1. Caring For Those Who Serve Setting and Monitoring Financial Goals Presenter: Mark Conner August 16, 2010 Learning, Living & Leading Stewardship

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

3. 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 ?

4. 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

5. 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:

6. 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

7. Exercise 1: Financial Goals

8. 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

9. 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

10. 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

11. Get In the Habit of Saving Early First step—build emergency reserve Time value of money Next step—goal funding

12. 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:

13. Exercise 2: Emergency Fund

14. Detour Strategies Financial Planning Process EmergencyFund Insurance

15. 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

16. Investing Basics: Considerations Time frame for investing Risk tolerance Diversification Socially responsible choices

17. Concepts and Principles of Saving and Investing Sticking to basics  Diversification:  Choose from a variety of possibilities  Maximizing return + minimize risk  Create a portfolio that uses multiple assets classes  Asset allocation:  The mix by “category”  Keeping the pieces in balance

18. 5-year holding periods Compound annual return 20-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 Small company stocks Large company stocks Government bonds 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

19. Asset Classes for Diversification Alternative Assets Common Equities Fixed Income Cash and Equivalents 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

20. Investment Options -UMPIP SVF IPF DBF MAF DSF ISF BSVPF Stable Value Fund Inflation Protection Fund Domestic Bond Fund Multiple Asset Fund Balanced Social Value Plus Fund Domestic Stock Fund International Stock Fund Risk Return Potential

21. 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

22. Investment Characteristics INCOME SAFETY GROWTH

23. Retirement Analysis Social Security, After Taxes Pension, After Taxes After Tax Income Need

24. Steward Puts “House in Order” Financial resources Savings Credit ‘worthy’ Tax savvy Cash management system Estate documents and other tools

25. 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