Solution Manual for Payroll Accounting 34th Edition by Bernard J. Bieg, Bridget Stomberg, Chapters 1-7

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




Part I: FOUNDATIONS OF FINANCIAL PLANNING.
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1. Understanding the Financial Planning Process. br br br br




2. Developing Your Financial Statements and Plans. br br br br br




3. Preparing Your Taxes. br br




Part II: MANAGING BASIC ASSETS.
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4. Managing Your Cash and Savings. br br br br




5. Making Automobile and Housing Decisions. br br br br




b r Part III: MANAGING CREDIT.
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6. UsingCredit. br




7. Using Consumer Loans. br br




Part IV: MANAGING INSURANCE NEEDS.
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8. Insuring Your Life. br br




9. Insuring Your Health. br br




10. ProtectingYour Property. br br br




b r Part V: MANAGING INVESTMENTS.
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11. InvestmentPlanning. rb

,12. Investing in Stocks and Bonds. br br br br




13. Investing in Mutual Funds and Real Estate.
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b r Part VI: RETIREMENT AND ESTATE PLANNING.
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14. Planningfor Retirement. br br




15. Preserving Your Estate. br br




Chapter1Understanding theFinancial PlanningProcess br br br br br br




How Will This Affect Me? br br br br




The heart of financial planning is making sure your values line up with how you spend and
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bsave. That means knowing where you are financially and planning on how to get where you
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bwant to be in the future no matter what life throws at you. For example, how should your
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bplan handle the projection that Social Security costs may exceed revenues by 2035? And
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bwhat if the government decides to raise tax rates to help cover the federal deficit? An
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binformed financial plan should reflect such uncertainties and more.
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This chapter overviews the financial planning process and explains its context. Topics
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b include how financialplans change to accommodate your current stage in life and the role
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bthat financial planners can play in helping you achieve your objectives. After reading this
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bchapter you will have a good perspective on how to organize your overall personal
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bfinancial plan.
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LEARNINGGOALS rb




LG1 Identify the benefits of using personal financial planning techniques to manage
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byour finances.
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Key concept in this section is the planning model as displayed in Exhibit 1.1. Your
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bstandard of living is greatly impacted by your spending habits and your commitment to
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bsaving. Your spending is measured by your propensity to consume. Wealth is the total
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bvalue of all property you own less the amount that you owe to others.
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ACTIVITY: Ask the studentsto assume that theyhave just inherited $100,000. What will b r br br br br br br br br br br br br




byou do with the money? Write down three ways you will spend or use the money.
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, Ask the students to share one item with the class and record what they say so
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that the entire class can reflect on the answers. Hopefully, at least a few will
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mention investing even if only $10,000 of the amount. Use their answers to
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discuss taking care of current needs versus future needs.
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Focus ontheir propensityto consume and its impact on accumulating wealth. Point out the
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b Financial Planning Tip, ―Be SMART in Planning Your Financial Goals.‖
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Use Exhibit 1.2 to show how the average person earns and spends their money and Exhibit
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1.6 to help the student identify where they are now.
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LG2 Describe the personal financial planning process and define your goals.
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Dwight Eisenhower,armygeneraland president,isquoted assaying ―Plansareuseless;
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bPlanning is priceless‖. The process of planning allows you to focus on the issues that are
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bmost important and to be ready when things change.
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Exhibit 1.3 lists the Six Step Financial Planning Process. The first and most important is
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bdefining your financial goals. Exhibit 1.6 lists goals by age to demonstrate how goals
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bchange over time. Use the examples in Exhibit 1.5 to ask students if the assumptions are
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brealistic. Yes, the answer is in the exhibit, but manywill not have read chapter at this point.
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bFor your use, the assumptions are:
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Assumption 1: Saving a few thousand dollars a year should provide enough to fund my br b r br br br br br br b r br br br br br




child‘s college Education. br br




Assumption 2: Anemergency fund lasting 3 months should be adequate. Assumption br br br br br br br br br br br b r




3: I will be able to retire at 65 and should have plenty to live on in
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b retirement. Assumption 4: I‘m relying on the rule of thumb that I will need
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only 70 percent of my pre- retirement income to manage nicely in retirement.
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There are several worksheets in the book. Worksheet 1.1 gives the student a format to
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bwrite downtheir PersonalFinancial Goals. There is power in writing downgoals [and most
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banyother plan]. Recording the goal and then reviewing three months later will help you to
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bkeep focus on the goal.
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LG3 Explain the life cycle of financial plans, their role in achieving your
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financial goals, how to deal with special planning concerns, and the use of
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professional financialplanners.
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Exhibit 1.7 can help focus the attention on how goals differ between the various stages of
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b life. Section 1-3b lists various decisions that you will have to make over your life. The
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b section 1-3c addresses Special Planning Concerns. Worksheet 1.2 focuses on the financial
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b benefit to the family of the second income. If the second income is from a minimum wage
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job, it may not be a good financialdecision. Ofcourse having a job, even a minimum wage
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b job, may give the person psychic income that will override the financial impact.
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While perhaps off topic, I recall a high school science teacher who was a
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bsmoker. He walked through the amount of money he spent on purchasing
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btobacco products. That computation had a
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