Course:	FIP501 - Foundational Financial Planning and Financial Management
Professor:	Mahsa Nasher
Evaluation Type:	Case Study #1
Total Marks:	50
Total Weight:	15%

This assignment will assess your ability to:

• Document an individual's financial planning related goals.
• Construct a net worth and cash flow statement.
• Explain the importance of net worth and cash flow in the financial planning process.
• Identify foundational financial management actions that can improve an individual's current and future situation.

Instructions:

The case study presented below contains the information that you collected from your new clients, Sara and Sam, during your introductory meeting with them.

Prepare a financial management report for the couple that includes the following information:

1. A title page with the clients' names, your name, and the date. (2 marks)
2. A summary of the clients' goals. (3 marks)
3. A short-written introduction to the clients' net worth statement that explains what net worth is and the importance of why their net worth is being presented. (2.5 marks)
4. A net worth statements for the clients. (15 marks)
5. A short introduction to the clients' cash flow statement that explains what free cash flow is and the importance of why their cash flow is being presented. (2.5 marks)
6. A cash flow statement for the couple. (15 marks)
7. Two recommendations that will help improve the clients' current or future situation, including how implementing the action will improve the clients' situation identified in goals. (10 marks)

Save the file with the naming convention,

FirstName.LastName.Assignment1 (e.g. lee.Fitzsimmons.Assignment1)

It is recommended to upload your file in Excel format.

This assignment is worth 15% of your final grade in this course and will be assessed based on the rubric above.

Sara and Sam McQueen Case

Sara (age 38) and Sam (age 40) Smith have been married for nine years. They have a six-year-old son named Tino and a three-year old daughter named Sophie. The family has lived in a house at 6 Love Avenue, Makham, Ontario for 4 years.

Sara and Sam have two goals. First, they would like to retire when Sam turns 60 years old with an annual after-tax income of $65,000 (in today's dollars). Second, they would like to fully fund four-years of post-secondary education for both of their children, starting when each child is 18 years old.

Sara earns a gross annual salary of $110,000 as a speech pathologist. Sam is an actuary for an insurance company and earns $100,000 gross per year. In addition to the government source deductions they pay, Sara's employer deducts $210 per month from her pay cheque to cover her health and insurance benefits. Sam's employer does the same at a cost of $150 per month.

The couple have $20,000 in their chequing account. They also have $50,000 in a high-interest savings account for emergency purposes that earns interest of 4%. The couple have two cars, one fully paid for and one that has a loan outstanding. Sara's five-year-old vehicle is worth $6,000 and Sam's brand- new car is worth $50,000, with a loan of $25,000 with a payment of

$500 per month. Sara has an RRSP with $45,000 invested in it. Sam has an RRSP with $100,000 in it.Also earmarked for the couple's retirement is the money they have invested in their respective TFSAs. Sara has $15,000 invested and Sam has $10,000 invested. Sara and Sam also own a RESP jointly where they save money for their child's education. The plan has $40,000 invested in it.

The couple own their own home jointly worth $800,000. Their mortgage has an outstanding balance of $400,000 owing on it. Their monthly mortgage payment is $2100. They also pay property taxes on their home of $7500 per year. Additionally, they pay the following monthly costs related to their home: $200 for home insurance, $150 for heat, $90 for hydro, and $100for water. They pay $2500 for food and supplies to clean run their household.

Sara and Sam also pay $90 each per month for their respective cell phone plans, $150 per month for high-speed internet access and internet access, and $100 for cable television. Their monthly expenses related to their vehicles include $120 for insurance, $120 for maintenance, and $250 for gas. They also pay $1,000 per month in childcare expenses.

Sam has a student loan of $20000 with a payment of $265 per month. The couple have a joint unsecured line of credit with a $40,000 credit limit and $15,000 owing on. The line of credit charges interest of 8% and has a minimum payment of $600. Additionally, Sara and Sam have a credit card with a credit limit of $20,000.

Sara and Sam generally take their family on one big trip per year, costing approximately $8,000. Additionally, they spend about $600 per month on social activities for them and their kids.

Considering CPP and EI and income tax for 2023, Prepare net worth and monthly cash flow statement.

Required sources: CPP: CPP contribution rates, maximums and exemptions - Calculate payroll deductions and contributions - Canada.ca EI: EI premium rates and maximums - Calculate payroll deductions and contributions - Canada.ca

Income tax: 2023 Personal tax calculator | EY Canada (eytaxcalculators.com)

Good luck