© 2024 Cengage. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible 1
website, in whole or in part.
,Solution and Answer Guide k k k
GARMAN/FOX, k PERSONAL k FINANCE k 14E, k CHAPTER k 1: k THINKING k LIKE k A k FINANCIAL
k PLANNER
TABLE kOF kCONTENTS
Answers kto kChapter kConcept kChecks .................................................................................................. 2
What kDo kYou kRecommend kNow? ......................................................................................................... 4
Let’s kTalk kAbout kIt ................................................................................................................................. 5
Do kthe kMath .............................................................................................................................................. 6
Financial kPlanning kCases ......................................................................................................................... 8
Extended kLearning .................................................................................................................................. 10
© 2024 Cengage. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible 2
website, in whole or in part.
,ANSWERS kTO kCHAPTER kCONCEPT kCHECKS
LO1.1 kRecognize kthe kkeys kto kachieving kfinancial ksuccess.
1. Explain kthe kfive ksteps kin kthe kfinancial kplanning kprocess.
Answer: kThere kare kfive kfundamental ksteps kto kthe kpersonal kfinancial kplanning kprocess: k(1)
kevaluate kyour kfinancial khealth kto kyour keducation kand kcareer kchoice; k(2) kdefine kyour kfinancial
kgoals; k(3) kdevelop ka kplan kofkaction kto kachieve kyour kgoals; k(4) kimplement kspending kand ksaving
kplans kto kmonitor kand kcontrol kprogress ktoward kyour kgoals; kand k(5) kreview kyour kfinancial
kprogress kand kmake kchanges kas kappropriate.
2. Distinguish kamong kfinancial ksuccess, kfinancial ksecurity, kand kfinancial khappiness.
Answer: kFinancial ksuccess kis kthe kachievement kof kfinancial kaspirations kthat kare kdesired, kplanned,
kor kattempted. kSuccess kis kdefined kby kthe kindividual kor kfamily kthat kseeks kit. kFinancial ksuccess
kmay kbe kdefined kaskbeing kable kto klive kaccording kto kone’s kstandard kof kliving. kFinancial ksecurity
kis kthat kcomfortable kfeeling kthatkyour kfinancial kresources kwill kbe kadequate kto kfulfill kany kneeds
kyou khave kas kwell kas kyour kwants. kFinancial khappiness kis kthe kexperience kyou khave kwhen kyou
kare ksatisfied kwith kmoney kmatters. kPeople kwho kare khappy kabout ktheir kfinances k will ksee ka
kspillover kinto kpositive kfeelings kabout klife kin kgeneral.
3. Summarize kwhat kyou kwill kaccomplish kstudying kpersonal kfinance.
Answer: kSeveral kthings kcan kbe kaccomplished kby kstudying kpersonal kfinance. kRecognize khow kto
kmanage kunexpected kand kexpected kfinancial kevents. kPay kas klittle kas kpossible kin kincome ktaxes.
kUnderstand khow kto keffectively kcomparison kshop kfor kvehicles kand khomes. kProtect kwhat kwe kown.
kInvest kwisely. kAccumulate kandkprotect kthe kwealth kthat kwe kmay kchoose kto kspend kduring kour knon-
working kyears k(e.g., kretirement) kor kdonate.
4. What kare kthe kbuilding kblocks kto kachieving kfinancial ksuccess?
Answer: kThe kbuilding kblocks kfor kachieving kfinancial ksuccess kinclude ka kfoundation kof kregular
kincome kthat kprovides kthe kmeans kto ksupport kyour klifestyle kand ksave kfor kdesired kgoals kin kthe
kfuture. kThe kfoundation ksupports ka kbase kof kvarious kbanking kaccounts, kinsurance kprotection, kand
kemployee kbenefits. kThen kwe kcan kestablish kgoals, ka krecordkeeping ksystem, ka kbudget, kand kan
kemergency ksavings kfund. kWe kwill kalso kmanage kvarious kexpenses ksuch kas khousing,
ktransportation, kinsurance, kand kthe kpayment kof ktaxes. kWe kwill kalso kneed ktokhandle kcredit, ksavings,
kand keducational kcosts. kFinally, kwe kinvest kin kvarious kinvestment kalternatives ksuch kas kmutual
kfunds, kstocks, kand kbonds, koften kfor kretirement. kAs ka kresult kof kall kthese kbuilding kblocks, kwe
kare kmore kapt kto khave ka kfinancially ksuccessful klife.
LO1.2 kUnderstand khow kthe keconomy kaffects kyour kpersonal kfinancial ksuccess.
1. Summarize kthe kphases kof kthe kbusiness kcycle.
Answer: kThe kbusiness kcycle kentails ka kwavelike kpattern kof krising kand kfalling keconomic kactivity
kas kmeasuredkby keconomic kindicators klike kunemployment krates kor kthe kgross kdomestic kproduct.
kThe kphases kof kthe kbusinesskcycle kinclude kexpansion k(preferred kstage—production kis khigh,
kunemployment klow, kinterest krates klow kor kfalling, kstock kmarket kand kconsumer kdemand khigh),
kpeak, kcontraction, kdownturn, ktrough, kand krecovery.
2. Describe ktwo kstatistics kthat khelp kpredict kthe kfuture kdirection kof kthe keconomy.
Answer: kForecasting kthe kstate kof kthe keconomy kinvolves kpredicting, kestimating, kor kcalculating
kwhat kwill khappen kin kadvance. kWe kneed kto kbe kable kto kforecast kthe kstate kof kthe keconomy,
kinflation, kand kinterest krates ksokthat kwe khave kadvance kwarning kof kthe kdirections kand kstrength kof
© 2024 Cengage. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible 3
website, in whole or in part.
, kchanges kin keconomic ktrends ksince kthey kwillkaffect kour kpersonal kfinances. kTwo kstatistics kwe
kcould kwatch kare kthe kconsumer kconfidence kindex k(how kconsumers kfeel kabout kthe keconomy kand
ktheir kpersonal kfinances) kand kthe kindex kof kleading keconomic kindicators k(composite kindex,
kaverages kten kcomponents kof keconomic kgrowth).
© 2024 Cengage. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible 4
website, in whole or in part.
website, in whole or in part.
,Solution and Answer Guide k k k
GARMAN/FOX, k PERSONAL k FINANCE k 14E, k CHAPTER k 1: k THINKING k LIKE k A k FINANCIAL
k PLANNER
TABLE kOF kCONTENTS
Answers kto kChapter kConcept kChecks .................................................................................................. 2
What kDo kYou kRecommend kNow? ......................................................................................................... 4
Let’s kTalk kAbout kIt ................................................................................................................................. 5
Do kthe kMath .............................................................................................................................................. 6
Financial kPlanning kCases ......................................................................................................................... 8
Extended kLearning .................................................................................................................................. 10
© 2024 Cengage. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible 2
website, in whole or in part.
,ANSWERS kTO kCHAPTER kCONCEPT kCHECKS
LO1.1 kRecognize kthe kkeys kto kachieving kfinancial ksuccess.
1. Explain kthe kfive ksteps kin kthe kfinancial kplanning kprocess.
Answer: kThere kare kfive kfundamental ksteps kto kthe kpersonal kfinancial kplanning kprocess: k(1)
kevaluate kyour kfinancial khealth kto kyour keducation kand kcareer kchoice; k(2) kdefine kyour kfinancial
kgoals; k(3) kdevelop ka kplan kofkaction kto kachieve kyour kgoals; k(4) kimplement kspending kand ksaving
kplans kto kmonitor kand kcontrol kprogress ktoward kyour kgoals; kand k(5) kreview kyour kfinancial
kprogress kand kmake kchanges kas kappropriate.
2. Distinguish kamong kfinancial ksuccess, kfinancial ksecurity, kand kfinancial khappiness.
Answer: kFinancial ksuccess kis kthe kachievement kof kfinancial kaspirations kthat kare kdesired, kplanned,
kor kattempted. kSuccess kis kdefined kby kthe kindividual kor kfamily kthat kseeks kit. kFinancial ksuccess
kmay kbe kdefined kaskbeing kable kto klive kaccording kto kone’s kstandard kof kliving. kFinancial ksecurity
kis kthat kcomfortable kfeeling kthatkyour kfinancial kresources kwill kbe kadequate kto kfulfill kany kneeds
kyou khave kas kwell kas kyour kwants. kFinancial khappiness kis kthe kexperience kyou khave kwhen kyou
kare ksatisfied kwith kmoney kmatters. kPeople kwho kare khappy kabout ktheir kfinances k will ksee ka
kspillover kinto kpositive kfeelings kabout klife kin kgeneral.
3. Summarize kwhat kyou kwill kaccomplish kstudying kpersonal kfinance.
Answer: kSeveral kthings kcan kbe kaccomplished kby kstudying kpersonal kfinance. kRecognize khow kto
kmanage kunexpected kand kexpected kfinancial kevents. kPay kas klittle kas kpossible kin kincome ktaxes.
kUnderstand khow kto keffectively kcomparison kshop kfor kvehicles kand khomes. kProtect kwhat kwe kown.
kInvest kwisely. kAccumulate kandkprotect kthe kwealth kthat kwe kmay kchoose kto kspend kduring kour knon-
working kyears k(e.g., kretirement) kor kdonate.
4. What kare kthe kbuilding kblocks kto kachieving kfinancial ksuccess?
Answer: kThe kbuilding kblocks kfor kachieving kfinancial ksuccess kinclude ka kfoundation kof kregular
kincome kthat kprovides kthe kmeans kto ksupport kyour klifestyle kand ksave kfor kdesired kgoals kin kthe
kfuture. kThe kfoundation ksupports ka kbase kof kvarious kbanking kaccounts, kinsurance kprotection, kand
kemployee kbenefits. kThen kwe kcan kestablish kgoals, ka krecordkeeping ksystem, ka kbudget, kand kan
kemergency ksavings kfund. kWe kwill kalso kmanage kvarious kexpenses ksuch kas khousing,
ktransportation, kinsurance, kand kthe kpayment kof ktaxes. kWe kwill kalso kneed ktokhandle kcredit, ksavings,
kand keducational kcosts. kFinally, kwe kinvest kin kvarious kinvestment kalternatives ksuch kas kmutual
kfunds, kstocks, kand kbonds, koften kfor kretirement. kAs ka kresult kof kall kthese kbuilding kblocks, kwe
kare kmore kapt kto khave ka kfinancially ksuccessful klife.
LO1.2 kUnderstand khow kthe keconomy kaffects kyour kpersonal kfinancial ksuccess.
1. Summarize kthe kphases kof kthe kbusiness kcycle.
Answer: kThe kbusiness kcycle kentails ka kwavelike kpattern kof krising kand kfalling keconomic kactivity
kas kmeasuredkby keconomic kindicators klike kunemployment krates kor kthe kgross kdomestic kproduct.
kThe kphases kof kthe kbusinesskcycle kinclude kexpansion k(preferred kstage—production kis khigh,
kunemployment klow, kinterest krates klow kor kfalling, kstock kmarket kand kconsumer kdemand khigh),
kpeak, kcontraction, kdownturn, ktrough, kand krecovery.
2. Describe ktwo kstatistics kthat khelp kpredict kthe kfuture kdirection kof kthe keconomy.
Answer: kForecasting kthe kstate kof kthe keconomy kinvolves kpredicting, kestimating, kor kcalculating
kwhat kwill khappen kin kadvance. kWe kneed kto kbe kable kto kforecast kthe kstate kof kthe keconomy,
kinflation, kand kinterest krates ksokthat kwe khave kadvance kwarning kof kthe kdirections kand kstrength kof
© 2024 Cengage. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible 3
website, in whole or in part.
, kchanges kin keconomic ktrends ksince kthey kwillkaffect kour kpersonal kfinances. kTwo kstatistics kwe
kcould kwatch kare kthe kconsumer kconfidence kindex k(how kconsumers kfeel kabout kthe keconomy kand
ktheir kpersonal kfinances) kand kthe kindex kof kleading keconomic kindicators k(composite kindex,
kaverages kten kcomponents kof keconomic kgrowth).
© 2024 Cengage. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible 4
website, in whole or in part.
