Tag Archives: Credit Cards

6 Financial Traps New College Graduates Should Avoid

This spring, college seniors across the nation will graduate and start their careers. Financial lifestyle should be top of mind, says the American Bankers Association. ABA has highlighted six traps new college graduates should avoid to fortify their finances as they transition from the dorm to the office.

“Now is the time for college grads to get their financial life started on the right foot,” said Corey Carlisle, executive director of the ABA Foundation. “When it comes to managing your finances in the real world, pulling an all-nighter isn’t the best strategy.  Forming positive financial habits today will set you up for lifelong success.”

According to ABA, new college graduates should avoid the following financial traps:

Not having a budget.  Don’t spend more than you make. Calculate the amount of money you’re taking home after taxes, then figure out how much money you can afford to spend each month while contributing to your savings. Be sure to factor in recurring expenses such as student loans, monthly rent, utilities, groceries, transportation expenses and car loans.

Forgoing an emergency fund.  Make it a priority to set aside the equivalent of three to six months’ worth of living expenses. Start putting some money away immediately, no matter how small the amount. A bank savings account is a smart place to stash your cash for a rainy day. Use your tax refund for this instead of an impulse buy.

Paying bills late – or not at all. Each missed payment can hurt your credit history for up to seven years, and can affect your ability to get loans, the interest rates you pay and your ability to get a job or rent an apartment. Consider setting up automatic payments for regular expenses like student loans, car payments and phone bills.

Racking up debt. Understand the responsibilities and benefits of credit.  Shop around for a card that best suits your needs, and spend only what you can afford to pay back. Credit is a great tool, but only if you use it responsibly.

Not thinking about the future.  It may seem odd since you’re just beginning your career, but now is the best time to start planning for your retirement. Contribute to your employer’s 401(k) or similar account, especially if there is a company match. Invest enough to qualify for your company’s full match – it’s free money that adds up to a significant chunk of change over the years.

Ignoring help from your bank. Most banks offer online, mobile and text banking tools to manage your account night and day.  Use these tools to check balances, pay bills, deposit checks, monitor transaction history and track budgets. To learn about the tools Stock Yards has to offer, visit our website at www.syb.com.

Resource information provided by the American Bankers Association

Holiday Planning: Make a List and Check it Twice

As the holidays quickly approach, the American Bankers Association is encouraging consumers to plan ahead to avoid excessive debt in the New Year.

“Develop a plan in advance of the holidays, and be sure to check it twice,” said Frank Keating, ABA’s former president and CEO. “Assessing your finances and spreading out your holiday spending are terrific ways to avoid starting the New Year with debt you’ll regret.”

Below are seven holiday spending tips from ABA to help consumers have a financially happy New Year:

  • Plan ahead. Before you start shopping, develop a realistic budget. Consider your income, subtract your normal monthly expenses and then add any savings to whatever cash is left over. If you need to use your credit card, think about what you can afford to pay back in January.
  • Keep track of other costs. Don’t forget costs beyond gifts, like postage, gift wrap, decorations, greeting cards, food, travel and charitable contributions.
  • Make a list and check it twice. Keep your gift list limited to family and close friends, noting how much you want to spend on each.
  • Shop early, spend carefully. Avoid shopping while rushed or under pressure, which can lead to overspending. Make sure to comparison shop online first, or download an app that lets you compare prices before you buy anything in a store. Before you head to the cashier (or online checkout), make sure your purchase is within the budget you set.
  • Avoid traps. Finding a spectacular sale on something you’ve been wanting can easily throw you off course. Stay strong and stick to your budget. And don’t apply for store credit cards you don’t need just to get a one-time discount.
  • Use credit wisely. Limit the use of credit for holiday spending. If you must use credit, use only one card, preferably the one with the lowest interest rate, and leave the rest at home.  Pick a date when you can pay off your holiday credit card bills, and commit to paying off the balance by that time. Be sure to check statements for unauthorized charges and report them immediately.
  • Save your receipts. Not only will you need them for possible returns, you’ll need them to keep track of what you’ve spent and to compare with your credit card statement. Knowing how much you spent will help you plan for next year, too.

Keating noted that banks are committed to helping consumers responsibly handle credit and save for the future.

“Banks offer a wide menu of options to help you save for the holidays and other expenses,” said Keating. “Ask your banker about a customizable savings plan, such as a Christmas account that enables you to set aside money throughout the year for your holiday spending.”

For more information on managing your money – as well as a variety of other personal finance tips and resources – visit aba.com/consumers.

Resource Information: American Banker’s Association

Teaching Kids About Finance: How to Get Started

It’s never too early to start teaching children the basics of finance. As the summer draws to an end, take the opportunity to explain to kids what they can do with that extra cash they may have earned. Whether they spent their days mowing the lawn or selling lemonade, it’s the perfect time to teach your child financial lessons that will last a lifetime. Here are some teachable moments to help you get started:

• At the bank. When you go to the bank, bring your children with you and show them how transactions work. Get the manager to explain how the bank operates, how money generates interest and how an ATM works. Click here to view all of Stock Yard’s locations.

• On payday. Discuss how your pay is budgeted to pay for housing, food and clothing, and how a portion is saved for future expenses such as college tuition and retirement.

• At the grocery store. Explain the benefits of comparison shopping, coupons and store brands. Emphasize the value of the purchase, and include wants versus needs.

• Paying bills. Explain the many ways that bills can be paid: over the phone, paper or by check, electronic check or online check draft. Discuss how each method of bill pay takes money out of your account. Be sure to cover late penalties, emphasizing the importance of paying bills on time.

• Using credit cards. Explain that using a credit card creates a loan that has to be repaid. Share how each month a credit card statement arrives in the mail with a bill. Discuss the features of different types of cards, such as ATM, debit and credit cards.

What are some ways you teach your children money management? Comment below!

Resource Information: American Banker’s Association