© m2024 mCengage. mAll mRights mReserved. mMay mnot mbe mscanned, mcopied, mor mduplicated, mor mposted mto ma 1
mpublicly maccessible
website, min mwhole mor min mpart.
,Solution and Answer Guide m m m
GARMAN/FOX, m PERSONAL m FINANCE m 14E, m CHAPTER m 1: m THINKING m LIKE m A m FINANCIAL m PLANNER
TABLE OF CONTENTSm m
Answers mto mChapter mConcept mChecks .................................................................................................... 2
What mDo mYou mRecommend mNow? .......................................................................................................... 4
Let’s mTalk mAbout mIt................................................................................................................................... 5
Do mthe mMath ............................................................................................................................................... 6
Financial mPlanning mCases .......................................................................................................................... 8
Extended mLearning................................................................................................................................... 10
© m2024 mCengage. mAll mRights mReserved. mMay mnot mbe mscanned, mcopied, mor mduplicated, mor mposted mto ma 2
mpublicly maccessible
website, min mwhole mor min mpart.
,ANSWERS TO CHAPTER CONCEPT CHECKS
m m m m
LO1.1 mRecognize mthe mkeys mto machieving mfinancial msuccess.
1. Explain mthe mfive msteps min mthe mfinancial mplanning mprocess.
Answer: mThere mare mfive mfundamental msteps mto mthe mpersonal mfinancial mplanning mprocess: m(1) mevaluate
myour mfinancial mhealth mto myour meducation mand mcareer mchoice; m(2) mdefine myour mfinancial mgoals; m(3)
mdevelop ma mplan mofmaction mto machieve myour mgoals; m(4) mimplement mspending mand msaving mplans mto
mmonitor mand mcontrol mprogress mtoward myour m goals; mand m(5) mreview myour m financial mprogress mand
mmake mchanges mas mappropriate.
2. Distinguish mamong mfinancial msuccess, mfinancial msecurity, mand mfinancial mhappiness.
Answer: mFinancial msuccess mis mthe machievement mof mfinancial maspirations mthat mare mdesired, mplanned,
mor mattempted. mSuccess mis mdefined mby mthe mindividual mor mfamily mthat mseeks mit. mFinancial msuccess mmay
mbe mdefined masmbeing mable mto mlive maccording mto mone’s mstandard mof mliving. mFinancial msecurity mis mthat
mcomfortable mfeeling mthatmyour mfinancial mresources mwill mbe madequate mto mfulfill many mneeds myou mhave mas
mwell mas myour mwants. mFinancial mhappiness mis mthe mexperience myou mhave mwhen myou mare msatisfied mwith
mmoney mmatters. mPeople mwho mare mhappy mabout mtheir mfinances m will msee ma m spillover minto mpositive
mfeelings mabout mlife min mgeneral.
3. Summarize mwhat myou mwill maccomplish mstudying mpersonal mfinance.
Answer: mSeveral mthings mcan mbe maccomplished mby mstudying mpersonal mfinance. mRecognize mhow mto
mmanage munexpected mand mexpected mfinancial mevents. mPay mas mlittle mas mpossible min mincome mtaxes.
mUnderstand mhow mto meffectively mcomparison mshop mfor mvehicles mand mhomes. mProtect mwhat mwe mown.
mInvest mwisely. mAccumulate mandmprotect mthe mwealth mthat mwe mmay mchoose mto mspend mduring mour mnon-
working myears m(e.g., mretirement) mor mdonate.
4. What mare mthe mbuilding mblocks mto machieving mfinancial msuccess?
Answer: mThe mbuilding mblocks mfor machieving mfinancial msuccess minclude ma mfoundation mof mregular
mincome mthat mprovides mthe mmeans mto msupport myour mlifestyle mand msave mfor mdesired mgoals min mthe
mfuture. mThe mfoundation msupports ma mbase mof mvarious mbanking maccounts, minsurance mprotection, mand
memployee mbenefits. mThen mwe mcan mestablish mgoals, ma mrecordkeeping msystem, ma mbudget, mand man
memergency msavings mfund. mWe mwill malso mmanage mvarious mexpenses msuch mas mhousing, mtransportation,
minsurance, m and mthe mpayment mof mtaxes. mWe mwill malso mneed mtomhandle mcredit, msavings, mand meducational
mcosts. mFinally, mwe minvest min mvarious minvestment malternatives msuch mas mmutual mfunds, mstocks, mand
mbonds, moften mfor mretirement. mAs ma mresult mof mall mthese mbuilding mblocks, mwe mare mmore mapt mto mhave ma
mfinancially msuccessful mlife.
LO1.2 mUnderstand mhow mthe meconomy maffects myour mpersonal mfinancial msuccess.
1. Summarize mthe mphases mof mthe mbusiness mcycle.
Answer: mThe mbusiness mcycle mentails ma mwavelike mpattern mof mrising mand mfalling meconomic mactivity mas
mmeasuredmby meconomic mindicators mlike munemployment mrates mor mthe mgross mdomestic mproduct. mThe
mphases mof mthe mbusinessmcycle minclude mexpansion m(preferred mstage—production mis mhigh,
munemployment mlow, minterest mrates mlow mor mfalling, mstock mmarket mand mconsumer mdemand mhigh), mpeak,
mcontraction, mdownturn, mtrough, mand mrecovery.
2. Describe mtwo mstatistics mthat mhelp mpredict mthe mfuture mdirection mof mthe meconomy.
Answer: mForecasting mthe mstate mof mthe meconomy minvolves mpredicting, mestimating, mor mcalculating mwhat
mwill mhappen min madvance. mWe mneed mto mbe mable mto mforecast mthe mstate mof mthe meconomy, minflation, mand
minterest mrates msomthat mwe mhave madvance mwarning mof mthe mdirections mand mstrength mof mchanges min
© m2024 mCengage. mAll mRights mReserved. mMay mnot mbe mscanned, mcopied, mor mduplicated, mor mposted mto ma 3
mpublicly maccessible
website, min mwhole mor min mpart.
, meconomic mtrends msince mthey mwillmaffect mour mpersonal mfinances. mTwo mstatistics mwe mcould mwatch mare
mthe mconsumer mconfidence mindex m(how mconsumers mfeel mabout mthe meconomy mand mtheir mpersonal
mfinances) mand mthe mindex mof mleading meconomic mindicators m(composite mindex, maverages mten
mcomponents mof meconomic mgrowth).
© m2024 mCengage. mAll mRights mReserved. mMay mnot mbe mscanned, mcopied, mor mduplicated, mor mposted mto ma 4
mpublicly maccessible
website, min mwhole mor min mpart.
