Solution Manual for Personal Finance 14th Edition by E. Thomas Garman & Raymond E. Forgue

SOLUTION MANUAL
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Personal Finance, 14th Edition
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By E. Thomas Garman, Chapter 1 - 17
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,TABLEOFCONTENTS c c




Part I: FINANCIAL PLANNING.
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1. Understanding Personal Finance. c c




2. Career Planning. c




3. Financial Statements, Goals, and Budgets. P
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art II: MONEY MANAGEMENT.
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4. Managing Income Taxes. c c




5. Managing Checking and Savings Accounts. c c c c




6. Building and Maintaining Good Credit.
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7. Credit Cards and Consumer Loans.
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8. Vehicles and Other Major Purchases.
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9. Obtaining Affordable Housing. c c




Part III: INCOME AND ASSET PROTECTION.
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10. Managing Property and Liability Risk. c c c c




11. Planning for Health Care Expenses. c c c c




12. Life Insurance Planning.
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Part IV: INVESTMENTS.
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13. Investment Fundamentals. c

,14. Investing in Stocks and Bonds.
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15. Mutual and Exchange-Traded Funds.
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16. Real Estate and High-Risk Investments.
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17. Retirement and Estate Planning.
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SolutionandAnswerGuide
GARMAN/FOX, PERSONAL
C FINANCE 14E, CHAPTER
C 1: THINKING
C LIKE AC C FINANCIAL PLANNER


TABLE OF CONTENTS
C C C




Answersc toc Chapterc Conceptc Checks........................................................................................... 2
Whatc Doc Youc Recommendc Now? ................................................................................................ 4
Let’sc Talkc Aboutc It ......................................................................................................................... 5
Doc thec Math ................................................................................................................................... 6
Financialc Planningc Cases................................................................................................................ 8
Extendedc Learning ...................................................................................................................... 10

, ANSWERS TO CHAPTER CONCEPT CHECKS
C C C C




LO1.1c Recognizec thec keysc toc achievingc financialc success.
1. Explainc thec fivec stepsc inc thec financialc planningc process.

Answer:c Therec arec fivec fundamentalc stepsc toc thec personalc financialc planningc process:c (1)ceval
uatec yourc financialc healthc toc yourc educationc andc careerc choice;c (2)c definec yourc financialcgoals
;c (3)c developc ac planc ofc actionc toc achievec yourc goals;c (4)c implementc spendingc andcsavingc pla
nsc toc monitorc andc controlc progressc towardc yourc goals;c andc (5)c reviewc yourcfinancialc progres
sc andc makec changesc asc appropriate.

2. Distinguishcamongcfinancialc success,cfinancialcsecurity,c andcfinancialchappiness.cAnswe

r:c Financialc successc isc thec achievementc ofc financialc aspirationsc thatc arec desired,
planned,c orc attempted.c Successc isc definedc byc thec individualc orc familyc thatc seeksc it.c Financial
successc mayc bec definedc asc beingc ablec toc livec accordingc toc one’sc standardc ofc living.cFinanc
ialc securityc isc thatc comfortablec feelingc thatc yourc financialc resourcesc willc becadequatec toc f
ulfillc anyc needsc youc havec asc wellc asc yourc wants.c Financialc happinessc isc thecexperiencec you
c havec whenc youc arec satisfiedc withc moneyc matters.c Peoplec whoc arec happycaboutc theirc finan

cesc willc seec ac spilloverc intoc positivec feelingsc aboutc lifec inc general.

3. Summarizec whatc youc willc accomplishc studyingc personalc finance.

Answer:c Severalc thingsc canc bec accomplishedc byc studyingc personalc finance.c Recognizec howc tocm
anagec unexpectedc andc expectedc financialc events.c Payc asc littlec asc possiblec inc incomec taxes.cUnd
erstandc howc toc effectivelyccomparisonc shopc forc vehiclesc andc homes.c Protectc whatc wec own.cInves
tc wisely.c Accumulatec andc protectc thec wealthc thatc wec mayc choosec toc spendc duringc ourcnon-
workingc yearsc(e.g.,cretirement)corcdonate.

4. Whatc arec thec buildingc blocksc toc achievingc financialc success?

Answer:c Thec buildingc blocksc forc achievingc financialc successc includec ac foundationc ofcregula
rc incomec thatc providesc thec meansc toc supportc yourc lifestylec andc savec forc desiredcgoalsc inc t
hec future.c Thec foundationc supportsc ac basec ofc variousc bankingc accounts,
insurancec protection,c andc employeec benefits.c Thenc wec canc establishc goals,c ac recordkeepingcs
ystem,c ac budget,c andc anc emergencyc savingsc fund.c Wec willc alsoc managec variousc expensescsu
chc asc housing,c transportation,c insurance,c andc thec paymentc ofc taxes.c Wec willc alsoc needc tocha
ndlec credit,c savings,c andc educationalc costs.c Finally,c wec investc inc variousc investmentcalternativ
esc suchc asc mutualc funds,c stocks,c andc bonds,c oftenc forc retirement.c Asc ac resultc ofcallc thesec b
uildingc blocks,c wec arec morec aptc toc havec ac financiallyc successfulc life.

LO1.2c Understandc howc thec economyc affectsc yourc personalc financialc success.
1. Summarizec thec phasesc ofc thec businessc cycle.

Answer:c Thec businessc cyclec entailsc ac wavelikec patternc ofc risingc andc fallingc economic
activityc asc measuredc byc economicc indicatorsc likec unemploymentc ratesc orc thec grossc domestic