 7 u7 u7 u7 u7 u7




ready when things change. u7 u7 u7




Exhibit 1.3 liststhe Six Step Financial PlanningProcess. The first and most important is defining yo u7 u7 u7 u7 u7 u7 u7 u7 u7 u7 u7 u7 u7 u7 u 7 u7




ur financial goals.Exhibit 1.6 listsgoals by age to demonstrate howgoals change overtime.Use the e
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xamples inExhibit 1.5 toaskstudentsiftheassumptions are realistic. Yes, the answer is inthe exhibi u7 7u u7 u7 u7 7u 7u 7u 7u u7 u 7 u7 u7 u7 u7 u7 7u u7




t, but manywillnot have readchapter atthispoint. For your use,the assumptions are:
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Assumption 1: Saving a few thousand dollars a year should provide enough to fund my u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7




child‘s college Education. u7 u7




Assumption2: Anemergencyfund lasting3 monthsshould beadequate. Assumption 3: I wil u7 u
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l be able to retire at 65 and should have plenty to live on in retirement. Assumption
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4: I‘m relying on the rule of thumb that I will need only 70 percent ofmypre-
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retirement incometo manage nicely in retirement.
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There are several worksheetsinthe book. Worksheet 1.1 givesthe student aformat to write downthe
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ir PersonalFinancialGoals. There ispower inwriting downgoals[and most anyother plan]. Recordi
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ng the goaland thenreviewing three monthslater will help you to keep focus onthe goal.
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LG3 Explain the life cycle of financial plans, their role in achieving your financial goals,
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how to deal with special planning concerns, and the use of professional financialplanners
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.

Exhibit 1.7 canhelp focusthe attention onhowgoals differ between the various stages of life. Section u7 u7 u7 u7 u7 u7 u7 u7 u7 u7 u7 u7 u7 u7 u7 u 7 u7 u7




1-3b lists various decisionsthat you will have tomake over your life. The section 1-
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3c addressesSpecial PlanningConcerns. Worksheet 1.2 focusesonthefinancial benefit tothe famil
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y ofthesecond income.Ifthesecond income is fromaminimumwage job, it may not beagoodf inancial
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decision. Ofcourse having ajob, evenaminimum wage job,maygive theperson psychic incomethat u7 7u u7 u7 u7 u7 7u u7 7u u 7 u7 7u u7 7u u7 u7 u7 u7




will override thefinancial impact. u7 u7 u7 u7




While perhaps off topic, I recall a high school science teacher who was a smoker. He w u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7 u 7




alked through the amount of money he spent on purchasing tobacco products. That comp
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utation hada u7 u7