the same at a cost Adriana & Martin Smith Adriana (age 34) and Martin (age 39) Smith have been married for eight years. They have a fiveyear old son named Milo and a three-year old daughter named Chloe. The family has lived in a house at 10 Gage Avenue, Kitchener, Ontario N8S 5B5 for 5 years. Adriana and Martin have two goals. First, they would like to retire when Martin turns 65 years old with an annual after-tax income of $50,000 (in todays 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. Adriana earns a gross annual salary of $90,000 as a speech pathologist. Martin is an actuary for an insurance company and earns $60,000 gross per year. In addition to the government source deductions they pay, Adrianas employer deducts $180 per month from her pay cheque to cover her health and insurance benefits. Martins employer does of $90 per month. The couple have $8,000 in their chequing account. They also have $35,000 in a high-interest savings account for emergency purposes that earns interest of 2%. The couple have two cars, one fully paid for and one that has a loan outstanding. Adrianas five-year-old vehicle is worth $6,000 and Martins brand-new car is worth $32,000, with a loan of $18,000 with a payment of $470 per month. Adriana has an RRSP with $40,000 invested in it. Martin has an RRSP with $120,000 in it. Also earmarked for the couples retirement is the money they have invested in their respective TFSAs. Adriana has $12,000 invested and Martin has $8,000 invested. Adriana and Martin also own a RESP jointly where they save money for their childs education. The plan has $25,500 invested in it. The couple own their own home jointly worth $700,000. Their mortgage has an outstanding balance of $385,000 owing on it. Their monthly mortgage payment is $1975. They also pay property taxes on their home of $8,600 per year. Additionally, they pay the following monthly costs related to their home: $145 for home insurance, $60 for heat, $90 for hydro, and $110 for water. They pay $1,600 for food and supplies to clean run their household. Adriana and Martin also pay $80 each per month for their respective cell phone plans, $120 per month for high-speed internet access and internet access, and $120 for cable television. Their monthly expenses related to their vehicles include $200 for insurance, $200 for maintenance, and $250 for gas. They also pay $1,100 per month in childcare expenses. Martin has a student loan of $30,000 with a payment of $265 per month. The couple have a joint unsecured line of credit with a $40,000 credit limit and $17,000 owing on. The line of credit charges interest of 7% and has a minimum payment of $400. Additionally, Adriana and Martin have a credit card with a credit limit of $10,000. They charge their expenses to it and then pay it off each month. They currently owe $950 on it. Adriana and Martin 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. Given Variables for 2020 Tax Rates (Monthly) Adriana Martin Income Tax $1637 $893 CPP $378 $252

Instructions: The case study presented below contains the information that you collected from your new clients, Adriana, and Martin Smith, 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 (1 mark). 2. A summary of the clients goals (4 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 marks). 4. A net worth statements for the clients. (10 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 (3 marks). 6. A cash flow statement for the couple. (10 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).

EI $118 $80