Young Professionals

Organize Your Financial Life

  • Paying bills: One of the biggest challenges to organizing one’s financial life is establishing a system to pay bills. My biggest recommendation is to automate this process as much as possible. A better approach is to pay bills electronically. You may choose to push money out of your account via your bank. You may also choose to have money pulled out of your account by the vendors that you must pay. This ensures that your bill is always paid on time. 
  • Filing and record-keeping: Consider having a master information document to organize all of your important financial information. This will centralize the information to make it easier for you or anyone in your family to reference it if needed. One key to organization is a good filing system. Consider using filing folders in different colors for different types of accounts. Another way to organize yourself is to understand which statements and papers should be kept and which information can be tossed:
    • ATM receipts, deposit slips, and credit card receipts aren’t needed after you’ve verified the transaction on your monthly statements. (Please note: You may have to keep a receipt or two for tax purposes.) 
    • Expired insurance policies
    • Old 401(k) statements
    • Paycheck stubs
    • Tax returns older than seven years


Retirement planning involves evaluating your current financial standing and creating an accumulation strategy that will help to ensure a desired retirement lifestyle. Because an individual’s retirement years can span decades, retirement planning generally dominates other financial goals. A successful plan put into place during the wealth-building life span should address ways to maximize growth and tax-efficient distributions, as well as how to leave retirement assets to the next generation. There are several ways to save for retirement:

  • Qualified employer-sponsored plans
  • Individual retirement accounts (IRAs)
  • Personal savings
  • Executive deferral plans

Qualified plans are employer-sponsored retirement plans such as 401(k)s and pension plans. Although there are contribution limits and strict distribution rules, these plans are popular because of their tax benefits. Generally, employers will make participation even more attractive by matching all or a portion of an employee’s contribution. It’s important that you choose the optimum plan to benefit the key people in your company.

IRAs are inexpensive, easy to establish and maintain, and also offer favorable tax incentives. They can be created by an individual or provided by an employer. Most people use IRAs to consolidate retirement savings that were previously held in employer-sponsored plans. Our process can help coordinate your IRA investments with your other savings plans.

You may find that qualified plans, IRAs, and social security won’t provide enough money to support your desired retirement lifestyle. By identifying your retirement gap, you can develop a strategy for personal savings invested outside of the traditional retirement vehicle. 

Business owners or executives may have access to other tax-advantaged retirement savings vehicles. Nonqualified executive compensation is a generic term used to describe a compensation arrangement that provides retirement income—and, in some cases, death benefits—to key employees of a business. 

At the heart of any retirement plan is the distribution of accumulated assets. The correct distribution method will help to ensure that your retirement savings last beyond your lifetime with minimum shrinkage from taxes. From premature distribution options that allow access to retirement assets prior to age 59½, to products intended to provide stable monthly payments for retirement,distribution planning is paramount to a successful retirement plan.

Spending and Budgeting

  • Reasons to prepare a budget: The real secret to building a budget that really works is creating a sustainable structure for your finances, one that balances spending and income and that leaves enough room to handle the unexpected. When used correctly, a personal budget can ensure that income and expenditures match, in both amount and timing. It can also serve to spotlight potential cash flow problems, as well as identify opportunities to make better use of current income. By comparing the planned budget against actual results, you can see whether you are making progress toward meeting specific goals.  

Student Loan Debt

Some federal loans offer forgiveness and cancellation of loans for qualified borrowers.

  • The Public Service Loan Forgiveness Program is an incentive program to encourage students to work in public service jobs. If a borrower works in a qualifying public service job and makes 120 qualifying payments, the remaining balance may be forgiven. The amount forgiven is not considered income for tax purposes by the IRS.
  • The Teacher Loan Forgiveness Program is a program to encourage students to become teachers. Borrowers who teach full-time at a qualifying school for five consecutive years may qualify to have as much as $17,500 in subsidized or unsubsidized loans forgiven. In addition, teachers may qualify for a discharge of Perkins loans if they have taught at a qualifying public or nonprofit elementary or secondary school. The amount canceled is not considered income for tax purposes.

Federal loans may be consolidated through the Department of Education. Consolidation is used to extend a loan’s repayment terms and combine several loans into one bill. Consolidation can have a loan term up to 30 years, resulting in lower monthly payments, but it increases the total amount that a borrower will pay over the life of the loan. A direct consolidation loan has a fixed interest rate calculated using the weighted average of the interest rates on the borrower’s current loans and rounding up to the nearest one-eighth of 1 percent.

The Department of Education does not offer borrowers the option to refinance; however, private companies have begun to offer borrowers the ability to refinance both private and federal student loans at lower rates. Keep in mind that refinancing may eliminate some of the options available with federal loans, such as income-based repayment plans, forgiveness programs, forbearance, or deferment.

Credit Card Dos and Don'ts

To seek out new customers, credit card companies often send young adults and other prospects credit card applications in the mail. Typically, these mailings are unsolicited by the potential customers—you may have received a few yourself. But, before you sign on the dotted line and mail in that application, you need to know more. Here are some dos and don’ts regarding credit cards.


  • Shop around. The credit card industry is very competitive, so compare interest rates, credit limits, grace periods, annual fees, terms, and conditions.
  • Read the fine print. The application is a contract, so read it thoroughly before you sign it. Watch for terms such as “introductory rate,” and be sure you know when that introductory rate of interest expires.
  • Pay your bill in full each month. Pay off your statement each month in full and on time; otherwise, you will begin paying interest charges and may be charged late fees. Paying off your bill each month can also help ensure that you stay out of debt.
  • Track your spending. Look closely at your credit card statements each month to be sure that you actually approved the charges that appear. Mistakes can happen, and you don’t want to pay more than you agreed to.
  • Pay attention to changes in your credit agreement. Occasionally, the credit card company will send you updates on the contract you have with it. If you don’t pay attention, you could miss something important.


  • Don’t spend money you don’t have. Buying things without the money in your savings account can lead you down a dangerous path. Before you know it, you could be in a lot of debt with no way to pay it off.
  • Stay below your maximum credit limit. Creditors want to see that you know how to use your card wisely. Keeping your balance low and making payments in full are good ways to do that. Just because the option to spend more is there doesn’t mean that you should take advantage of it.
  • Don’t sign up for store credit cards just to receive a discount. Opening a credit line at a store to obtain a discount on a purchase then and there may not be a good idea. Remember that credit cards affect your credit score and that opening too many can actually hurt it. Plus, store credit cards tend to have much higher interest rates than those offered by financial institutions.
  • Don’t apply for additional credit cards if you have balances on others. Pay your balances on existing cards before you open new accounts. Getting in this habit will make you less likely to open too many accounts.
  • Don’t give your credit card to someone else. Whether you authorize it or not, giving your credit card to someone else to use is against the law.

Mortgage and Refinancing

  • Most common mortgage types:
    • A fixed-rate mortgage is straightforward in that the interest rate stays fixed for the entire period of the loan. Most people use a 30-year loan, although options with shorter terms, such as 15 years, are available. With a fixed-rate loan, the portion of the monthly payment that constitutes principal and interest remains the same for the life of the loan. 
    • With an adjustable-rate mortgage or ARM, the initial rate is usually maintained for a specific period, and then the rate is subject to change periodically, typically annually. For example, a 5/1 ARM features a fixed rate for five years; thereafter, the rate is subject to change annually. These products typically feature a lower initial rate than does a fixed-rate loan, which is why they are tempting for some people. But when the initial period is over and the rate is due to reset, the monthly payment can sometimes increase by a few hundred dollars. This is the potential danger with these loans. 
    • Interest-only loans are mortgages where the homeowner is required to pay only the interest on the amortized loan. This has the benefit of keeping the payment down (because interest and principal are not being paid); however, the homeowner is not paying anything toward the principal of the property. This can be dangerous during periods of depressed real estate values, causing the value of the home to drop below the principal portion of the loan. This can put a homeowner in a tough situation if he or she tries to sell a home that is worth less than the outstanding loan. 
  • Paying points on a mortgage: A point is a fee equal to 1 percent of the loan amount. For example, a 30-year, $300,000 mortgage might have a rate of 5.50 percent but come with a charge of 1 point, or $3,000. A lender can charge one, two, or more points. How do you decide whether to pay points? It depends on a number of factors, such as how much money you have available to put down at closing and how long you plan on staying in your house. Points are a form of prepaid interest, which reduces the interest rate. This is an advantage if you plan to stay in your home for a while. But if you need the lowest possible closing costs, choose the zero-point option on your loan program.
  • When to refinance: There are a number of situations in which refinancing a mortgage makes sense. For example, you may have purchased a home years ago when interest rates were higher and now you want to take advantage of a decline in mortgage rates. Or you may have initially started with a variable-rate mortgage, are not comfortable with the variability of the rate, and want to switch to a more predictable fixed-rate mortgage. There are also circumstances when you have the opportunity to shorten the term of your loan. 

Your Credit Report

  • Free credit report: Credit information (i.e., a person’s financial history) is an integral part of a person’s life. Credit reports are used when applying for a loan or for life, auto, or home insurance. They are also used when renting an apartment or applying for a job. The three credit reporting companies collect and record information on your credit report. The report itself does not include any statement about whether an individual is a good or a poor lending risk. This determination is made by lenders using the information in your report and their own criteria. Check your three credit reports free once a year through or by calling 877.322.8228. Contact the creditor and the credit bureau to correct any errors. 
  • What are the common errors?
    • Misspelled names
    • Wrong social security numbers
    • Inaccurate birth dates
    • Inaccurate information about a spouse
    • Out-of-date address
    • “Closed” accounts listed as “open”
    • The same mortgage or loan listed twice
    • Absence of major credit, loan, mortgage, or other accounts that could be used to demonstrate creditworthiness
  • What if you find an error? Write a letter to the credit bureau, which is obligated by law to contact the creditor who supplied the disputed information. The credit bureau must respond to you within 30 days. If you’re not satisfied with how the dispute is settled, ask that a brief written explanation be added to the bottom of your credit report. 
  • Your FICO Score: A FICO credit score, used by many lenders, ranges from 300 to 850. If you have a favorable debt-to-income ratio and a score between 650 and 850, you’ll likely qualify for a home loan with no problems. But the best mortgage rates are reserved for those near the top tier of that range. To improve your credit score, use common sense and start with three simple changes:
    • Pay on time. About one-third of your score is based on whether you make on-time payments to creditors. Late payments will come back to haunt you and can cost you tens of thousands of dollars in higher interest payments over the life of a mortgage.
    • Pay down balances. Know your total line of credit, which is the top limit or ceiling amount you can charge without paying over-the-limit charges. Try not to charge more than 25 percent of that total line of credit. By keeping your utilization rate below 25 percent, you’ll ensure that lenders likely see you as a good credit risk. 
    • Don’t cut up old cards. About 15 percent of your credit score is based on the length of credit history. Canceling old cards cuts short your history of responsible credit usage and increases your utilization rate when your total credit line drops. 

Health Savings Account

  • An HSA is a tax-advantaged account that can be used to pay for specific qualified medical expenses. Unlike with flexible spending accounts (FSAs), which are designed to cover current out-of-pocket medical costs, the money in HSAs never expires and can be used to pay for health care expenses now and in retirement. HSAs may be offered through your employer or purchased directly if you are eligible. They can be established at a bank, insurance company, or IRS-recognized third-party administrator. Generally, contributions to an HSA are tax deductible. Their earnings accumulate tax deferred and withdrawals are tax free if used to pay for qualified expenses.