The Golden Ratio
Written by Macy Su
March 17, 2019 --- Youth Entrepreneur Society kicked off its eighth monthly meeting this month by diving into a sector of business often overlooked: Finance. Money is crucial for businesses but managing it is the hard part.
YES was honored and thrilled that Texas Republic Bank sponsored our March meeting by setting up a business tour. The meeting began with a brief introduction of the history of Texas Republic Bank by its CEO and President, Mr. David Baty. The bank was founded in 1891, and since then, it has been tightly knitted within its community in its three locations.
Texas Republic Bank has been recognized for four out of five years as “one of the top 100 community banks” in America, Mr. Baty says proudly. In 2017, it tanked #4 in the US out of community banks. The focus of Texas Republic Bank is “on the local businesses.” Mr. David Baty says. They make their money by “growing deposits, real estate loans, and working together with churches, homeowners, and commercial businesses.” This particular style of banking “allos Texas Republic Bank to be very responsive to their [the community’s] needs.”
“Before all the computers and fancy technology, do you know how the banks kept track of their clients and their money?” Baty asked before revealing an old leather-bound book. Inside, records show the clients’ names and their respective transactions. “It’s tedious work.”
After Mr. Baty’s remarks, Mrs. Kathy Selvidge led YES members on a tour of the building, which was actually the headquarters. Then, members sat down for a “Budgeting 101” session by Mrs. Jerrica Anderson, the Vice President/Compliance, CRA & BSA at Texas Republic Bank.
50-30-20. That’s Mrs. Anderson’s golden ratio on budgeting. 50% of your income should be spent on needs, such as food, clothes, and housing. 30% can be spent on wants, things like a new pair of shoes or a dinner out. 20% should go into your savings for emergencies like a flat tire or a trip to the hospital. Mrs. Anderson stressed the importance of saving: “Start small. Save up enough for one month’s bills-- in case of emergencies-- and then three months.” She advises young adults to start their savings account with “at least $500.”
Mrs. Anderson demonstrated her budgeting techniques through a scenario using “Monica and Sarah” who had a monthly budget of $294. Monica bought some new Nikes, a couple dozen magazines to add to her collection, and lots of takeout, which ended up totaling to $300-- $6 over her budget, which means overdraft and overdraft fees. Sarah, on the other hand, focused more on her ‘needs’ rather than her ‘wants’, like Monica. She ended up only spending $260, which meant no dues. “You need clothes, but you don’t need a shopping spree.” Mrs. Anderson advises heartily.
Next, Senior Vice President Jerry Song, gave a little more of a personal touch to banking. He started with an anecdote, which struck a chord with many of the parents and our members, all as Asian Americans.
And as Asian-Americans, “too often, we fall into the field of being a doctor, lawyer, or engineer,” Mr. Song says, “So it’s really great that you guys [YES], are pursuing your interest in the field of finance, banking, and accounting.”