Texas Star

Financial advice for young adults entering the work force

Laying the right foundation as you start your career is the key to future financial success, and at this lifestage, TIME is your greatest asset.  Consider that each dollar you save in your 20s can be worth ten times as much as one saved in your 40s.  Through the magical power of compounding, the beginning of your working life is the prime time to start saving towards retirement - even though many people don’t want to think about, or worse yet, act on this principle.

During this time, young adults have the exciting task of learning how to manage the spending and saving of their money within the constraints of their income.  Here are some steps to take now to put your financial future on track:

1. Identify your short, medium and long-term goals and budget your money accordingly

Your short term goals of less than five years might encompass a wedding, honeymoon, furniture or a new car. Medium term goals could include the purchase of a home and financing your future children’s college education, followed by long-term retirement goals. These goals will help you determine how to spend and save your money.

2. Build assets through saving at least __percent of your income

It may be wise to invest in CDs or Money Market funds for your short term goals and the stock market for your long term goals.  Historically, the stock market has outperformed other types of investments over comparable time periods, but it’s not for the faint of heart.  You may also want to join a 401K plan if available from your employer or open up an IRA account.

3. Establish an emergency fund

A good guide is to save three to six months worth of living expenses to cover rent or house payments, utilities, car payments, food, transportation and insurance into a separate bank account that could be easily accessed in the case of job loss or uncovered medical expenses.  Don’t use the money for anything else.

 

4. Conserve time, money and paper with Texas Community Bank’s convenient accounts with online banking, bill pay and ATM services

You will reduce the time it takes to pay your bills and save on the expense of printed paper checks and postage while helping the environment as well.

 

5. Borrow wisely

Avoid high-interest credit cards and pay off your credit card debit monthly.  Work with Texas Community Bank for your lending needs for personal loans, vehicle loans, and home mortgages.

  • Consumer loans We make personal loans, vehicle loans, and consumer loans
  • Mortgage loans Need a mortgage? First home? Second home? Retirement home? See TCB about a refinance, home improvement or home equity loan. For the current rate, please call one of our mortgage representatives at (956) 722-8333.

 

6. Understand your credit report

Your financial behavior over the past seven years, including how much credit you have, how long you have had it and whether you pay your bills on time is information included in your credit report.  Three credit report agencies - Equifax, TransUnion and Experian - maintain these reports, and lenders buy them to help them decide whether to offer you a prequalification.  Your credit report also carries your credit score ranked between 300 and 850 that many lenders use to decide whether you are creditworthy and will repay a loan.  Your credit score can also influence the interest rate you pay.  In many cases, the higher your score, the lower your interest rate.  Your credit score is available from three credit reporting agencies:

Tips for becoming a "Texas Star"

  • Pay off your credit card debt. It is senseless to pay 13-20 percent interest on credit card payments while your savings account earns one or two percent.
  • If you cannot pay off your credit card debt, pay more than the minimum payment each month which in some cases the minimum payment will only cover the interest charges.
  • Don’t worry too much about paying off student loans early. These normally have a much lower interest rate than credit cards.  By making low payments on student loans, you’ll have more money to save for future use and to reduce high-interest credit card debt.
  • Make wise purchasing decisions by determining what you “need” compared to what you “want”. This will help you make good ongoing decisions to keep your finances in check.
  • Guard against impulse shopping, especially for costly purchases such as vehicles, major appliances, furniture, jewelry and the like.

For help determining the best practices and products for the sound and productive money management during your particular life stage, please contact us at 1-956-722-8333 or email us.

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