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Solution Manual for Personal Financial Planning 15th Edition by Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk A+ $12.99
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Solution Manual for Personal Financial Planning 15th Edition by Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk A+

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Solution Manual for Personal Financial Planning 15th Edition by Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk A+ ..

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  • October 14, 2024
  • 535
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers

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  • solution
  • manual for
  • personal
  • financial
  • planning
  • 15th
  • edition
  • randy billingsley
  • lawrence j gitman
  • personal financial planning
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  • Solution Manual for Personal Financial Planning 15th Edition by Randy Billingsley, Lawrence J. ,MichaelD.JoehnK
  • Solution Manual for Personal Financial Planning 15th Edition by Randy Billingsley, Lawrence J. Gitman, Michael D. Joehnk|9780357438480|All Chapters| LATEST
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Created by: A Solution


Solution Manual for Personal Financial Planning 15th

Edition by Randy Billingsley, Lawrence J. Gitman, Michael

D. Joehnk A+
Chapter 1: Understanding the Financial Planning Process

How Will This Affect Me?

The heart of financial planning is making sure your values line up with how you spend and save.

That means knowing where you are financially and planning on how to get where you want to be

in the future no matter what life throws at you. For example, how should your plan handle the

projection that Social Security costs may exceed revenues by 2035? And what if the government

decides to raise tax rates to help cover the federal deficit? An informed financial plan should

reflect such uncertainties and more.



This chapter overviews the financial planning process and explains its context. Topics include

how financial plans change to accommodate your current stage in life and the role that financial

planners can play in helping you achieve your objectives. After reading this chapter you will

have a good perspective on how to organize your overall personal financial plan.



LEARNING GOALS

LG1 Identify the benefits of using personal financial planning techniques to manage your

finances.




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Key concept in this section is the planning model as displayed in Exhibit 1.1. Your standard of

living is greatly impacted by your spending habits and your commitment to saving. Your

spending is measured by your propensity to consume. Wealth is the total value of all property

you own less the amount that you owe to others.



ACTIVITY: Ask the students to assume that they have just inherited $100,000. What will you do

with the money? Write down three ways you will spend or use the money.



Ask the students to share one item with the class and record what they say so that the entire class

can reflect on the answers. Hopefully, at least a few will mention investing even if only $10,000

of the amount. Use their answers to discuss taking care of current needs versus future needs.

Focus on their propensity to consume and its impact on accumulating wealth. Point out the

Financial Planning Tip, ―Be SMART in Planning Your Financial Goals.‖

Use Exhibit 1.2 to show how the average person earns and spends their money and Exhibit 1.6 to

help the student identify where they are now.



LG2 Describe the personal financial planning process and define your goals.



Dwight Eisenhower, army general and president, is quoted as saying ―Plans are useless;

Planning is priceless‖. The process of planning allows you to focus on the issues that are most

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 defining

your financial goals. Exhibit 1.6 lists goals by age to demonstrate how goals change over time.

Use the examples in Exhibit 1.5 to ask students if the assumptions are realistic. Yes, the answer

is in the exhibit, but many will not have read chapter at this point. For your use, the assumptions

are:



Assumption 1: Saving a few thousand dollars a year should provide enough to fund my child‘s

college Education.

Assumption 2: An emergency fund lasting 3 months should be adequate.

Assumption 3: I will be able to retire at 65 and should have plenty to live on in retirement.

Assumption 4: I‘m relying on the rule of thumb that I will need only 70 percent of my pre-

retirement income to manage nicely in retirement.



There are several worksheets in the book. Worksheet 1.1 gives the student a format to write

down their Personal Financial Goals. There is power in writing down goals [and most any other

plan]. Recording the goal and then reviewing three months later will help you to keep focus on

the goal.



LG3 Explain the life cycle of financial plans, their role in achieving your financial goals, how to

deal with special planning concerns, and the use of professional financial planners.



Exhibit 1.7 can help focus the attention on how goals differ between the various stages of life.

Section 1-3b lists various decisions that you will have to make over your life. The section 1-3c


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addresses Special Planning Concerns. Worksheet 1.2 focuses on the financial benefit to the

family of the second income. If the second income is from a minimum wage job, it may not be a

good financial decision. Of course having a job, even a minimum wage job, may give the person

psychic income that will override the financial impact.



While perhaps off topic, I recall a high school science teacher who was a smoker. He walked

through the amount of money he spent on purchasing tobacco products. That computation had a



lot to do with my decision to not smoke. How this relates to the course is that this is an

illustration of how the financial impact of a decision can drive the decision.



LG4 Examine the economic environment’s influence on personal financial planning.



For older folks, the financial crisis of 2008-2009 is fresh in our memory. To the student of 2021,

that crisis is more of history than life. If you can share a war story on how you were personally

impacted, it will help bring the impact of the world economy on financial plans to life. The book

speaks how to manage this type of crisis, but you had to go through it to really understand the

impact it had.



The value of professional advice is greatly understated. If by talking to a professional you can

prevent making a mistake -- that can be of a great value. Section 1-3e speaks to the use of

professional financial planners. Exhibit 1.9 lists out the various certifications that planners have.




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