SOLUTION MANUAL Personal Finance, 14th Edition By E. Thomas Garman, Chapter 1 - 17 newest edition updated 2025

SOLUTION MANUAL

Personal Finance, 14th Edition

By E. Thomas Garman, Chapter 1 - 17

,TABLE OFCONTENTS nt nt nt




Part I: FINANCIAL PLANNING.
nt nt nt




1. Understanding Personal Finance.
nt nt nt




2. Career Planning.
nt nt




3. Financial Statements, Goals, and Budgets.
nt nt nt nt nt




Part II: MONEY MANAGEMENT.
nt nt nt




4. Managing Income Taxes.
nt nt nt




5. Managing Checking and Savings Accounts.
nt nt nt nt nt




6. Building and Maintaining Good Credit.
nt nt nt nt nt




7. Credit Cards and Consumer Loans.
nt nt nt nt nt




8. Vehicles and Other Major Purchases.
nt nt nt nt nt




9. Obtaining Affordable Housing.
nt nt nt




Part III: INCOME AND ASSET PROTECTION.
nt nt nt nt nt




10. Managing Property and Liability Risk.
nt nt nt nt nt




11. Planning for Health Care Expenses.
nt nt nt nt nt




12. Life Insurance Planning.
nt nt nt




Part IV: INVESTMENTS.
nt nt




13. Investment Fundamentals.
nt nt

,14. Investing in Stocks and Bonds.
nt nt nt nt nt




15. Mutual and Exchange-Traded Funds.
nt nt nt nt




16. Real Estate and High-Risk Investments.
nt nt nt nt nt




17. Retirement and Estate Planning.
nt nt nt nt




SolutionandAnswerGuide n
t n
t n
t




GARMAN/FOX, PERSONAL FINANCE 14E, CHAPTER 1: THINKING LIKE A FINANCIAL PLANNER
N T N T N T N T N T N T N T N T N T N T




TABLE OF CONTENTS NT NT




Answers to Chapter Concept Checks .............................................................................................. 2
nt nt nt nt




What Do You Recommend Now?.................................................................................................... 4
nt nt nt nt




Let’s Talk About It ........................................................................................................................................................... 5
nt nt nt




Do the Math..................................................................................................................................... 6
nt nt




FinancialPlanning Cases................................................................................................................. 8
nt nt




Extended Learning ....................................................................................................................... 10
nt

, ANSWERS TO CHAPTER CONCEPT CHECKS NT NT NT NT




LO1.1 Recognize the keys to achievingfinancial success.
nt nt nt nt nt nt nt




1. Explainthe five steps in the financial planning process. nt nt nt nt nt nt nt nt




Answer: There are five fundamental steps to the personal financial planning process: (1) evaluate your f
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




inancial health to your education and career choice; (2) define your financial goals; (3) develop a plan of a
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




ction to achieve your goals; (4) implement spending and saving plans to monitor and control progress t
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




oward your goals; and (5) review your financial progress and make changes as appropriate.
nt nt nt nt nt nt nt nt nt nt nt nt nt




2. Distinguishamongfinancial success, financialsecurity, andfinancial happiness. nt nt nt nt nt nt nt nt




Answer: Financial success is the achievement of financial aspirations that are desired, planned, or atte
nt nt nt nt nt nt nt nt nt nt nt nt nt nt




mpted. Success is defined bythe individual or familythat seeks it. Financial success maybe defined as bei
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




ng able to live according to one’s standard of living. Financial security is that comfortable feeling that y
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




our financial resources will be adequate to fulfill any needs you have as well as your wants. Financial hap
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




piness is the experience you have when you are satisfied with money matters. People who are happy ab
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




out their finances will see a spillover into positive feelings about life in general.
nt nt nt nt nt nt nt nt nt nt nt nt nt




3. Summarize what you will accomplish studying personal finance. nt nt nt nt nt nt nt




Answer: Several things can be accomplished by studying personal finance. Recognize how to manage un nt nt nt nt nt nt nt nt nt nt nt nt nt nt




expected and expected financial events. Pay as little as possible in income taxes. Understand how to effecti nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




velycomparison shop for vehicles and homes. Protect what we own. Invest wisely. Accumulate and protect t
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




he wealth that we maychoose to spend during our non-working years (e.g., retirement) or donate.
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




4. What are the building blocks to achieving financial success? nt nt nt nt nt nt nt nt




Answer: The building blocks for achieving financial success include a foundation of regular income tha
nt nt nt nt nt nt nt nt nt nt nt nt nt nt




t provides the means to support your lifestyle and save for desired goals in the future. The foundation su
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




pports a base of various banking accounts, insurance protection, and employee benefits. Then we can e
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




stablish goals, a recordkeeping system, a budget, and an emergency savings fund. We will also manage
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




various expenses such as housing, transportation, insurance, and the payment of taxes. We will also need
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




to handle credit, savings, and educational costs. Finally, we invest in various investment alternatives suc
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




h as mutual funds, stocks, and bonds, often for retirement. As a result of all these building blocks, we are
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




more apt to have a financially successful life. nt nt nt nt nt nt nt




LO1.2 Understandhow the economy affects your personal financial success.
nt nt nt nt nt nt nt nt nt




1. Summarize the phases of the business cycle. nt nt nt nt nt nt




Answer: The business cycle entails a wavelike pattern of rising and falling economic activity as measure
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




d byeconomic indicators like unemployment rates or the gross domestic product. The phases of the busi
nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt nt




ness cycle include expansion (preferred stage—
nt nt nt nt nt




production is high, unemployment low, interest rates low or falling, stock market and consumer deman nt nt nt nt nt nt nt nt nt nt nt nt nt nt




d high), peak, contraction, downturn, trough, and recovery.
nt nt nt nt nt nt nt