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SOLUTION MANUAL
Personal Finance, 14th Edition
By E. Thomas Garman, Chapter 1 - 17
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TABLE OF CONTENTS ik ik i k
Part I: FINANCIAL PLANNING.
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1. Understanding Personal Finance. ik ik
2. Career Planning. ik
3. Financial Statements, Goals, and Budgets.
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Part II: MONEY MANAGEMENT.
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4. Managing Income Taxes. ik ik
5. Managing Checking and Savings Accounts.ik ik ik ik
6. Building and Maintaining Good Credit.
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7. Credit Cards and Consumer Loans.
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8. Vehicles and Other Majory Purchases.
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9. Obtaining Affordable Housing. ik ik
Part III: INCOME AND ASSET PROTECTION.
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10. Managing Property and Liability Risk. ik ik ik ik
11. Planning for Health Care Expenses. i k ik i k i k
12. Life Insurance Planning.
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Part IV: INVESTMENTS.
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13. Investment Fundamentals. ik
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14. Investing in Stocks and Bonds. i k i k ik i k
15. Mutual and Exchange-Traded Funds. ik ik ik
16. Real Estate and High-Risk Investments.
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17. Retirement and Estate Planning. ik ik i k
SolutionandAnswerGuide ik ik ik
GARMAN/FOX, i k PERSONAL i k i k FINANCE i k i k 14E, i k CHAPTER i k i k 1: i k THINKING i k i k LIKE i k i k AY i k FINANCIAL i k
PLANNER
i k
TABLE OF CONTENTS
K
I I K I K
Answers i k to i k Chapter i k Concept i k Checks ................................................................................2
What i k Do i k You i k Recommend i k Now? .....................................................................................4
Let’s i k Talk i k About i k It .................................................................................................................5
Do i k the i k Math .............................................................................................................................6
Financial Planning i k i k Cases...........................................................................................................8
Extended i k Learning .................................................................................................................... 10
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Material
ANSWERS TO CHAPTER CONCEPT CHECKS IK I K I K I K
LO1.1 i k Recognize i k the i k keys i k to i k achieving i k financial i k success.
1. Explain i k the i k five i k steps i k in i k the i k financial i k planning i k process.
Answer: There are five fundamental steps to the personal financial planning
i k i k i k i k i k i k i k i k i k i k
process:
i k
(1) evaluate your
i k financial health to your education and career choice; (2) i k i k i k i k i k i k i k i k i k i k
define your financial goals; (3) develop a plan of action to achieve your
i k i k ik i k i k i k i k i k i k i k i k i k i k
i goals; (4) implement spending and saving plans to monitor and control
k i k i k ik i k i k i k i k i k i k i k
progress toward your goals; and (5) review your financial progress and make
i k i k i k i k i k i k ik i k i k i k i k i k
changes as appropriate.
i k i k i k
2. Distinguish i k among i k financial i k success, i k financial i k security, i k and i k financial i k happiness.
Answer: Financial success is the achievement of financial aspirations that are
i k i k i k i k i k i k i k i k i k i k
desired, planned, or attempted. Success is defined by the individual or
i k ik i k i k i k i k i k i k i k i k i k
i family that seeks it.
k i k i k i k
Financial success may be defined as being able to live according to
i k i k i k i k i k i k i k i k i k i k i k
i one’s standard ofy living. Financial security is that comfortable feeling that
k i k i k ik i k i k i k i k i k i k i k
your financial resources will be adequate to fulfill any needs you have
i k i k i k i k i k ik i k i k i k i k i k i k
i as well as your wants. Financial
k i k happiness is the experience you i k i k i k i k i k i k ik i k i k
i have when you are satisfied with money matters. People who are
k i k i k i k i k i k i k i k i k i k i k
happy about their finances will see a spillover into positive feelings
ik i k i k i k i k i k i k i k i k i k i k
i about life in general.
k i k i k ik
3. Summarize i k what i k you i k will i k accomplish i k studying i k personal i k finance.
Answer: Several things can be accomplished by studying personal finance.
i k i k i k i k i k i k i k i k i k
iRecognize how to manage unexpected and expected financial events. Pay
k i k ik i k i k i k i k i k i k i k
i as little as possible in income taxes.
k i k Understand how to effectively i k i k i k i k ik i k i k i k i k
icomparison shop for vehicles and homes. Protect what we own. Invest
k i k i k i k i k i k i k ik i k i k i k
wisely. Accumulate and protect the wealth that we may choose to spend
i k i k i k i k i k i k i k i k i k i k i k i k
during our non-working years (e.g., retirement) or donate.
i k i k i k i k i k i k i k i k
4. What i k are i k the i k building i k blocks i k to i k achieving i k financial i k success?
Answer: The building blocks for achieving financial
i success include a
k i k i k i k i k i k i k i k i k
foundation ofy regular income that provides the means to support your
i k i k ik i k i k i k i k i k i k i k i k
i lifestyle and save for desired goals in the future. The
k i foundation supports
k i k i k i k ik i k i k i k i k i k i k
a base of various banking
i k i k accounts, insurance protection,
i k and employee i k i k i k ik i k i k i k
benefits. Then
i k we can establish goals, a recordkeeping system, a budget,
i k i k i k i k i k i k ik i k i k i k
and an emergency savings fund. We will also manage various expenses such
i k i k i k i k i k i k i k i k i k ik i k i k
as housing, transportation, insurance, and the payment of taxes. We will also
i k i k i k i k i k i k i k i k i k ik i k i k
need to handle credit, savings, and educational costs. Finally, we invest
i k i k i k i k i k i k i k i k i k i k i k
i in various investment alternatives such as mutual funds, stocks, and bonds,
k ik i k i k i k i k i k i k i k i k i k
often for retirement. As a result of all these building blocks, we
i k i k i k i k i k i k i k i k i k i k i k i k
i are more apt to have a financially successful life.
k i k i k i k i k i k ik i k i k
LO1.2 i k Understand how i k i k the i k economy i k affects i k your i k personal i k financial i k success.
1. Summarize i k the i k phases i k of i k the i k business i k cycle.
Want to earn ik ik
$1.236 ik
extra per year?
ik ik ik ik ik ik ik ik ik
Material
SOLUTION MANUAL
Personal Finance, 14th Edition
By E. Thomas Garman, Chapter 1 - 17
Want to earn
ik ik
$1.236
ik
extra per year?
, Stuvia.com - The Marketplace to Buy and Sell your Study
ik ik ik ik ik ik ik ik ik
Material
TABLE OF CONTENTS ik ik i k
Part I: FINANCIAL PLANNING.
i k i k i k
1. Understanding Personal Finance. ik ik
2. Career Planning. ik
3. Financial Statements, Goals, and Budgets.
ik ik ik ik
Part II: MONEY MANAGEMENT.
ik ik ik ik
4. Managing Income Taxes. ik ik
5. Managing Checking and Savings Accounts.ik ik ik ik
6. Building and Maintaining Good Credit.
ik ik ik i k
7. Credit Cards and Consumer Loans.
ik ik i k ik
8. Vehicles and Other Majory Purchases.
ik ik i k ik
9. Obtaining Affordable Housing. ik ik
Part III: INCOME AND ASSET PROTECTION.
i k i k i k ik i k
10. Managing Property and Liability Risk. ik ik ik ik
11. Planning for Health Care Expenses. i k ik i k i k
12. Life Insurance Planning.
ik ik
Part IV: INVESTMENTS.
ik ik ik
13. Investment Fundamentals. ik
Want to earn
ik ik
$1.236
ik
extra per year?
, Stuvia.com - The Marketplace to Buy and Sell your Study
ik ik ik ik ik ik ik ik ik
Material
14. Investing in Stocks and Bonds. i k i k ik i k
15. Mutual and Exchange-Traded Funds. ik ik ik
16. Real Estate and High-Risk Investments.
ik i k i k i k
17. Retirement and Estate Planning. ik ik i k
SolutionandAnswerGuide ik ik ik
GARMAN/FOX, i k PERSONAL i k i k FINANCE i k i k 14E, i k CHAPTER i k i k 1: i k THINKING i k i k LIKE i k i k AY i k FINANCIAL i k
PLANNER
i k
TABLE OF CONTENTS
K
I I K I K
Answers i k to i k Chapter i k Concept i k Checks ................................................................................2
What i k Do i k You i k Recommend i k Now? .....................................................................................4
Let’s i k Talk i k About i k It .................................................................................................................5
Do i k the i k Math .............................................................................................................................6
Financial Planning i k i k Cases...........................................................................................................8
Extended i k Learning .................................................................................................................... 10
Want to earn
ik ik
$1.236
ik
extra per year?
, Stuvia.com - The Marketplace to Buy and Sell your Study ik ik ik ik ik ik ik ik ik
Material
ANSWERS TO CHAPTER CONCEPT CHECKS IK I K I K I K
LO1.1 i k Recognize i k the i k keys i k to i k achieving i k financial i k success.
1. Explain i k the i k five i k steps i k in i k the i k financial i k planning i k process.
Answer: There are five fundamental steps to the personal financial planning
i k i k i k i k i k i k i k i k i k i k
process:
i k
(1) evaluate your
i k financial health to your education and career choice; (2) i k i k i k i k i k i k i k i k i k i k
define your financial goals; (3) develop a plan of action to achieve your
i k i k ik i k i k i k i k i k i k i k i k i k i k
i goals; (4) implement spending and saving plans to monitor and control
k i k i k ik i k i k i k i k i k i k i k
progress toward your goals; and (5) review your financial progress and make
i k i k i k i k i k i k ik i k i k i k i k i k
changes as appropriate.
i k i k i k
2. Distinguish i k among i k financial i k success, i k financial i k security, i k and i k financial i k happiness.
Answer: Financial success is the achievement of financial aspirations that are
i k i k i k i k i k i k i k i k i k i k
desired, planned, or attempted. Success is defined by the individual or
i k ik i k i k i k i k i k i k i k i k i k
i family that seeks it.
k i k i k i k
Financial success may be defined as being able to live according to
i k i k i k i k i k i k i k i k i k i k i k
i one’s standard ofy living. Financial security is that comfortable feeling that
k i k i k ik i k i k i k i k i k i k i k
your financial resources will be adequate to fulfill any needs you have
i k i k i k i k i k ik i k i k i k i k i k i k
i as well as your wants. Financial
k i k happiness is the experience you i k i k i k i k i k i k ik i k i k
i have when you are satisfied with money matters. People who are
k i k i k i k i k i k i k i k i k i k i k
happy about their finances will see a spillover into positive feelings
ik i k i k i k i k i k i k i k i k i k i k
i about life in general.
k i k i k ik
3. Summarize i k what i k you i k will i k accomplish i k studying i k personal i k finance.
Answer: Several things can be accomplished by studying personal finance.
i k i k i k i k i k i k i k i k i k
iRecognize how to manage unexpected and expected financial events. Pay
k i k ik i k i k i k i k i k i k i k
i as little as possible in income taxes.
k i k Understand how to effectively i k i k i k i k ik i k i k i k i k
icomparison shop for vehicles and homes. Protect what we own. Invest
k i k i k i k i k i k i k ik i k i k i k
wisely. Accumulate and protect the wealth that we may choose to spend
i k i k i k i k i k i k i k i k i k i k i k i k
during our non-working years (e.g., retirement) or donate.
i k i k i k i k i k i k i k i k
4. What i k are i k the i k building i k blocks i k to i k achieving i k financial i k success?
Answer: The building blocks for achieving financial
i success include a
k i k i k i k i k i k i k i k i k
foundation ofy regular income that provides the means to support your
i k i k ik i k i k i k i k i k i k i k i k
i lifestyle and save for desired goals in the future. The
k i foundation supports
k i k i k i k ik i k i k i k i k i k i k
a base of various banking
i k i k accounts, insurance protection,
i k and employee i k i k i k ik i k i k i k
benefits. Then
i k we can establish goals, a recordkeeping system, a budget,
i k i k i k i k i k i k ik i k i k i k
and an emergency savings fund. We will also manage various expenses such
i k i k i k i k i k i k i k i k i k ik i k i k
as housing, transportation, insurance, and the payment of taxes. We will also
i k i k i k i k i k i k i k i k i k ik i k i k
need to handle credit, savings, and educational costs. Finally, we invest
i k i k i k i k i k i k i k i k i k i k i k
i in various investment alternatives such as mutual funds, stocks, and bonds,
k ik i k i k i k i k i k i k i k i k i k
often for retirement. As a result of all these building blocks, we
i k i k i k i k i k i k i k i k i k i k i k i k
i are more apt to have a financially successful life.
k i k i k i k i k i k ik i k i k
LO1.2 i k Understand how i k i k the i k economy i k affects i k your i k personal i k financial i k success.
1. Summarize i k the i k phases i k of i k the i k business i k cycle.
Want to earn ik ik
$1.236 ik
extra per year?
