Financial Planning and Management Quiz

Financial Planning and Management

• Net Worth: Calculating wealth by subtracting liabilities from assets.
• Cash Flow Budget: Tracking income and expenses to ensure finances stay positive. Crucial for sustainability.
• Financial Sustainability: Maintaining financial stability and growth over time.
• Building Wealth: Increasing assets. Often involves saving and investing strategies.
• Capacity vs. Capital: Capacity represents potential to grow, while capital is accumulated wealth or assets.
• Government Relations: Important for tax, funding, and regulatory aspects in financial strategies.

Taxes and Financial Planning

• Income Tax: Four types (purchases, property, annual property, capital gains) are mentioned, along with calculations.
• Financial Planning: Preparing personal income tax returns and understanding tax fundamentals.
• Tax Brackets: Progressive tax system where higher income earners pay a higher percentage in taxes (Alberta tax brackets specifically are mentioned for several income levels).
• Tax Planning Strategies: Methods for lowering taxes, leveraging tax credits.

Taxable Income and Liability

• Net Income: Income after deductions are subtracted. Net income used in tax calculations.
• Taxable Income: Income used to calculate the amount of tax owed.
• Tax Credits: Reductions in tax liabilities, dependent on specific situations.

Insurance and Risk Management

• Insurance: Protects against financial loss resulting from events like property damage, injuries, and death.
• Premium: Fee paid for insurance coverage.
• Deductible: Amount insured pays first when a loss or damage occurs. A higher deductible reduces premiums.
• Risk Management: Strategies for handling risks, including avoidance, reduction, assumption, and transfer.
• Property Insurance: Protects against damage to buildings or personal belongings.

Insurance Coverages and Types

• Automobile Insurance: Coverage for bodily injury liability, property damage liability, collision, comprehensive damage.
• Homeowner's Insurance: Protects against property damage and loss of use, as well as personal liability.
• Life Insurance: Provides financial security for beneficiaries after the insured's death (and possibly for other purposes).
• Life Insurance Policy Options: Term policies (time limited) or Permanent policies (lifetime).

Investing and Savings

• TFSA: Tax-free savings account. Contributions are not taxed, withdrawals are not taxed.
• RESP: Registered Education Savings Plan. Contributions are not taxed at the time they are made, only on the growth upon withdrawal.
• Retirement Planning: Strategies for building retirement funds, like RRSPs (Registered Retirement Savings Plan), and contributing.

Other Financial Considerations

• Risk Management: Assessing and minimizing potential financial risks.
• Tax Deductions: Items or expenses that can reduce taxable income.
• Financial Statements: Tools for assessing financial health and progress towards goals.