SOLUTION MANUAL Personal Financial Planning, 16th Edition by Billingsley, Gitman, Chapters 1 - 15, Complete

SOLUTION MANUAL
Personal Financial Planning, 16th Edition
by Billingsley, Gitman, Chapters 1 - 15, Complete




Table of Contents
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,Part I: FOUNDATIONS OF FINANCIAL PLANNING.
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1. Understanding the Financial Planning Process.
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2. Developing Your Financial Statements and Plans.
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3. Preparing Your Taxes.
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Part II: MANAGING BASIC ASSETS.
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4. Managing Your Cash and Savings.
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5. Making Automobile and Housing Decisions.
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Part III: MANAGING CREDIT.
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6. Using Credit.
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7. Using Consumer Loans.
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Part IV: MANAGING INSURANCE NEEDS.
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8. Insuring Your Life.
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9. Insuring Your Health.
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10. Protecting Your Property.
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Part V: MANAGING INVESTMENTS.
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11. Investment Planning.
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12. Investing in Stocks and Bonds.
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13. Investing in Mutual Funds and Real Estate.
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Part VI: RETIREMENT AND ESTATE PLANNING.
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14. Planning for Retirement.
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15. Preserving Your Estate.
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Chapter 1 R




Understanding the Financial Planning Process R R R R

,HowRWillRThisRAffectRMe?
TheRheartRofRfinancialRplanningRisRmakingRsureRyourRvaluesRlineRupRwithRhowRyouRspendRandRsave.RThatR
meansRknowingRwhereRyouRareRfinanciallyRandRplanningRonRhowRtoRgetRwhereRyouRwantRtoRbeRinRtheRfu
tureRnoRmatterRwhatRlifeRthrowsRatRyou.RForRexample,RhowRshouldRyourRplanRhandleRtheRprojectionRthat
RSocialRSecurityRcostsRmayRexceedRrevenuesRbyR2035?RAndRwhatRifRtheRgovernmentRdecidesRtoRraiseRt

axRratesRtoRhelpRcoverRtheRfederalRdeficit?RAnRinformedRfinancialRplanRshouldRreflectR suchRuncertaintie
sRandRmore.

ThisRchapterRoverviewsRtheRfinancialRplanningRprocessRandRexplainsRitsRcontext.RTopicsRincludeRhowRfi
nancialRplansRchangeRtoRaccommodateRyourRcurrentRstageRinRlifeRandRtheRroleRthatRfinancialRplannersR
canRplayRinRhelpingRyouRachieveRyourRobjectives.RAfterRreadingRthisRchapterRyouRwillRhaveRaRgoodRp
erspectiveRonRhowRtoRorganizeRyourRoverallRpersonalRfinancialRplan.

LEARNING GOALS R




LG1RIdentifyRtheRbenefitsRofRusingRpersonalRfinancialRplanningRtechniquesRtoRmanageRyourRfin
ances.

KeyRconceptRinRthisRsectionRisRtheRplanningRmodelRasRdisplayedRinRExhibitR1.1.RYourRstandardRofRlivingRi
sRgreatlyRimpactedRbyRyourRspendingRhabitsRandRyourRcommitmentRtoRsaving.RYourRspendingRisRmeasure
dRbyRyourRpropensityRtoRconsume.RWealthRisRtheRtotalRvalueRofRallRpropertyRyouRownRlessRtheRamount
RthatR youRoweRtoRothers.




ACTIVITY:R AskRtheRstudentsRtoRassumeRthatRtheyRhaveRjustRinheritedR$100,000.R WhatRwillRyouRdoRwith
RtheR money?RWriteRdownRthreeRwaysRyouRwillRspendRorRuseRtheR money.

, AskRtheRstudentsRtoRshareRoneRitemRwithRtheRclassRandRrecordRwhatRtheyRsayRsoRthatRtheRentireRclassRcanR
reflectRonRtheRanswers.RHopefully,RatRleastRaRfewRwillRmentionRinvestingRevenRifRonlyR$10,000RofRtheRa
mount.R UseRtheirRanswersRtoRdiscussRtakingRcareRofRcurrentRneedsRversusRfutureRneeds.
FocusRonRtheirRpropensityRtoRconsumeRandRitsRimpactRonRaccumulatingRwealth.RPointRoutRtheRFinancialRPl
anningRTip,R―BeRSMARTRinRPlanningR YourRFinancialRGoals.‖
UseRExhibitR1.2RtoRshowRhowRtheRaverageRpersonRearnsRandRspendsRtheirRmoneyRandRExhibitR1.6RtoRhel
pRtheRstudentRidentifyRwhereRtheyRareRnow.

LG2RDescribeRtheRpersonalRfinancialRplanningRprocessRandRdefineRyourRgoals.

DwightREisenhower,RarmyRgeneralRandRpresident,R isRquotedRasRsayingR ―PlansRareRuseless;RPlanningRisRp
riceless‖.RTheRprocessRofRplanningRallowsRyouRtoRfocusRonRtheRissuesRthatRareRmostRimportantRandRtoRbeR
readyRwhenRthingsRchange.

ExhibitR1.3RlistsRtheRSixRStepRFinancialRPlanningRProcess.RTheRfirstRandRmostRimportantRisRdefiningRyou
rRfinancialRgoals.RExhibitR1.6RlistsRgoalsRbyRageRtoRdemonstrateRhowRgoalsRchangeRoverRtime.RUseRthe
RexamplesRinRExhibitR 1.5RtoRaskRstudentsRifRtheRassumptionsRareRrealistic.RYes,RtheRanswerRisRinRtheRexhi

bit,RbutRmanyRwillRnotRhaveRreadRchapterRatRthisRpoint.RForRyourRuse,RtheRassumptionsRare:

AssumptionR1:RSavingRaRfewRthousandRdollarsRaRyearRshouldRprovideRenoughRtoRfundRmyRchild‘sRcoll
egeREducation.
AssumptionR2:RAnRemergencyRfundRlastingR3RmonthsRshouldRbeRadequate.
AssumptionR3:RIRwillRbeRableRtoRretireRatR65RandRshouldRhaveRplentyRtoRliveRonRinRretirement.RAs
sumptionR4:RI‘mRrelyingRonRtheRruleRofRthumbRthatRIRwillRneedRonlyR70RpercentRofRmyRpre-
RretirementR incomeRtoR manageR nicelyRinRretirement.




ThereRareRseveralRworksheetsRinRtheRbook.RWorksheetR1.1RgivesRtheRstudentRaRformatRtoRwriteRdownR
theirRPersonalRFinancialRGoals.RThereRisRpowerRinRwritingRdownRgoalsR[andRmostRanyRotherRplan].RRec
ordingRtheRgoalRandRthenRreviewingRthreeRmonthsRlaterRwillRhelpRyouRtoRkeepRfocusRonRtheRgoal.

LG3RExplainRtheRlifeRcycleRofRfinancialRplans,RtheirRroleRinRachievingRyourRfinancialRgoals,Rhow
RtoRdealRwithRspecialRplanningRconcerns,RandRtheRuseRofR professionalRfinancialRplanners.




ExhibitR1.7RcanRhelpRfocusRtheRattentionRonRhowRgoalsRdifferRbetweenRtheRvariousRstagesRofRlife.RSectio
nR1-3bRlistsRvariousRdecisionsRthatRyouRwillRhaveRtoRmakeRoverRyourRlife.RTheRsectionR1-
3cRaddressesRSpecialRPlanningRConcerns.RWorksheetR1.2RfocusesRonRtheRfinancialRbenefitRtoRtheRfamil
yRofRtheRsecondRincome.RIfRtheRsecondRincomeRisRfromRaRminimumRwageRjob,RitRmayRnotRbeRaRgoodRfinan
cialRdecision.ROfRcourseRhavingRaRjob,RevenRaRminimumRwageRjob,RmayRgiveRtheRpersonRpsychicRincomeR
thatR willRoverrideRtheRfinancialRimpact.

WhileRperhapsRoffRtopic,RIRrecallRaRhighRschoolRscienceRteacherRwhoRwasRaRsmoker.RHeRwalkedRthrough
RtheRamountRofRmoneyRheRspentRonRpurchasingRtobaccoRproducts.R ThatRcomputationRhadRa