Personal Financial Management seminar


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  • The Purpose Driven Life, Rick Warren God has not left us in the dark to wonder and guess. He has clearly revealed his five purposes for our lives through the Bible. It is our Owner’s Manual, explaining why we are alive, how life works, what to avoid, and what to expect in the future. It explains what no self-help or philosophy book could know. The Bible says, “God’s wisdom…..goes deep into the interior of His purposes….It’s not the latest message, but more like the oldest – what God determined as the way to bring out his best in us.”
  • I’m here with the FLF team! … we’re an organization that …. *** Fill in the blanks *** and today we’re sharing with you simple financial planning nuggets that you can take home with you. If you like what you learn today, we can come back again and share more information on other financial planning topics, so be sure to fill out our survey to let us know what you’d like to hear more about … and of course, we’d like to improve our program so tell us what we could do better and what we’ve done well today. -financial planning need not be scary … but let’s face it – we all avoid doing things that make us uncomfortable – and for most people managing money is uncomfortable -today we’re going to talk about the basic principles of financial planning, helping your to understand your financial fitness and if there are gaps where they might be and where you can go for help most people do not have a financial plan … congratulations – you’re ahead of most … by attending today’s session, you’re on the right road
  • -- in fact the true high cost is in avoiding building a solid financial foundation -let’s have a look at this and overcome the fear factor!
  • We have a great info sheet at the drop-in booth highlighting these verses. If you’re interested in a copy, following the seminar please stop by and one of the representatives will be pleased to help you.
  • Where you are today Where you want to go Creating the plan to get you from A to B
  • At different stages your plan will need to emphasize different aspects of the financial planning pyramid Where are you? What stage of your financial life are you in? Take a moment to find yourself. … each age and stage has different needs and so your financial plan is holistic, changing and growing with you: Early career – paying off debt, purchasing a home, first child Mid-career – focus on children, education, travel and vacation Peak accumulation – getting children through school, pay off mortgage, savings increased Pre-retirement – making plans, revising will, caring for elderly parents Retirement – maintaining comfortable lifestyle and estate planning
  • Here are the elements you have to consider in developing a financial roadmap, in the form of a pyramid. Creating the actual financial plan provides a solid foundation. It takes into consideration where you are now, where you want to go and the plan itself acts as the roadmap to help you get from A to B. You will notice that there is an ordering to the pyramid – starting with the plan and then moving to the key components that protect your financial security. Following this, is wealth accumulation based on your financial goals and priorities.
  • The base of your plan must be solid. Like a pyramid, if the base isn’t solid, it will topple over. You need to address the elements within the plan by priority. Start at the bottom and work your way up.
  • Unfortunately there are many events that can significantly impact your ability to achieve your financial goals – in fact many events can be financially devastating not just to you but to your loved ones as well. A good financial plan will look at managing those risks such as dying too soon, losing your ability to earn income, becoming critically ill, becoming overburdened with debt or unable to cope with short-term unexpected crisis. Due to time constraints I’m not able to cover each component in any detail so I’ve selected the areas that I feel few people understand or have a very keen interest in – if you have interest in the other areas we are happy to meet with you after the fact or come visit us at our booth. Most people are familiar with life insurance, disability insurance, Wills and Power of Attorneys – but few people understand or know about Critical Illness insurance – so I will pause here for a few moments and share with you what it is and why it is a key component to consider in your planning. I will also spend time on budgeting and debt reduction as this is something most Canadians struggle with in today’s society.
  • 4 minute slide: This story emphasizes the importance of preparing for the uncontrollable events in our lives – saving for the future…i.e. pennies on the dollar (premium) – should disaster strike. Joseph said to Pharaoh, “God has told to Pharaoh what He is about to do. The seven good cows are seven years; and the seven good ears are seven years; the dreams are one and the same. And the seven lean and ugly cows that came up after them are seven years, and the seven thin ears scorched by the east wind shall be seven years of famine. It is as I have spoken to Pharaoh: God has shown to Pharaoh what He is about to do. Behold, seven years of great abundance are coming in all the land of Egypt; and after them seven years of famine will come, and all the abundance will be forgotten in the land of Egypt; and the famine will ravage the land.” What can Pharoah do? Pharaoh take action to appoint overseers in charge of the land, and let him exact a fifth of the produce of the land of Egypt in the seven years of abundance. Then let them gather all the food of these good years that are coming, and store up the grain for food in the cities under Pharaoh’s authority, and let them guard it. And let the food become as a reserve for the land for the seven years of famine which will occur in the land of Egypt, so that the land may not perish during the famine” (Genesis 41:25-36).
  • Life Insurance is probably more familiar to us. It provides our heirs with a lump-sum benefit on death to cover our final expenses and provide capital that can help create or preserve an estate and capital that can be invested to replace our income to the family. Ensures your family will be taken care of in case of tragedy A financial needs analysis will help to determine amount needed – looks at assets and sources of income vrs expenses (including final expenses, paying off mortgage, car loans, credit cards and other debts; replacing income; funding children’s education) Basic rule of thumb – income for your family should be sustained at 70% of your gross monthly income Critical Illness Insurance does not replace other Insurance plans. They all work together to protect you, your loved ones and your financial goals. Critical Illness Insurance provides a lump-sum cash benefit for you to use without restrictions while you are alive. It can allow you to seek the best possible care and protect your family’s finances from the high costs of recovering from a life altering illness. Your ability to achieve your financial goals is largely dependant on your ability to earn an income and save money. Disability Insurance is designed to protect your income in the event you are unable to work due to disability. It can replace a stream of income during your working years. A complement to Disability Insurance is Long Term Care Insurance which provides a stream of income after your working years. LTC Insurance can protect your quality of life in old age and ensure you do not become a burden on family.
  • Different types of coverage available – Suggest contacting a financial advisor to determine if current coverage is sufficient. FaithLife Financial Representatives can help with this analysis.
  • Critical illness covers many different illnesses – most plans cover anywhere from 19-27 different common illnesses. The 3 most common being Cancer, Stroke and Heart Disease. Statistics show us that there is high risk of suffering a disability or critical illness during a lifetime and it’s not a matter of if but more a matter of when.
  • … ..BUT due to medical advances and technology, more people are surviving. So if more people are surviving – why do I need Critical Illness Insurance? If you suffer a critical illness you may need to use some or all of your personal and retirement savings to get through this storm in your life. The number one reason for early withdrawal from an RRSP is illness and most mortgage foreclosures are due to illness. There are also significant tax ramifications to using your RRSP. If you need to fund cancer drugs which are not covered by a group plan or Gov’t Health Plan – by cashing in your RRSP – if the drugs cost x you will need to take out x from your savings because of the taxes that will need to be paid on that withdrawal (assuming a marginal tax rate of x%). Remember we are survivors – which mean you are going to need those retirement savings or personal savings down the road.
  • You may choose to use critical illness insurance coverage in the following ways: Alternative medicine and treatment Therapy (speech, physiotherapy, occupational, nutritional) Continued repayment of debt (e.g. mortgage, credit card, line of credit, etc.) Home renovation and vehicle modifications Purchase of equipment and devices to assist you in recovery and you day-to-day living Treatment for surgery and other health-care services outside of Canada Home care and child care Homemaking services Allows you to focus on those around you and getting well Not to worry about where the money is going to come from For most plans….don’t use – there is a return of premium option – what other insurance offers that?
  • Taking care of your loved ones is very important and proper estate planning should be a key part of your financial plan. Today, we’re very briefly going to share information with you about wills and powers of attorney, but if you’d like to hear more on these topics, check off the box on the feedback form and we’ll see if there’s enough interest in a special session. A will is important because: It will cut down on costs as well as letting you control your money and assets, not the government If you die without a will, the courts appoint a representative to effect the distribution according to the provincial rules, which may not match your wishes and may not be most tax effective A will tells people in charge of your assets how to distribute them You choose who will receive your property and assets, your personal effects and family heirlooms; who will serve as executor to carry out your wishes; who will be guardian of minor children (this is not legally binding, the courts will take the child’s best interests into account if your instructions are contested); your wishes regarding burial or cremation Keep your will current Review your will if changes in your life occur Keep a copy in a safe but accessible place Invest in having a lawyer draw up your will
  • As you can see, if you’re in debt – you’re not alone. Let’s banish the fear factor of money management … Let’s take the first step and embrace that a budget … is building your wealth !
  • Address controllable priorities
  • The Parable of the Talents - Matthew 25:14 25:14 “For it is like a man going on a journey, who summoned his servants and entrusted his property to them. To one he gave five talents,   to another two, and to another one, each according to his ability. The one who had received five talents went off right away and put his money to work and gained five more. In the same way, the one who had two gained two more. But the one who had received one talent went out and dug a hole in the ground and hid his master’s money in it. After a long time, the master of those servants came and settled his accounts with them. The one who had received the five talents came and brought five more, saying, ‘Sir, you entrusted me with five talents. See, I have gained five more. His master answered ‘Well done, good and faithful servant! You have been faithful in a few things. I will put you in charge of many things. Enter into the joy of your master. The one with the two talents also came and said, ‘Sir, you entrusted two talents to me. See, I have gained two more. His master answered, ‘Well done, good and faithful servant! You have been faithful with a few things. I will put you in charge of many things. Enter into the joy of your master. Then the one who had received the one talent came and said, ‘Sir, I knew that you were a hard man, harvesting where you did not sow, and gathering where you did not scatter seed, I was afraid, and I went and hid your talent in the ground. See, you have what is yours. But his master answered, ‘Evil and lazy servant! So you knew that I harvest where I didn’t sow and gather where I didn’t scatter? Then you should have deposited my money with the bankers, and on my return I would have received my money back with interest! Therefore take the talent from him and give it to the one who has ten. For the one who has will be given more,and he will have more than enough. But the one who does not have, even what he has will be taken from him. And throw that worthless servant into the outer darkness, where there will be weeping and gnashing of teeth.’
  • The first step to successful financial management is educating yourself about finances and how money works. Is it safe to say that we all want to make our hard-earned money work for us … so we can work less hard for our money ? Let’s unlock the secrets and look at key principles in growing your money! Read Slide
  • A simple concept called the rule of 72 shows the dramatic effect of time, compounding and rate of return. Your money will approximately DOUBLE at a point in time determined by dividing 72 by the percent interest you earn
  • One of the primary goals of a financial plan is to make your money work for you. Earning a living doesn’t come easy for anyone. It takes dedication to your family to get up each day and go to work. Most people spend more hours providing for their loved ones than they do playing with them. It’s clear that the harder you can get your money to work for you, the better you can provide your family with the quality of life you want for them. Balancing safe investments with quality return at every stage of life -from your first investment through retirement -is the foundation of growing your savings. Both investors invested in an RRSP investment fund which has easily averaged 7% growth over the past 10 years and expects to continue to exceed this in the future. Investor “A” lays out 10 X $1,000 = $10,000 over 10 years and leaves it untouched for the remaining 15 years until age 65. Investor “B” lays out 15 X $1,000 = $15,000 over the 15 years to age 65. Even though “A” only invested $10,000, her fewer dollars worked longer and she ends up with more money at age 65 than “B” who had $15,000 working for him! Why? “A” had her smaller amount compounding for a longer period (10 + 15 years). A little goes a long way.
  • Make a commitment Pray -- Ask for help, trust in God Organize -- Know where you stand Use a budget Prioritize Share with family and trusted friends Reward yourself!
  • Credit Counselling Services Crown Ministries Mennonite Foundation of Canada - just to name a few…..and of course FaithLife Financial. Financial Advisors in general….act as a coach. When you meet with an advisor – the most important aspect to consider is trust, philosophy and committed to ongoing client service. Financial plans should be reviewed annually and for sure no less then every 2 years….because your priorities will change, you will go through different lifestages and your situation will likely have changed…..this could mean significant updates or modifications to your plans. Some will charge a fee for the plan and will not provide any products that will help put your plan into action. Some will create the plan and work with you ongoing at no charge, with an aim however that you will put your plan into action using the products they are licensed to put into place (insurance and investments) and some advisors will combine both of those.
  • Personal Financial Management seminar

    1. 1. Personal Financial Management Bringing It All Together
    2. 2. Personal Finance Workshops <ul><li>Budgeting and Debt Reduction </li></ul><ul><li>Saving and Investing </li></ul><ul><li>Personal Financial Management </li></ul><ul><li>Stewardship </li></ul><ul><li>Charitable Giving </li></ul>
    3. 3. Our mission today <ul><li>Financial planning </li></ul><ul><ul><li>Overcoming the fear factor! </li></ul></ul><ul><li>Building a solid foundation </li></ul><ul><li>Where to go for more help </li></ul>
    4. 4. People don’t plan to fail….. they fail to plan! <ul><li>Only 28% of households have a comprehensive financial plan </li></ul><ul><li>Only 19% express an interest in having a financial plan </li></ul><ul><ul><li>Don’t understand the value </li></ul></ul><ul><ul><li>Don’t know what a comprehensive plan is </li></ul></ul><ul><ul><li>Believe the cost of having such a plan developed by a financial professional is high </li></ul></ul>
    5. 5. Did you know? <ul><li>God provides us with the knowledge and tools in the bible for sound money management. </li></ul><ul><li>New testament: </li></ul><ul><ul><li>215 verses pertaining to faith </li></ul></ul><ul><ul><li>218 verses pertaining to salvation </li></ul></ul><ul><ul><li>2084 versus dealing with stewardship of and accountability for money and finance </li></ul></ul>
    6. 6. How do we create a financial plan? <ul><li>Define financial planning </li></ul><ul><li>Structure of a sound financial plan </li></ul><ul><li>Commit to action </li></ul><ul><li>Who can help? </li></ul>
    7. 7. What is financial planning? <ul><li>Where you are today? </li></ul><ul><ul><li>Examine your personal finances </li></ul></ul><ul><li>Where you want to go? </li></ul><ul><ul><li>Define short and long-term goals </li></ul></ul><ul><li>Creating the plan to get you from today into tomorrow </li></ul><ul><ul><li>Action steps to reach those goals </li></ul></ul>
    8. 8. Your plan will move with you through the various life stages
    9. 9. Key components of a plan Speculation Financial Goals & Priorities Protecting Financial Security
    10. 10. Key components of a plan Speculation Financial Goals & Priorities Protecting Financial Security
    11. 11. Key components of a plan Speculation Financial Goals & Priorities Protecting Financial Security
    12. 12. Pharaoh's dream <ul><li>Genesis 41:25-36: </li></ul><ul><li>“ cows, fat and sleek came up out of the Nile; and they grazed in the marsh grass…, seven other cows came up after them, poor and very ugly and gaunt…; and the lean and ugly cows ate up the first seven fat cows. Yet when they had devoured them, it could not be detected that they had devoured them; for they were just as ugly as before….I saw also in my dream seven ears, full and good, came up on a single stalk; and lo, seven ears, withered, thin, and scorched by the east wind, sprouted up after them; and the thin ears swallowed the seven good ears.” </li></ul>
    13. 13. Risk Management Savings and Investments for Retirement Goals, Education, etc. Long Term Care to preserve dignity and family ties at old age (stream of income) Disability Insurance for income preservation while living (stream of income) Life Insurance for income and estate protection on death (lump-sum)
    14. 14. Life insurance <ul><li>Financial protection for: </li></ul><ul><li>Your family and loved ones </li></ul><ul><ul><li>Can supplement lost income </li></ul></ul><ul><ul><li>Provide funding for child’s education </li></ul></ul><ul><ul><li>Debt relief – mortgage, credit cards </li></ul></ul><ul><ul><li>Money for funeral and final expenses and taxes </li></ul></ul>
    15. 15. Critical Illness Facts 73,000 died of Heart Disease and Stroke in 2003 159,900 new cases of cancer diagnosed and 72,700 deaths in 2007 Over 70,000 heart attacks in Canada each year Statistics Canada, Canadian Cancer Society, Heart and Stroke Foundation
    16. 16. The need – advances in medicine <ul><li>We are more likely to survive critical illnesses: </li></ul><ul><ul><li>Today 59% of people diagnosed with cancer will survive as compared to 1 in 3 in the 1960’s </li></ul></ul><ul><ul><li>80% of heart attack victims survive when admitted to hospital </li></ul></ul><ul><ul><li>75% of stroke victims will survive the initial event, but 60% will be left with a disability </li></ul></ul><ul><ul><li>We are survivors! </li></ul></ul>Sources: Statistics Canada; Canadian Cancer Society; Heart and Stroke Foundation of Canada
    17. 17. Critical Illness Insurance <ul><li>Pay the bills and more! </li></ul><ul><li>Provides you with options </li></ul><ul><li>Allows you to focus on getting well </li></ul><ul><li>Eliminates money worries </li></ul><ul><li>Return of premium option </li></ul>
    18. 18. Wills and Power of Attorney <ul><li>A Will helps ensure your personal wishes are followed. If you own a personal asset or have children, you should have a Will. </li></ul><ul><li>A property power of attorney will make financial decisions on your behalf. </li></ul><ul><li>A healthcare power of attorney will take care of your healthcare needs. </li></ul>
    19. 19. Truth about savings and debt <ul><li>Trend #1: Less Saving </li></ul><ul><li>Savings rates: 20.2% in the 1982 to 1.2% in 2005 </li></ul><ul><li>Half of all Canadians have less than $2500 in savings </li></ul><ul><li>Trend #2: More Debt </li></ul><ul><li>Canadians spend, on average 127% of their income every year </li></ul><ul><li>Money is the #1 cause of marital conflict </li></ul><ul><li>Source: / Statistics Canada </li></ul>
    20. 20. Key components of a plan Speculation Financial Goals & Priorities Protecting Financial Security
    21. 21. The Parable of the Talents <ul><li>Matthew 25:14: </li></ul><ul><li>5 talents – put his money to work and gained 5 more </li></ul><ul><li>2 talents – put his money to work and gained 2 more </li></ul><ul><li>1 talent – went out, dug a hole and hid the money </li></ul><ul><li>For the 2 who put the money to work… “Well done, good and faithful servant! You have been faithful with a few things. I will put you in charge of many things. </li></ul><ul><li>For the 1 who didn’t…. ‘Evil and lazy servant!.... Then you should have deposited my money with the bankers, and on my return I would have received my money back with interest!’ </li></ul>
    22. 22. Wealth creation <ul><li>The Power of Time </li></ul><ul><li>The Power of Compounding </li></ul><ul><li>The Importance of Rate of Return </li></ul>
    23. 23. <ul><li>Rule of 72 </li></ul><ul><ul><li>Dramatic effect of time, compounding and rate of return. </li></ul></ul><ul><ul><li>Your money will approximately DOUBLE at a point in time determined by dividing 72 by the percent interest you earn. </li></ul></ul>Time, Compounding and Return Values are for illustrative purposes only and may be subject to applicable taxes. 2% 4% 6% 8% 10% 72 / % Interest
    24. 24. <ul><li>Who Has More at 65? </li></ul><ul><li>Investor “A” invests $1,000/year from age 40 to 50 and stops to let it grow </li></ul><ul><li>or </li></ul><ul><li>Investor “B” invests $1,000/year from age 50 to 65? </li></ul>Putting money to work
    25. 25. Retirement savings <ul><li>25% have died </li></ul><ul><li>19% have incomes less than $10,000 </li></ul><ul><li>49% have incomes of $10,000 - $35,000 </li></ul><ul><li>7% have incomes of over $35,000 </li></ul>Most people begin their career with the hope of a good retirement. However by age 65: Source – National Council of Welfare, Canada Customs and Revenue Agency, 2001
    26. 26. If you fail to plan… <ul><li>Inefficient use of resources </li></ul><ul><li>Risk of not meeting financial objectives </li></ul><ul><li>Unprepared for the storms of life </li></ul><ul><li>Pay higher taxes than necessary </li></ul><ul><li>Delay retirement; live on less money </li></ul><ul><li>May be difficult fulfilling God’s purpose for your life </li></ul>
    27. 27. Commit to action <ul><li>Concrete steps for action </li></ul><ul><ul><li>Set goals – spiritual and practical </li></ul></ul><ul><ul><li>Assess current situation </li></ul></ul><ul><ul><li>Develop action plans </li></ul></ul><ul><ul><li>Put your plan into action </li></ul></ul><ul><ul><li>Track your progress </li></ul></ul><ul><ul><li>Celebrate your successes </li></ul></ul>
    28. 28. Who can help? <ul><li>“ Plans fail for lack of counsel, but with many advisors they succeed” </li></ul><ul><li>Proverbs 15:22 </li></ul>
    29. 29. Want to go deeper? <ul><li>To review or start your plan </li></ul><ul><li>– consider FaithLife Financial </li></ul><ul><li>Go Green - </li></ul><ul><ul><ul><ul><li>download financial tools </li></ul></ul></ul></ul><ul><ul><ul><ul><li>view seminars </li></ul></ul></ul></ul><ul><ul><ul><ul><li>calculators </li></ul></ul></ul></ul><ul><ul><ul><ul><li>great financial articles </li></ul></ul></ul></ul>