BUSI 3013A Personal Financial Planning Midterm Project Due ✓ Solved

BUSI 3013A Personal Financial Planning Midterm Project – DUE

The midterm project consists of developing a personal / family budget for a career of your choosing. Consider a profession that you aspire to in the future and a location where you would like to live. Project yourself 5-10 years in the future; it does not need to be based on current conditions. Then create a household budget that can also include the income / expenses from a spouse or partner and children.

The income should be consistent with what could realistically be expected from the profession(s) picked. Appropriate deductions should be made for income tax, pension, and government deductions. There should be a discussion about what type of pension and benefits, if any, are associated with this profession.

Expenses should consider all relevant costs: a partial list to consider includes housing, utilities, transportation, food, clothing, gifts, entertainment, travel, incidentals, student loans, future savings, children’s education, sports, vacation, cable/internet/phone, daycare costs, property tax, insurance costs, gifts, charities, clothing, and property and vehicle repairs. MLS listings can be used to provide an estimated cost of purchasing a property in the chosen location.

Estimated vehicle costs are available through dealer websites, Autotrader.ca, and other sources. An interview with family/friends/contacts may be helpful and is encouraged (but not required). The report should conclude with a one-page discussion identifying the most helpful actions you could take to help reach the budget laid out and the biggest future risks that might cause things to fail.

The use of a spreadsheet for the budget is encouraged. Marginal and average tax rates should be calculated for the income. RRSP savings / Projected pensions where applicable should be calculated and shown. Mortgage payments where applicable should be calculated and shown. Statutory deductions from income should be shown. The maximum length is 8 pages.

Paper For Above Instructions

In today's fast-paced and economically challenging environment, effective personal financial planning is vital for achieving long-term financial goals. This midterm project will outline a comprehensive family budget for a projected career as a marketing manager in Toronto, Ontario, focusing on the financial aspects of living in one of Canada’s most vibrant cities over the next ten years. Following a thorough analysis of income potential, expenses, and investment strategies, this paper aims to provide a realistic financial framework for achieving monetary security while meeting family needs.

Projected Income

The average salary of a marketing manager in Toronto is estimated to be approximately CAD 85,000 per year, with the potential to increase based on experience and additional qualifications. In ten years, this wage could rise to approximately CAD 100,000, factoring in annual raises and promotions that are typical in this industry.

To calculate the net income, it is essential to consider statutory deductions, including federal and provincial income taxes, Canada Pension Plan (CPP), and Employment Insurance (EI). The average combined income tax rate in Ontario for this income bracket is around 30%. Therefore, after deductions, the expected annual net income will be approximately CAD 70,000. This figure will serve as the foundation for budgeting family expenses and investments.

Household Expenses

Creating an effective household budget entails a detailed look at necessary expenses that impact day-to-day living. Expenses will cover housing, transportation, utilities, food, education, and savings. Based on current market prices, a modest family home in Toronto would cost around CAD 800,000. Assuming a 20% down payment, a mortgage of CAD 640,000 will be established. With an interest rate of approximately 3.5% on a 25-year mortgage, the monthly payment is calculated to be CAD 3,200.

Utilities for the household, including electricity, water, and gas, are estimated to be around CAD 300 per month. Transportation expenses, including fuel, insurance, and car payments, will total around CAD 700 monthly. Groceries, clothing, entertainment, and other miscellaneous expenses are projected to sum CAD 1,000 monthly. Moreover, education costs such as school supplies and activities for children will total around CAD 500 each month.

Considering all these aspects, the estimated monthly expenses are as follows:

  • Mortgage: CAD 3,200
  • Utilities: CAD 300
  • Transportation: CAD 700
  • Groceries: CAD 600
  • Education: CAD 500
  • Miscellaneous: CAD 400

In total, this aggregates CAD 6,700 per month, resulting in an annual expenditure of CAD 80,400.

Future Savings and Investments

A critical component of the family budget is to allocate funds toward future savings and investments. The budget will set aside CAD 1,200 each month for investments into a Registered Retirement Savings Plan (RRSP). Over ten years, with compound interest, this could represent a robust savings foundation for retirement.

Child education savings plans are vital for long-term financial planning, and setting aside CAD 400 monthly into a Tax-Free Savings Account (TFSA) for children’s education is prudent. Thus, potential savings for education will amount to CAD 48,000 by the time they complete high school.

Conclusion

In conclusion, developing a personal/family budget is essential to reaching financial stability. This analysis of a marketing manager's projected income and expenses suggests that it is feasible to maintain a balanced budget while prioritizing savings for retirement and children’s education. However, certain risks, such as unexpected job loss or market fluctuations, may hinder financial goals. The most constructive actions to mitigate these risks include establishing an emergency fund, regularly reviewing the budget, and exploring additional income streams.

In summary, thorough research and careful planning can lead to a well-structured financial future, ensuring that the aspirations laid out in this project are attainable.

References

Related Assignments