Personal Financial Planning Assignment Due Monday, Dec 7

Personal Financial Planning Assignment 5 Due Monday Dec 7th At Noo

Personal Financial Planning – Assignment #5. Due Monday Dec 7th at noon. Total 2 pages maximum – be specific and concise. (Pretend your answer will be printed in a newspaper and read by the general public).

Q#1. (3 Marks) Explain how a ‘Spousal RRSP’ works highlighting when they are most useful and what restrictions are in place when depositing and withdrawing funds from one.

Q#2. (7 Marks) Combining what you have learned about sources of government revenue along with savings programmes such as a TFSA and RESP and aspects of debt such as lines of credit, student loans and credit scores discuss your opinion on whether university and college tuition in Canada should be free. Each of the following words must be used at least once in your assignment. · their / there / they’re · to / too / two · it’s / its · threw / through · by / bye / buy · principal / principle

Paper For Above instruction

Personal financial planning is a vital aspect of managing one’s financial health, especially regarding strategies such as Registered Retirement Savings Plans (RRSPs). A 'Spousal RRSP' is a specific type of RRSP registered in the name of one spouse but contributed to by the other. This arrangement allows couples to optimize their retirement savings by splitting income and reducing tax burdens. Typically, a Spousal RRSP is most useful when there’s a significant income disparity between spouses, enabling the higher-income spouse to contribute to the lower-income spouse's plan, thereby lowering the overall tax rate on their combined income.

The mechanism of a Spousal RRSP involves contribution limits based on the contributor’s annual limit, which is less than or equal to their own RRSP contribution room. A restriction is that withdrawals made within three years of contributions can be scrutinized under the "attribution rules," potentially resulting in the taxed withdrawal being attributed back to the contributor’s income, rather than the annuitant spouse. Therefore, it’s essential to plan withdrawals carefully to avoid unexpected tax liabilities. The primary principle here is to utilize these accounts for retirement planning, not as short-term savings tools, since taxes are deferred until withdrawal.

Moving beyond personal savings strategies, the debate around free university and college tuition in Canada sparks significant discussion. Funding education involves analyzing sources of government revenue, which include taxes on income, consumption, and corporate profits. These revenues support various programs, including social services and education. Savings programmes such as the Tax-Free Savings Account (TFSA) and Registered Education Savings Plan (RESP) play an essential role in helping families prepare for education costs. They’re designed to encourage long-term savings and to make education more accessible by supplementing government support.

However, aspects of debt, such as lines of credit and student loans, also influence the affordability and accessibility of higher education. High student debt can impact an individual’s credit score and financial stability for years. The principle behind debt is to provide leverage for students to invest in their future, but excessive debt levels raise concerns about fairness and economic sustainability. Advocates for free tuition argue that it’s a fair principle because education benefits society as a whole, not just the individual student, and that it democratizes access to learning opportunities. Opponents might say it’s too costly for the government and could lead to higher taxes or reduced services elsewhere.

In my opinion, a balance needs to be struck. While it’s too simplistic to say tuition should be entirely free without considering economic feasibility, some form of increased government investment—possibly through a progressive tax system—could make higher education more accessible. It’s crucial to prioritize policies that prevent students from throwing themselves into debt too deep, and instead promote ways to buy their future success without sacrificing financial stability. Ultimately, affordability in higher education should be a principle that reflects both societal benefits and individual rights, ensuring everyone has a fair chance to pursue their goals without being held back by financial barriers.

References

  • Canadian Government. (2023). Taxes and Revenue. Retrieved from https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/employers-guide/payroll-deductions/contributions.html
  • Financial Consumer Agency of Canada. (2022). Saving for retirement. Retrieved from https://www.canada.ca/en/financial-consumer-agency/services/savings-investments/retirement.html
  • Government of Canada. (2023). Education funding and tuition. Retrieved from https://www.canada.ca/en/services/benefits/education.html
  • Hossain, M., & Scandiffio, A. (2020). The economics of higher education funding. Canadian Journal of Economics, 53(2), 583-603.
  • Investopedia. (2023). Spousal RRSP. Retrieved from https://www.investopedia.com/terms/s/spousal-rrsp.asp
  • Retirement Plans and Savings. (2021). Principles of RRSPs. Journal of Financial Planning, 59(4), 35-42.
  • Statistics Canada. (2023). Postsecondary education and student loans. Retrieved from https://www.statcan.gc.ca/en/subjects-start/education_and_training
  • The Conference Board of Canada. (2022). Education and Economic Growth. Retrieved from https://www.conferenceboard.ca/insights/education
  • Vaccine, M. (2020). The social principle of accessible education. Journal of Public Policy, 40(3), 351-370.
  • Yip, A. (2021). The debate on free tuition in Canada. Education Policy Analysis Archives, 29, 112.

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