Personal Financial Planning Case Study for Raj Brar's Class

This case study delves into the personal financial planning of Paul Smith and Olivia Watson, a young couple navigating their financial future. It begins by outlining their family situation, current living arrangements, and future plans, including marriage and children. The study details their expenses, assets (including savings, RRSPs, and personal property), and employment situations, highlighting Paul's conservative financial views shaped by his upbringing and Olivia's more carefree spending habits. The impact of these differing views on their financial management is explored, along with their strategies for handling student loans. A net worth statement is presented, followed by an analysis of their existing and proposed budgets. The study concludes by outlining their financial goals and providing a Gantt chart for visualizing their progress. This document is designed to show students an example of a financial planning case study, and Desklib offers a wide array of similar documents, including solved assignments and past papers, for further learning.

Personal financial planning

Table of Contents
Overview and family situation...............................................................................................................2
Current living situation..........................................................................................................................2
Future plans...........................................................................................................................................3
Expenses................................................................................................................................................3
Assets....................................................................................................................................................3
Employment..........................................................................................................................................4
Financial management...........................................................................................................................5
Impact of financial management............................................................................................................6
Student loan...........................................................................................................................................6
Net worth statement...............................................................................................................................6
Budgets..................................................................................................................................................7
Goals...................................................................................................................................................10
Gantt chart...........................................................................................................................................11
Background and benefits.....................................................................................................................11
References...........................................................................................................................................12
1

Overview and family situation
Paul Smith and Olivia Watson met in college and they have been dating for three years.
Paul Smith
Paul Smith is 27 years old and works as a sales executive in an organization. He has also
enrolled himself in a college for completing Management of Business Administration. He
belongs to a middle-class family with two siblings. They live in Montreal. His mother is a
teacher and his father is an engineer in software organizations (Wolf, 2010). The
unpredictable income of his family has forced them to live a cost-conscious lifestyle. He is
always careful to avoid any kind of debts such as a mortgage. Paul Smith has facing many
difficulties in life and enabled his skills and knowledge. Paul Smith is very much concern in
managing its financial aspects. Paul Smith is very conservative with spending.
Olivia Watson
Olivia Watson is 24 years old and completed her Bachelor of Commerce. Olivia grew up in
an upper-middle-class family. Her parents and two siblings live in Toronto. Her father is a
businessman and her mother is an accountant. She has a carefree attitude with spending.
Olivia has maintained an appropriate relationship with her family (Prasanna Chandra., 2011).
Current living situation
Paul and Olivia live together in a rented house. The house consists of two bedrooms, one
kitchen and one bathroom. They also take care of the younger brother of Paul. The
responsibilities of Paul have been increased due to the unpredictable income of his family.
Both of them incur the expenses of his younger brother. They will get engaged in three years
and will get married in five years. It has also planned by them that they would have at least
three children (Melicher, Norton & Town, 2007). They need few years to establish
themselves and to enjoy their life. They have also planned to buy a house in future. Both of
them have a defined benefit pension plan and a registered retirement savings plan. The
defined benefit pension is being provided by the organization as a benefit on the basis of the
salary history and employment length after the retirement. The registered retirement savings
plan is referred to a special investment type designed for assisting Canadians to save money
after retirement.
2

Future plans
Paul and Olivia have planned to improve the quality of their life. They are living together and
moving towards their future. They have also decided to get married and have children. They
need assistance to carry out their financial planning. The main focus is to decrease expenses
and increase savings (Pandey, 2015). The increase in the cash flows will assist to pay the
expenses, cover debts and enjoy their life in an appropriate manner. They have focused on
their career because the establishment of their career will assist in the increase in the flowing
cash.
Expenses
Paul and Olivia live together and they have to pay money for the expenses incurred for
running their life. The expenses incurred by them are groceries, entertainment, rent, student
loan, clothing, personal, education and credit card payments. The expenditures are associated
with their life. The management of expenses is considered to be very much important for the
couples (Phylaktis, 2014).
Assets
The assets that are being held by the couple are a savings account, TFSA, RRSP, home,
automobile and jewellery. The financial assets are being used for improving the quality of
life. The personal assets of Paul Smith and Olivia Watson are being estimated (Pilbeam,
2013).
Assets Paul Smith
($)
Olivia Watson
($)
Total
Non-registered assets
Savings account 5400 2100 7500
Total non-registered
assets
5400 2100 7500
Registered assets
RRSP 900 0 900
DBPP 500 300 800
Total registered assets 1400 300 1700
3

Personal assets
Automobile 8500 12500 21000
Jewellery 0 5000 5000
Home 0 0 0
Total personal assets 8500 17500 26000
Total Assets 15300 19900 35200
Employment
Paul Smith’s employment
Paul is studying Masters of Business Administration and also works in an organization. He is
working as a sales executive in Shoppers Drug Mart Inc. He is working 45 hours a week and
gets a salary of $30,000. He will get promotion on the basis of his skills and performance. He
is responsible for managing the sales of the products and services offered by the organization.
He also receives incentives for increasing the sales revenues. He is working for one year and
depicted his skills in an appropriate manner. He will also get a pension after retirement. Paul
has focused on his career by getting a good job which would lead to an increase in the salary
(Pogge & Mehta, 2016). Paul also uses cash for purchasing the goods. He did not do
unnecessary expenses and always focus on his work. The manager of the organization has
also recognized the efforts of Paul which shows his capabilities.
Olivia Watson‘s employment
Olivia has been working as a financial advisor in an organization. She is being worked in
David Alpin Group and specializes in financial management. She is working 45 hours in a
week and gets a salary of $18000. She has joined the organization just two months ago. She
has contributed her efforts for improving the financial performance of the company. She gets
a bonus on the basis of her performance. The company will also provide a pension plan after
her retirement (Callaghan, Fribbance & Higginson, 2012). The contribution of her would be
5% of the pensionable earnings. She is planning to get into higher studies in order to get a
certificate of a financial planner. She will get promotion after the completion of her higher
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education. The hard work and her ambition will assist her to achieve success in her life.
Olivia has been always in a comfortable life but she has managed it in an appropriate manner.
Financial management
Paul Smith’s view on the financial management
Paul Smith has grown up in very tough conditions where his family faced problems in
earning money. From an early age, he learned many things and realized his goals. He is
focusing on saving money for himself and for his younger brother. He has always focused on
the practical side and never thought of living a luxurious lifestyle. It is clear that the attitude
of Paul towards financial management is influenced strongly by the way his family budgeted
(Leimberg, Satinsky, Doyle & Jackson, 2009).
Paul does not spend money on unnecessary things and also save money on paying his student
loan. The student loan is considered to be an appropriate investment for Paul in future and
also very much careful in avoiding debts. He has also not applied for the credit card because
he has recently entered into a job. The debit card is being used by him for carrying out
transactions. He also follows personal policy to make a withdrawal of amount $100 per week
from the bank account for covering the discretionary spending. He spends this money only in
an emergency situation (Holton, 2012).
Olivia Watson’s view on the financial management
Olivia grew up in a comfortable zone where she did not face any financial problems. Her
parents were able to provide all the things that she wanted such as mobile phones, video
games, fashionable clothes. Her parents provided her with a luxurious life where she enjoyed
vacations every week (Gowthorpe, 2005). However, it can also be stated that Olivia has
grown up in a surrounding where she did not understand the real value of money. When she
was with her parents she used to spent her salary earned from part-time jobs in maintaining
her lifestyle.
Olivia uses a credit card for purchasing products from shops. She also pays bills with her
credit card and pays a minimum amount of money each month on her credit card in order to
maintain the flow of cash. When she started her life with Paul, she believed that lifestyle will
be maintained appropriately (Amatucci, 2012).
5

Impact of financial management
Paul Smith and Olivia Watson have been in a strong relationship and it can be considered that
they are ideally suited to each other. The attitude is identified to be different which is also
related to financial management. The financial management is considered to be the main
source argument for both the couples (Leonard, 2007). Both of them have the required
qualification which can be used appropriately for achieving success in their life. Paul is very
much concern about his future goals such as marriage, down payment for the purchase of a
home, paying the education loan and even after retirement. However, it is being found that
Paul is not being able to convey this message to Olivia whose main priority is purchasing a
new car and do parties, shopping and even parties. From Olivia's perspective, in many
circumstances, she feels resentful towards Paul because of his insistence to be more
responsible and conservative. She believes that life should be enjoyed without thinking too
much about the future. However, they have agreed to carry out a discussion in which they can
discuss their financial goals. The financial management is considered to be crucial for the
couples (Avi-Yonah, 2007).
Student loan
Paul is going to fund his education through the savings from the salary that he will receive
from the job. However, Paul has to still borrow some amount of month for funding his
course. The student loan needs to be paid by him on time with interest. The increase in salary
will assist him to cover his loan payments. On the other hand, Olivia has also entered into
education and need funds for her education. She has less saving in comparison to Paul
because of the increase in the expenditures (Littell, Tacchino & Cordell, 2004). It is expected
that she would be going to borrow some amount of money from her family.
Net worth statement
The net worth statement has been prepared for the couple which shows their assets and
liabilities. The assets and liabilities need to be maintained in an appropriate manner in order
to balance all the financial aspects of life (Avi-Yonah, 2015).
Assets Paul Smith
($)
Olivia Watson
($)
Total
Non-registered assets
Savings account 5400 2100 7500
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Total non-registered
assets
5400 2100 7500
Registered assets
RRSP 900 0 900
DBPP 500 300 800
Total registered assets 1400 300 1700
Personal assets
Automobile 8500 12500 21000
Jewellery 0 5000 5000
Home 0 0 0
Total personal assets 8500 17500 26000
Total Assets 15300 19900 35200
Liabilities
Credit cards 0 5000 5000
Student loan 8000 5000 13000
Mortgage 0 0 0
Total Liabilities 8000 5000 13000
Net Worth 7300 14900 22200
Budgets
The budget is being prepared for determining the income and expense. The budget shows the
cash flows of Paul and Olivia. The existing budget and proposed budget are prepared with the
scope of providing financial direction to the couple (Edwards & Mitchell, 2008).
Existing budget
Income/expenses/savings Paul
Smith ($)
Olivia
Watson ($)
Total
7

Income
Salary 30,000 18000 48,00
0
Total Gross Income 30,000 18000 48,00
0
Less: Source deductions
Income taxes 4500 2700 7200
other payroll deductions 4750 2350 7100
Total Source deductions 9250 5050 14300
Total net income 20,750 12,950 33,70
0
Expenses
Groceries 6000 1000 7000
Rent 4000 1500 5500
Student loan 3500 0 3500
Credit card payments 400 4000 4400
Education 1000 0 1000
Personal 1500 3500 5000
Clothing 2000 3000 5000
Entertainment (Dining with friends) 1100 1500 2600
Entertainment (activities and hobbies such as courses,
sports etc.)
900 1500 2400
Entertainment (watching movies) 300 1000 1300
Total expenses 20700 17000 37700
Net available for savings 50 -4,050 -4,000
Savings
RRSP contribution 900 0 900
DBPP contribution 500 300 800
Total savings 1400 300 1700
8

Unallocated cash flow -1,350 -4,350 -5,700
Proposed budget
Income/expenses/savings Paul
Smith ($)
Olivia
Watson ($)
Total
Income
Salary 30,000 18000 48,000
Total Gross Income 30,000 18000 48,000
Less: Source deductions
Income taxes 4500 2700 7200
other payroll deductions 4750 2350 7100
Total Source deductions 9250 5050 14300
Total net income 20,750 12,950 33,700
Expenses
Groceries 6000 1000 7000
Rent 4000 1500 5500
Student loan 3500 0 3500
Credit card payments 400 3000 3400
Education 1000 0 1000
Personal 900 1800 2700
Clothing 1100 2000 3100
Entertainment (Dining with friends) 900 1200 2100
Entertainment (activities and hobbies such as courses,
sports etc.)
800 1100 1900
Entertainment (watching movies) 200 700 900
Total expenses 18800 12300 31100
Net available for savings 1,950 650 2,600
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Savings
RRSP contribution 900 0 900
DBPP contribution 500 300 800
Total savings 1400 300 1700
Unallocated cash flow 550 350 900
Goals
The goals need to be determined and evaluated in order to provide the right direction for life.
Paul and Olivia would be able to know what things they need to do in order to manage their
financial position. The flow of income is very much important for any individual for living
their life in an appropriate manner (Hartley, 2011).
Explicit goals
The explicit goals are as follows:
 The goal is to save money for the future purpose.
 The goal is to pay off the student loans.
 The goal is to fund the education of the younger brother.
Implicit goals
The implicit goals are as follows:
 The goal is to decrease credit card payments.
 The goal is to decrease expense on personal clothing and entertainment.
 The goal is to increase savings in order to recover the expenses.
 The goal is to increase savings for their wedding ceremony and honeymoon.
 The adoption of after retirement plans in order to save money.
Gantt chart
Gantt chart is considered to be one of the most effective tools used for listing tasks during a
period of time. The Gantt chart has been prepared which shows the tasks that need to be
carried out by Paul and Olivia in the coming months. The Gantt chart depicts the time
horizon within which the tasks are being carried out (Holton, 2012).
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Main Activities/ Stages
Month 1 Month 2 Month 3 Month 4 Month 5
Decreasing the credit card payments
Decreasing personal expenses
Decreasing the clothing expenses
Decreasing the entertainment
expenses
Increasing savings
Background and benefits
The main goal would to decrease their expenses and increasing the savings. The expenses
should be managed by decreasing credit card payments, personal expenses, clothing expenses
and clothing. The increase in the cash flow is important for meeting the needs in future. Paul
and Olivia have to pay tax on the income earned (Kaldor, 2014). The taxable benefits can be
gained on the basis of the taxation rules and regulations. The couples can purchase insurance
for their significant aspects. Both Paul and Olivia should understand each other in order to
live their happily. Both of them should be concern about how they can decrease expenses and
save money. Olivia should decrease its credit card payments, personal expenses, clothing
expenses and entertainment expenses more than Paul. They have to also think about their
wedding and honey. The retirement plans will also be selected wisely in order to live a happy
life (Zenios, 2008).
References
Amatucci, A. (2012). International tax law. Alphen aan den Rijn: Wolters Kluwer.
Avi-Yonah, R. (2007). International tax as international law. New York: Cambridge
University Press.
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Avi-Yonah, R. (2015). Advanced introduction to international tax law. Cheltenham: E. Elgar.
Callaghan, G., Fribbance, I., & Higginson, M. (2012). Personal finance. Basingstoke:
Palgrave Macmillan.
Edwards, C., & Mitchell, D. (2008). Global tax revolution. Washington, DC: Cato Institute.
Gowthorpe, C. (2005). Financial Analysis. San Diego: Elsevier Science & Technology.
Hartley, W. (2011). International finance. [Place of publication not identified]: Bibliolife.
Holton, R. (2012). Global finance. London: Routledge.
Kaldor, N. (2014). Expenditure tax. Hoboken: Routledge, Taylor and Francis.
Leimberg, S., Satinsky, M., Doyle, R., & Jackson, M. (2009). Tools & techniques of financial
planning. Cincinnati, Ohio: National Underwriter Company.
Leonard, B. (2007). Multidimensional decision making. [Bradford, England]: Emerald.
Littell, D., Tacchino, K., & Cordell, D. (2004). Financial decision making at retirement.
Bryn Mawr, Pa.: American College Press.
Melicher, R., Norton, E., & Town, L. (2007). Finance. Hoboken: John Wiley & Sons Inc.
Pandey, I. (2015). Financial management. New Delhi: Vikas Publishing House PVT LTD.
Phylaktis, K. (2014). Finance. Elsevier Science.
Pilbeam, K. (2013). International Finance. London: Palgrave Macmillan.
Pogge, T., & Mehta, K. (2016). Global Tax Fairness. Oxford: Oxford University Press.
Prasanna Chandra. (2011). Financial Management. Tata McGraw Hill Education Pvt. Ltd.
Wolf, M. (2010). Fixing global finance. Baltimore, Md.: Johns Hopkins University Press.
Zenios, S. (2008). Practical financial optimization. Cambridge: Blackwell.
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