Caring For Those Who Serve

Setting and Monitoring Financial

GoalsPresenter: Mark Conner

August 16, 2010

Learning,Living & Leading

Stewardship

Our Mission

To serve and support the financial well-being of participants guided by the principles of The United Methodist Church

Today’s Agenda

• Establishing Financial Goals

• Two financial tools with practical uses:■ Net worth statement■ Spending plan

• Building savings & investment programs

• Selected Topics

• What’s your legacy ?

We Are Stewards of Our Resources

• Cultivate skills• Plan ahead• Pieces of the puzzle

■ Resources■ Saving and investing■ Insurance or risk management■ Taxation■ Retirement and benefits■ Estate planning

• Develop good habits

Financial Planning Process

• Witness with Christian stewardship • Understand our resources • Define purpose for resources• Withstand pressure to consume• Project accomplishment of goals• Handle economic and unexpected changes• Invest with social responsibility • Pass our legacy to future generations

Enables us to:

For Every Financial Goal

• Identify a cost or define success• Project a time horizon—

hope vs. required• Determine how it will it be

funded• Decide how to measure progress• Determine how this goal fits into

the overall scheme• State the consequences for

not accomplishing• Decide what will be the next

steps, secondary goals

Exercise 1:Exercise 1: Financial Goals Financial Goals

How are you using your resources?

• Track expenditures

• Create budget both of resources and uses

• Build tithe and savings into your plan

• Align spending with goals

Purpose: to raise awareness of spending patterns in order to align them with goals

Keeping Track of What You Have Acquired

Purpose: To set a baseline for where you are today to be compared periodically with future results

• Create a listing of assets and liabilities (net worth statement)

■ Expectation is to see growth in assets and reduction in liabilities

Cash Management System

• Create a “tracking system”

• Establish an emergency fund

• Reconcile spending and savings accounts

• Monitor progress towards goals and annually review net worth changes

• Revisit collection of goals for any additions, deletions or new priorities

• Get back on track

Get In the Habit of Saving Early

• First step—build emergency reserve

• Time value of money

• Next step—goal funding

Emergency Reserve

• Three to six months of living expenses

• Liquid and accessible account

• Line of credit or credit card• Loans

Insurance policy Credit union Home equity

Backup Resources:

Exercise 2:Exercise 2: Emergency Fund Emergency Fund

Detour Strategies

FinancialFinancialPlanning Planning ProcessProcess

EmergencEmergencyy

FundFund

InsuranceInsurance

Risk Management

• Provision for income continuation

• Premature death—need to replace future earnings

• Medical expenses

• Personal liability

• Loss of personal or real property—due to fire, casualty, theft, etc.

• Unreimbursed rehabilitation or custodial care

• Longevity—living beyond resource stream

Investing Basics: Considerations

Time frame for investing

Risk tolerance

Diversification

Sociallyresponsible

choices

Concepts and Principlesof Saving and Investing

Sticking to basics

Diversification:Choose from a variety of

possibilitiesMaximizing return + minimize riskCreate a portfolio that uses

multiple assets classes

Asset allocation:The mix by “category”

Keeping the pieces in balance

5-year holding periods

Compound annual return20-year holding periods

Each bar shows the range of compound annual returns for each asset class over the period 1926–2006

1-year holding periods

Smallcompany

stocks

Largecompanystocks

Governmentbonds

Treasury bills

-75%

-50%

-25%

0%

25%

50%

75%

100%

125%

150%

10.4%12.6% 5.4% 3.7%

This is for illustrative purposes only and not indicative of any investment. An investment cannot be made directly in an index. 2007 Morningstar, Inc.© All rights reserved.

Reduction of Volatility Over Time

Asset Classes for Diversification

AlternatiAlternative ve

AssetsAssets

Common Common EquitiesEquities

Fixed Fixed IncomeIncome

Cash and Cash and EquivalenEquivalen

tsts

• Real estate•

Commodities

• Other

• U.S. and international• Growth and value• Large, midsize

and small-cap companies

• Government bonds

• Corporate bonds

• Inflation-indexed bonds

• Money market accounts• CDs

• Commercial paper

Less Risk/Return More Risk/Return

Risk/Potential Return

Investment Options -UMPIP

SVFSVF

IPFIPF

DBFDBF

MAFMAF

DSFDSF

ISFISF

BSVPFBSVPF• Stable Value Fund• Inflation Protection Fund• Domestic Bond Fund• Multiple Asset Fund

• Balanced Social Value Plus Fund

• Domestic Stock Fund• International Stock Fund

Ris

kR

isk

Return PotentialReturn Potential

Historical Inflation Rates

Source:Stocks, Bonds, Bills and Inflation 2007 Yearbook™Morningstar, Table C-7

1997 - 2006

1992 - 2006

1987 - 2006

1926 - 2006

1967 - 2006

Investment Characteristics

INCOME

SAFETY GROWTH

Retirement AnalysisRetirement Analysis

Social Security,

After Taxes

Pension, After Taxes

After Tax Income Need

Steward Puts “House in Order”

Financial resources• Savings• Credit ‘worthy’• Tax savvy

Cash managementsystem

Estate documents

and other tools

Faithful Stewardship

Earn all you can

Make best use of resources

Save all you can

Set financial goals

Develop good habits

Be disciplined

Take time for financial education

Give all you can