SOLUTION MANUAL
j
Personal Finance, 14th Edition
j j j
By E. Thomas Garman, Chapter 1 - 17
j j j j j j j
,TABLE OF CONTENTS j j j
Part I: FINANCIAL PLANNING.
j j j
1. Understanding Personal Finance.
j j j
2. Career Planning.
j j
3. Financial Statements, Goals, and Budgets.
j j j j j
Part II: MONEY MANAGEMENT.
j j j
4. Managing Income Taxes.
j j j
5. Managing Checking and Savings Accounts.
j j j j j
6. Building and Maintaining Good Credit.
j j j j j
7. Credit Cards and Consumer Loans.
j j j j j
8. Vehicles and Other Major Purchases.
j j j j j
9. Obtaining Affordable Housing.
j j j
Part III: INCOME AND ASSET PROTECTION.
j j j j j
10. Managing Property and Liability Risk.
j j j j j
11. Planning for Health Care Expenses.
j j j j j
12. Life Insurance Planning.
j j j
Part IV: INVESTMENTS.
j j
13. Investment Fundamentals.
j j
,14. Investing in Stocks and Bonds.
j j j j j
15. Mutual and Exchange-Traded Funds.
j j j j
16. Real Estate and High-Risk Investments.
j j j j j
17. Retirement and Estate Planning.
j j j j
Solution and Answer Guide j j j
GARMAN/FOX, PERSONAL FINANCE 14E, CHAPTER 1: THINKING LIKE A FINANCIAL PLANNER
J J J J J J J J J J
TABLE OF CONTENTS J J
Answers jto jChapter jConcept jChecks ............................................................................................ 2
What jDo jYou jRecommend jNow? ................................................................................................. 4
Let’s jTalk jAbout jIt ......................................................................................................................................................... 5
Do jthe jMath ................................................................................................................................... 6
Financial jPlanning jCases ............................................................................................................... 8
Extended jLearning ....................................................................................................................... 10
, ANSWERS TO CHAPTER CONCEPT CHECKS
J J J J
LO1.1 jRecognize jthe jkeys jto jachieving jfinancial jsuccess.
1. Explain jthe jfive jsteps jin jthe jfinancial jplanning jprocess.
Answer: jThere jare jfive jfundamental jsteps jto jthe jpersonal jfinancial jplanning jprocess: j(1) jevaluate
jyour jfinancial jhealth jto jyour jeducation jand jcareer jchoice; j(2) jdefine jyour jfinancial jgoals; j(3)
jdevelop ja jplan jof jaction jto jachieve jyour jgoals; j(4) jimplement jspending jand jsaving jplans jto
jmonitor jand jcontrol jprogress jtoward jyour jgoals; jand j(5) jreview jyour jfinancial jprogress jand jmake
jchanges jas jappropriate.
2. Distinguish jamong jfinancial jsuccess, jfinancial jsecurity, jand jfinancial jhappiness.
Answer: jFinancial jsuccess jis jthe jachievement jof jfinancial jaspirations jthat jare jdesired, jplanned,
jor jattempted. jSuccess jis jdefined jby jthe jindividual jor jfamily jthat jseeks jit. jFinancial jsuccess jmay jbe
jdefined jas jbeing jable jto jlive jaccording jto jone’s jstandard jof jliving. jFinancial jsecurity jis jthat
jcomfortable jfeeling jthat jyour jfinancial jresources jwill jbe jadequate jto jfulfill jany jneeds jyou jhave jas
jwell jas jyour jwants. jFinancial jhappiness jis jthe jexperience jyou jhave jwhen jyou jare jsatisfied jwith
jmoney jmatters. jPeople jwho jare jhappy jabout jtheir jfinances jwill jsee ja jspillover jinto jpositive
jfeelings jabout jlife jin jgeneral.
3. Summarize jwhat jyou jwill jaccomplish jstudying jpersonal jfinance.
Answer: jSeveral jthings jcan jbe jaccomplished jby jstudying jpersonal jfinance. jRecognize jhow jto
jmanage junexpected jand jexpected jfinancial jevents. jPay jas jlittle jas jpossible jin jincome jtaxes.
jUnderstand jhow jto jeffectively jcomparison jshop jfor jvehicles jand jhomes. jProtect jwhat jwe jown. jInvest
jwisely. jAccumulate jand jprotect jthe jwealth jthat jwe jmay jchoose jto jspend jduring jour jnon-working
jyears j(e.g., jretirement) jor jdonate.
4. What jare jthe jbuilding jblocks jto jachieving jfinancial jsuccess?
Answer: jThe jbuilding jblocks jfor jachieving jfinancial jsuccess jinclude ja jfoundation jof jregular
jincome jthat jprovides jthe jmeans jto jsupport jyour jlifestyle jand jsave jfor jdesired jgoals jin jthe jfuture.
jThe jfoundation jsupports ja jbase jof jvarious jbanking jaccounts, jinsurance jprotection, jand jemployee
jbenefits. jThen jwe jcan jestablish jgoals, ja jrecordkeeping jsystem, ja jbudget, jand jan jemergency
jsavings jfund. jWe jwill jalso jmanage jvarious jexpenses jsuch jas jhousing, jtransportation, jinsurance,
jand jthe jpayment jof jtaxes. jWe jwill jalso jneed jto jhandle jcredit, jsavings, jand jeducational jcosts.
jFinally, jwe jinvest jin jvarious jinvestment jalternatives jsuch jas jmutual jfunds, jstocks, jand jbonds,
joften jfor jretirement. jAs ja jresult jof jall jthese jbuilding jblocks, jwe jare jmore japt jto jhave ja jfinancially
jsuccessful jlife.
LO1.2 jUnderstand jhow jthe jeconomy jaffects jyour jpersonal jfinancial jsuccess.
1. Summarize jthe jphases jof jthe jbusiness jcycle.
Answer: jThe jbusiness jcycle jentails ja jwavelike jpattern jof jrising jand jfalling jeconomic jactivity jas
jmeasured jby jeconomic jindicators jlike junemployment jrates jor jthe jgross jdomestic jproduct. jThe
j
Personal Finance, 14th Edition
j j j
By E. Thomas Garman, Chapter 1 - 17
j j j j j j j
,TABLE OF CONTENTS j j j
Part I: FINANCIAL PLANNING.
j j j
1. Understanding Personal Finance.
j j j
2. Career Planning.
j j
3. Financial Statements, Goals, and Budgets.
j j j j j
Part II: MONEY MANAGEMENT.
j j j
4. Managing Income Taxes.
j j j
5. Managing Checking and Savings Accounts.
j j j j j
6. Building and Maintaining Good Credit.
j j j j j
7. Credit Cards and Consumer Loans.
j j j j j
8. Vehicles and Other Major Purchases.
j j j j j
9. Obtaining Affordable Housing.
j j j
Part III: INCOME AND ASSET PROTECTION.
j j j j j
10. Managing Property and Liability Risk.
j j j j j
11. Planning for Health Care Expenses.
j j j j j
12. Life Insurance Planning.
j j j
Part IV: INVESTMENTS.
j j
13. Investment Fundamentals.
j j
,14. Investing in Stocks and Bonds.
j j j j j
15. Mutual and Exchange-Traded Funds.
j j j j
16. Real Estate and High-Risk Investments.
j j j j j
17. Retirement and Estate Planning.
j j j j
Solution and Answer Guide j j j
GARMAN/FOX, PERSONAL FINANCE 14E, CHAPTER 1: THINKING LIKE A FINANCIAL PLANNER
J J J J J J J J J J
TABLE OF CONTENTS J J
Answers jto jChapter jConcept jChecks ............................................................................................ 2
What jDo jYou jRecommend jNow? ................................................................................................. 4
Let’s jTalk jAbout jIt ......................................................................................................................................................... 5
Do jthe jMath ................................................................................................................................... 6
Financial jPlanning jCases ............................................................................................................... 8
Extended jLearning ....................................................................................................................... 10
, ANSWERS TO CHAPTER CONCEPT CHECKS
J J J J
LO1.1 jRecognize jthe jkeys jto jachieving jfinancial jsuccess.
1. Explain jthe jfive jsteps jin jthe jfinancial jplanning jprocess.
Answer: jThere jare jfive jfundamental jsteps jto jthe jpersonal jfinancial jplanning jprocess: j(1) jevaluate
jyour jfinancial jhealth jto jyour jeducation jand jcareer jchoice; j(2) jdefine jyour jfinancial jgoals; j(3)
jdevelop ja jplan jof jaction jto jachieve jyour jgoals; j(4) jimplement jspending jand jsaving jplans jto
jmonitor jand jcontrol jprogress jtoward jyour jgoals; jand j(5) jreview jyour jfinancial jprogress jand jmake
jchanges jas jappropriate.
2. Distinguish jamong jfinancial jsuccess, jfinancial jsecurity, jand jfinancial jhappiness.
Answer: jFinancial jsuccess jis jthe jachievement jof jfinancial jaspirations jthat jare jdesired, jplanned,
jor jattempted. jSuccess jis jdefined jby jthe jindividual jor jfamily jthat jseeks jit. jFinancial jsuccess jmay jbe
jdefined jas jbeing jable jto jlive jaccording jto jone’s jstandard jof jliving. jFinancial jsecurity jis jthat
jcomfortable jfeeling jthat jyour jfinancial jresources jwill jbe jadequate jto jfulfill jany jneeds jyou jhave jas
jwell jas jyour jwants. jFinancial jhappiness jis jthe jexperience jyou jhave jwhen jyou jare jsatisfied jwith
jmoney jmatters. jPeople jwho jare jhappy jabout jtheir jfinances jwill jsee ja jspillover jinto jpositive
jfeelings jabout jlife jin jgeneral.
3. Summarize jwhat jyou jwill jaccomplish jstudying jpersonal jfinance.
Answer: jSeveral jthings jcan jbe jaccomplished jby jstudying jpersonal jfinance. jRecognize jhow jto
jmanage junexpected jand jexpected jfinancial jevents. jPay jas jlittle jas jpossible jin jincome jtaxes.
jUnderstand jhow jto jeffectively jcomparison jshop jfor jvehicles jand jhomes. jProtect jwhat jwe jown. jInvest
jwisely. jAccumulate jand jprotect jthe jwealth jthat jwe jmay jchoose jto jspend jduring jour jnon-working
jyears j(e.g., jretirement) jor jdonate.
4. What jare jthe jbuilding jblocks jto jachieving jfinancial jsuccess?
Answer: jThe jbuilding jblocks jfor jachieving jfinancial jsuccess jinclude ja jfoundation jof jregular
jincome jthat jprovides jthe jmeans jto jsupport jyour jlifestyle jand jsave jfor jdesired jgoals jin jthe jfuture.
jThe jfoundation jsupports ja jbase jof jvarious jbanking jaccounts, jinsurance jprotection, jand jemployee
jbenefits. jThen jwe jcan jestablish jgoals, ja jrecordkeeping jsystem, ja jbudget, jand jan jemergency
jsavings jfund. jWe jwill jalso jmanage jvarious jexpenses jsuch jas jhousing, jtransportation, jinsurance,
jand jthe jpayment jof jtaxes. jWe jwill jalso jneed jto jhandle jcredit, jsavings, jand jeducational jcosts.
jFinally, jwe jinvest jin jvarious jinvestment jalternatives jsuch jas jmutual jfunds, jstocks, jand jbonds,
joften jfor jretirement. jAs ja jresult jof jall jthese jbuilding jblocks, jwe jare jmore japt jto jhave ja jfinancially
jsuccessful jlife.
LO1.2 jUnderstand jhow jthe jeconomy jaffects jyour jpersonal jfinancial jsuccess.
1. Summarize jthe jphases jof jthe jbusiness jcycle.
Answer: jThe jbusiness jcycle jentails ja jwavelike jpattern jof jrising jand jfalling jeconomic jactivity jas
jmeasured jby jeconomic jindicators jlike junemployment jrates jor jthe jgross jdomestic jproduct. jThe
