Financial Planning

Senior Series


College Senior


Dear College Seniors,

In the past 30 days we have experienced changes that were unfathomable prior to the covid-19 pandemic.  As college seniors you have been launched into the real world with quite a jolt.  You are missing out on traditional celebrations and last moments with your contemporaries as you embark on your new beginnings.  I am confident it will be evident the resilience you have gained from going through such a time as this.  This historic moment will shape you and give you courage to face the changes that are inevitable as you go through life.  Your future is bright!

The way the world gathers may be different for a long while, but the importance of remaining fiscally responsible remains the same.  As a college student your financial responsibilities largely consist of budgeting for rent, utilities, gas and groceries balanced with occasional social outings.  As you begin your new job, your financial planning opportunities will broaden.

Budgeting Recap:

As a reminder, the guidelines for budgeting are as follows:

  • 10% - giving

  • 20% - saving

  • 70% - spending

Getting Started:

Making decisions about retirement savings and insurance is the next level of adulting.  A new job will hopefully offer you corresponding employee benefits as listed below: 

  • Retirement plan

  • Health insurance and savings account

  • Life insurance

  • Disability insurance


    In addition to benefits offered by your employer, it is also advisable to set up your Durable Power of Attorney, Health Care Directive and Will – even if you are NOT married with children.


    Employee Benefits Summary:


    Retirement Plan Contributions:


    Starting the habit of contributing to a retirement plan will have a dramatic effect on your long term financial security associated with the time value of money. 


    If your employer offers a 401(k) or 403(b), you should consider contributing a minimum equal to the amount of your employer’s match.  Neglecting to take advantage of the employer match is throwing away free money.


    You may have a choice between a Traditional or Roth (401k or 403b) retirement account.  A Roth version allows you to pay the tax on the money going into the account and pull your retirement distributions out tax free.  A Traditional version allows you to take a tax deduction on the money going into the account and the money grows tax deferred, but distributions will be taxable. 


    It is preferable to pay taxes on the smaller contribution to Roth than on distributions from a Traditional account that is large based on decades of growth.


    If your employer doesn’t offer a retirement plan, you should open an individual Roth IRA and contribute at least 20% of your income up to the maximum allowable contribution.  If you are using the Roth IRA as an emergency fund, be sure to keep the emergency portion in cash and not in investments that might be subject to market risk.


    Health Insurance and Savings:


    Most employers offer a plan for health insurance.  Health insurance is a tremendous benefit offered by employers in a traditional deductible or a high deductible option. 


    The traditional deductible plan is usually paired with a flexible savings account (FSA) to pay for copays and other medical expenses.  The FSA is a use it or lose it option.  You will want to fund it based on your typical year of medical expenses – this is not an exact science and will vary from year to year.  The FSA contribution is pretax and qualified distributions are tax free.  Your full contribution is prefunded, but any amount left at the end of the year is use it or lose it.


    If your employer offers a high deductible health plan, you will probably have the option to participate in a Health Savings Account (HSA).  Similar to the flexible savings account, the HSA allows pretax contributions and tax free qualified distributions.  The HSA does NOT prefund the full amount of your contribution, but any excess funds at the end of the year does continue to roll over year to year.


    Life Insurance:


    Cautionary Advice

    Almost 15 years ago, I left the corporate world and my employee benefits behind to open my own business.  For cash flow purposes, I let my life insurance expire.  One year later, a cancer diagnosis caused me to be uninsurable at the age of 36.  You are never too young to consider taking advantage of life insurance as an employee benefit – and take it with you if you leave your job.


    If your employer offers life insurance as a benefit, it is advisable to at least take advantage of the minimum death benefit available.  If your cash flow permits, you should also consider buying the additional amounts available while you are young and healthy and the cost is low. 


    You may need to seek advice about how much you should purchase.  Usually an amount to replace your income for your family (if you have one or plan to have one) and to cover your debt such as a car and/or house note is recommended.



    Disability Insurance:


    If your employer offers disability insurance, you should consider taking advantage of this benefit.  Similar to life insurance, disability insurance is important income replacement protection to have even at an early age.  The statistics are actually greater for a young person to experience a disability than a premature death. 


    Typically, employers offer short term and long term disability.  Short term disability is usually paid by the employer and long term disability comes with a pretax premium payable by the employee.  The short term disability pays for a 3 to 6 month income replacement for a qualified event, and the long term disability insurance typically pays if the qualified event continues after the 3 to 6 month period.  The income replacement is capped at 60% so there is incentive to return to work.


    Legal Documents:


    If you are graduating college, you are likely the age of a legal adult.  Once you are 18 it is advisable to have a will, power of attorney and a health care directive.  At this stage of life, your documents are typically simple and inexpensive to draft.  Having your legal documents in order will put you ahead of many adults who are well beyond your years. 


    As a legal adult, your parents no longer have the rights to handle your affairs as they did when you were a minor.  The alternative to having your own documents is to let the government decide how to handle your affairs.  No one wants that. 


    Don’t forget to update these documents when you have a substantial change in life.


    You made it!


    If you are reading this section, kudos to you for making it to the end.  I know this is a lot of very dry information – welcome to adulting!


    One last piece of advice, start building your team of advisors.  Ask experienced people you know and respect who they recommend to help you stay on track.  You should have a Certified Financial Planner™ (one who doesn’t sell financial or insurance products), a banking relationship, a CPA, an attorney and an investment advisor.  I recommend seeking advisors who are of a similar age and place in life.  You will have the opportunity to grow and go through life with your advisors.  These relationships will keep you on track and likely become dear, lifelong friends.


    Congratulations on your new job and the start of the best years of your life!

Laurel Alberty, CFP®

VP, Director of Private Banking Division


High School


Over the next three months, I will be providing high school seniors, college seniors and our senior citizen readers with basic financial planning guidance as it applies to each season of life.  This month we will address the High School Seniors. 

High School Seniors:

Hello soon to be college students!  I’m sure you are spending a lot of time thinking about your new season of life; moving away from home, choosing a roommate, choosing a Greek affiliation, and maybe still working on choosing a major. 

How much time have you spent on planning for your finances?  Even if Mom and Dad are footing the bill, you will still have to make decisions about how you will spend your money.  So where do you start?

Getting Started:

First, if you do not already have a checking account, you should open an account that offers access to a debit card.  A debit card is NOT a credit card.  The funds in your account will be limited to your income and it is important to be able to access your account on your mobile device so you can keep up with your spending and your balance. 

All funds that you will rely on for your expenses should be deposited into your checking account; money from parents and/or direct deposited paychecks.  You should avoid using a credit card if at all possible.  The debit card, checks or cash should be your primary ways of paying for expenses. 

It is advisable to use your debit card and checks as much as possible and avoid using cash.  The debit card and checks provide a clear trail of where you have spent your money and will help with budgeting.

Budgeting Basics:

I know budget is the dreaded “b” word.  Budgeting is essential to financial security.  Once budgeting becomes a way of life for you, you will find a peace about finances that very few people ever experience.

The guidelines for budgeting are as follows:

  • 10% - giving

  • 20% - saving

  • 70% - spending


I know most financial professionals will tell you to pay yourself first.  I personally feel that giving your first and best 10% will be a life changer for you.  Even if it seems super small because your income is small, giving 10% of what you earn (not the money from your parents) will help you see the importance of connecting to those less fortunate than you.  If giving 10% of your income becomes a habit, you will be blessed by the compounding effect your financial contribution brings to the things you care about.


Saving is a critical element of budgeting.  You can actually have peace and joy from saving 20% of your income.  If you have an emergency, having funds dedicated to handle the emergency will provide peace.  My recommendation is to try to accumulate 3 months income for an emergency.  You will be glad you saved when the inevitable flat tire or other costly emergency occurs and you actually have funds set aside.

Once you have 3 months income accumulated, you should continue putting 20% into savings.  I recommend using a Roth IRA for savings due to the tax benefits and for purposes of developing a habit of saving for retirement.  Any amount of money over the dedicated emergency fund should be saved for large long term purchases.  Also, don’t forget to replenish your emergency fund anytime you use it.

Closing note to the high school senior:

Kudos to you my dear soon to be college student, if you are reading this without the prodding of a parental figure.  You are already showing signs that you are headed toward financial security.  I promise that planning and budgeting will bring you a long term peace that will far exceed any impulse buy or excess you might indulge.  I’m excited for you and your new journey.  I’d love to hear from you if you have questions and if you want to share how things are going.  My last few words are for your parents. Your future is bright!

Note to the parents:

For parents who may be reading this on behalf of their high schoolers, let them use college as practice for real life.  Even if you are providing the funds, let them live on a fixed income and pay their own bills.   Let them write the check for rent and utilities so they can experience how it drains their account.  Let them try to get by on what is remaining so they make better choices about spending money on groceries rather than bar bills or impulsive purchases. 

I recommend letting your soon to be college student start now while they are still at home.  Practicing ahead of time will give them guided experience possibly alleviating the stress of one more new thing to learn as they embark on their college career.  Your child is graduating from high school….Well Done!

Laurel Alberty, CFP®

VP, Financial & Estate Planning


Hit Reset


I remember playing the video game Pong as a child.  Yes, you have to be pretty old to remember playing Pong.  Even though Pong required little to no skill, sometimes the game didn’t go my way and I hit reset to start a new game.

What if we could start over fresh with our finances like we can a video game?  Even though we can’t change the remnants of the past, we can start over with new habits and a new perspective.  As your yearend statements fill the mailbox, I encourage you to review your personal income and spending trends. 

Every year is different and has its own unique ebb and flow of saving and spending.  Even so, there are some constants worth noting.   My personal constant is a daily stop by the local coffee shop to buy my chai tea latte. 

Not only does this, albeit small, routine habit have a negative impact on my bank account but, it is not great for my calorie count either.  I have literally changed my path forward by going to work via a route that does not pass the coffee shop.  This is one small example, but it has a compounding effect on my finances and my health.

Identifying the pitfalls in our routines can be daunting.  The marketplace offers plenty of tools and information to assist you in the review of your current situation and the path forward if you like to DIY.

If you are fortunate enough to be a First American Bank and Trust customer, you won’t have to go it alone.  First American Bank and Trust is dedicated to consultative banking and is providing complimentary, financial and estate planning services exclusively to customers.  Onsite access to a Certified Financial Planner™ is available to ALL First American Bank and Trust customers.

FAB customers will also be provided with your own personal financial and estate planning mobile application.  You can view your budget and your actual spending and saving live from the palm of your hand.  Your personal mobile application will provide you with a virtual vault for important documents such as tax returns, deeds, powers of attorney and other legal documents accessible 24/7.  No more digging through baskets under the bed or in the attic.

Let 2020 be the year you hit reset and start anew with a complimentary financial and estate plan.

Laurel Alberty, CFP®

VP, Financial & Estate Planning


End of Year Charitable Giving


The end of another year, and decade, is within sight. Have you had time to consider your charitable giving plan yet?  The deadline for making a 2019 tax deductible charitable gift is fast approaching.  Christmas parties and fun vacation plans may distract us from our year end goals.  Don’t let all of the fun cause you to miss your opportunity for a tax deduction.  There is still time to make an impactful donation – quickly and easily.

The Athens Area Community Foundation (AACF) is a local resource ready and able to facilitate the charitable giving process for donors and charities.  The AACF offers a plethora of charitable giving strategies.  A favorite strategy recommended for the procrastinating but charitably minded donor is donating to a donor advised fund (DAF).  Fortunately, the AACF offers the donor advised fund as a charitable giving strategy and they simplify the charitable gift making process.

There are several benefits to donor advised funds that make it especially appealing for last minute charitable giving.  First, the donor can aggregate the charitable donation and recognize the tax deduction in the current year.  The tax deduction is tied to the donation to the qualified donor advised fund not to the grants to the specific charities. 

The DAF structure allows the donor to take their time to make informed decisions about their charitable gifts without having to wait for the tax deduction.  The donor has an active role in determining which charities receive a donation, how much of a donation is made and when the donation is to be made (even if it is in a different year).  Maybe the most compelling feature of a donor advised fund is the ability to donate appreciated real estate and securities which can be intimidating gifts to make otherwise.

There are a multitude of charitable giving strategies offered through the AACF and other locally available resources.   I have singled out the AACF because of their commitment to our community and surrounding areas.  The staff at AACF have their finger on the pulse of our local philanthropists and the needs within our community and beyond. 

If your blessings abound, let them spill over to those in need.  Enjoy the season to the fullest by receiving the gift of giving.

Laurel Alberty, CFP®

VP, Financial & Estate Planning