SOLUTION MANUAL
Personal Finance, 14th Edition
By E. Thomas Garman, Chapter 1 - 17
,TABLE OF CONTENTS
Part I: FINANCIAL PLANNING.
1. Understanding Personal Finance.
2. Career Planning.
3. Financial Statements, Goals, and Budgets.
Part II: MONEY MANAGEMENT.
4. Managing Income Taxes.
5. Managing Checking and Savings Accounts.
6. Building and Maintaining Good Credit.
7. Credit Cards and Consumer Loans.
8. Vehicles and Other Major Purchases.
9. Obtaining Affordable Housing.
Part III: INCOME AND ASSET PROTECTION.
10. Managing Property and Liability Risk.
11. Planning for Health Care Expenses.
12. Life Insurance Planning.
Part IV: INVESTMENTS.
13. Investment Fundamentals.
,14. Investing in Stocks and Bonds.
15. Mutual and Exchange-Traded Funds.
16. Real Estate and High-Risk Investments.
17. Retirement and Estate Planning.
Solution and Answer Guide
GARMAN/FOX, PERSONAL FINANCE 14E, CHAPTER 1: THINKING LIKE A FINANCIAL PLANNER
TABLE OF CONTENTS
Answers to Chapter Concept Checks ........................................................................................... 2
What Do You Recommend Now? ................................................................................................. 4
Let’s Talk About It......................................................................................................................................................... 5
Do the Math ................................................................................................................................... 6
Financial Planning Cases ............................................................................................................... 8
Extended Learning....................................................................................................................... 10
, ANSWERS TO CHAPTER CONCEPT CHECKS
LO1.1 Recognize the keys to achieving financial success.
1. Explain the five steps in the financial planning process.
Answer: There are five fundamental steps to the personal financial planning process: (1) evaluate
your financial health to your education and career choice; (2) define your financial goals; (3)
develop a plan of action to achieve your goals; (4) implement spending and saving plans to
monitor and control progress toward your goals; and (5) review your financial progress and make
changes as appropriate.
2. Distinguish among financial success, financial security, and financial happiness.
Answer: Financial success is the achievement of financial aspirations that are desired, planned,
or attempted. Success is defined by the individual or family that seeks it. Financial success may be
defined as being able to live according to one’s standard of living. Financial security is that
comfortable feeling that your financial resources will be adequate to fulfill any needs you have as
well as your wants. Financial happiness is the experience you have when you are satisfied with
money matters. People who are happy about their finances will see a spillover into positive
feelings about life in general.
3. Summarize dwhat dyou dwill daccomplish dstudying dpersonal dfinance.
Answer: dSeveral dthings dcan dbe daccomplished dby dstudying dpersonal dfinance. dRecognize
dhow dto dmanage dunexpected dand dexpected dfinancial devents. dPay das dlittle das dpossible din
dincome dtaxes. dUnderstand dhow dto deffectively dcomparison dshop dfor dvehicles dand dhomes.
dProtect dwhat dwe down. dInvest dwisely. dAccumulate dand dprotect dthe dwealth dthat dwe dmay
dchoose dto dspend dduring dour dnon-working dyears d(e.g., dretirement) dor ddonate.
4. What dare dthe dbuilding dblocks dto dachieving dfinancial dsuccess?
Answer: dThe dbuilding dblocks dfor dachieving dfinancial dsuccess dinclude da dfoundation dof
dregular dincome dthat dprovides dthe dmeans dto dsupport dyour dlifestyle dand dsave dfor
ddesired dgoals din dthe dfuture. dThe dfoundation dsupports da dbase dof dvarious dbanking
daccounts, dinsurance dprotection, dand demployee dbenefits. dThen dwe dcan destablish dgoals, da
drecordkeeping dsystem, da dbudget, dand dan demergency dsavings dfund. dWe dwill dalso
dmanage dvarious dexpenses dsuch das dhousing, dtransportation, dinsurance, dand dthe dpayment
dof dtaxes. dWe dwill dalso dneed dto dhandle dcredit, dsavings, dand deducational dcosts. dFinally,
dwe dinvest din dvarious dinvestment dalternatives dsuch das dmutual dfunds, dstocks, dand dbonds,
doften dfor dretirement. dAs da dresult dof dall dthese dbuilding dblocks, dwe dare dmore dapt dto
dhave da dfinancially dsuccessful dlife.
LO1.2 dUnderstand dhow dthe deconomy daffects dyour dpersonal dfinancial dsuccess.
1. Summarize dthe dphases dof dthe dbusiness dcycle.
Answer: dThe dbusiness dcycle dentails da dwavelike dpattern dof drising dand dfalling deconomic
Personal Finance, 14th Edition
By E. Thomas Garman, Chapter 1 - 17
,TABLE OF CONTENTS
Part I: FINANCIAL PLANNING.
1. Understanding Personal Finance.
2. Career Planning.
3. Financial Statements, Goals, and Budgets.
Part II: MONEY MANAGEMENT.
4. Managing Income Taxes.
5. Managing Checking and Savings Accounts.
6. Building and Maintaining Good Credit.
7. Credit Cards and Consumer Loans.
8. Vehicles and Other Major Purchases.
9. Obtaining Affordable Housing.
Part III: INCOME AND ASSET PROTECTION.
10. Managing Property and Liability Risk.
11. Planning for Health Care Expenses.
12. Life Insurance Planning.
Part IV: INVESTMENTS.
13. Investment Fundamentals.
,14. Investing in Stocks and Bonds.
15. Mutual and Exchange-Traded Funds.
16. Real Estate and High-Risk Investments.
17. Retirement and Estate Planning.
Solution and Answer Guide
GARMAN/FOX, PERSONAL FINANCE 14E, CHAPTER 1: THINKING LIKE A FINANCIAL PLANNER
TABLE OF CONTENTS
Answers to Chapter Concept Checks ........................................................................................... 2
What Do You Recommend Now? ................................................................................................. 4
Let’s Talk About It......................................................................................................................................................... 5
Do the Math ................................................................................................................................... 6
Financial Planning Cases ............................................................................................................... 8
Extended Learning....................................................................................................................... 10
, ANSWERS TO CHAPTER CONCEPT CHECKS
LO1.1 Recognize the keys to achieving financial success.
1. Explain the five steps in the financial planning process.
Answer: There are five fundamental steps to the personal financial planning process: (1) evaluate
your financial health to your education and career choice; (2) define your financial goals; (3)
develop a plan of action to achieve your goals; (4) implement spending and saving plans to
monitor and control progress toward your goals; and (5) review your financial progress and make
changes as appropriate.
2. Distinguish among financial success, financial security, and financial happiness.
Answer: Financial success is the achievement of financial aspirations that are desired, planned,
or attempted. Success is defined by the individual or family that seeks it. Financial success may be
defined as being able to live according to one’s standard of living. Financial security is that
comfortable feeling that your financial resources will be adequate to fulfill any needs you have as
well as your wants. Financial happiness is the experience you have when you are satisfied with
money matters. People who are happy about their finances will see a spillover into positive
feelings about life in general.
3. Summarize dwhat dyou dwill daccomplish dstudying dpersonal dfinance.
Answer: dSeveral dthings dcan dbe daccomplished dby dstudying dpersonal dfinance. dRecognize
dhow dto dmanage dunexpected dand dexpected dfinancial devents. dPay das dlittle das dpossible din
dincome dtaxes. dUnderstand dhow dto deffectively dcomparison dshop dfor dvehicles dand dhomes.
dProtect dwhat dwe down. dInvest dwisely. dAccumulate dand dprotect dthe dwealth dthat dwe dmay
dchoose dto dspend dduring dour dnon-working dyears d(e.g., dretirement) dor ddonate.
4. What dare dthe dbuilding dblocks dto dachieving dfinancial dsuccess?
Answer: dThe dbuilding dblocks dfor dachieving dfinancial dsuccess dinclude da dfoundation dof
dregular dincome dthat dprovides dthe dmeans dto dsupport dyour dlifestyle dand dsave dfor
ddesired dgoals din dthe dfuture. dThe dfoundation dsupports da dbase dof dvarious dbanking
daccounts, dinsurance dprotection, dand demployee dbenefits. dThen dwe dcan destablish dgoals, da
drecordkeeping dsystem, da dbudget, dand dan demergency dsavings dfund. dWe dwill dalso
dmanage dvarious dexpenses dsuch das dhousing, dtransportation, dinsurance, dand dthe dpayment
dof dtaxes. dWe dwill dalso dneed dto dhandle dcredit, dsavings, dand deducational dcosts. dFinally,
dwe dinvest din dvarious dinvestment dalternatives dsuch das dmutual dfunds, dstocks, dand dbonds,
doften dfor dretirement. dAs da dresult dof dall dthese dbuilding dblocks, dwe dare dmore dapt dto
dhave da dfinancially dsuccessful dlife.
LO1.2 dUnderstand dhow dthe deconomy daffects dyour dpersonal dfinancial dsuccess.
1. Summarize dthe dphases dof dthe dbusiness dcycle.
Answer: dThe dbusiness dcycle dentails da dwavelike dpattern dof drising dand dfalling deconomic
