Solutions for Personal Finance, 14th Edition by E. Thomas Garman
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Course
Personal Finance
Institution
Personal Finance
Complete Solutions Manual for Personal Finance 14e 14th Edition by E. Thomas Garman, Jonathan Fox. ISBN 1496
End of Chapters exercises and problems solutions are given
Chapter 1: Thinking like a Financial Planner
1.1 Achieving Personal Financial Success
1.2 The Economy Affects Our Personal ...
Solution Manual / Guide: Garman/Fox, Personal Finance 14e, Chapter 1: Thinking Like a Financial Planner
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 what you will accomplish studying personal finance.
Answer: Several things can be accomplished by studying personal finance. Recognize
how to manage unexpected and expected financial events. Pay as little as possible in
income taxes. Understand how to effectively comparison shop for vehicles and homes.
Protect what we own. Invest wisely. Accumulate and protect the wealth that we may
choose to spend during our non-working years (e.g., retirement) or donate.
4. What are the building blocks to achieving financial success?
Answer: The building blocks for achieving financial success include a foundation of
regular income that provides the means to support your lifestyle and save for desired
goals in the future. The foundation supports a base of various banking accounts,
insurance protection, and employee benefits. Then we can establish goals, a
recordkeeping system, a budget, and an emergency savings fund. We will also manage
various expenses such as housing, transportation, insurance, and the payment of
taxes. We will also need to handle credit, savings, and educational costs. Finally, we
invest in various investment alternatives such as mutual funds, stocks, and bonds,
often for retirement. As a result of all these building blocks, we are more apt to have a
financially successful life.
LO1.2 Understand how the economy affects your personal financial success.
1. Summarize the phases of the business cycle.
Answer: The business cycle entails a wavelike pattern of rising and falling economic
activity as measured by economic indicators like unemployment rates or the gross
domestic product. The phases of the business cycle include expansion (preferred
stage—production is high, unemployment low, interest rates low or falling, stock
market and consumer demand high), peak, contraction, downturn, trough, and
recovery.
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