Author Topic: kid graduating college w/ some savings; How to start his financial journey?  (Read 604 times)

AmberTheCat

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hi. my oldest kiddo graduates from college in the spring. He's pretty frugal; has no debt and will have $15k in savings.

any thoughts we can suggest to him as he starts his own life/job? what should he do with his savings? IRAs? (roth? traditional?) investments? car? european travel?

he will need to buy a car because he's using ours now, and we want our younger kids to use it when he gets a job.

His projected first job income will be from $50-65k per year.  Basically - what are beginning words you impart to someone just starting out without debt? I so appreciate your thoughts.

Jaayse

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I was in a somewhat similar situation when I graduated.  The best thing my parents did with me was that my dad took me to a Fidelity location and helped me set up 5k in an S&P 500 index fund account (early 2011).  I pretty much ignored that money for a while on my dad's advice and when I looked back it was over 6k (mid 2013).  From that point on I stashed my money in that account. 

Seeing the growth compared to everything else I was doing was the biggest lesson learned, and although I wouldn't find MMM and learn as much about investing until early 2017, I was glad to have an alternative to my horrible savings account that paid me $1 for my 20k per month. 

Sibley

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To him: Develop a budget and a system to handle bills, etc so everything gets paid on time. This can take some trial and error, that's ok. It's a learning curve.

To you: Make sure he knows when he needs to return the car to you - give him plenty of notice so he's not blindsided. If there's any money or goods you're willing to give him, let him know specifically what that looks like, and any obligations on his part. If he's living with you, be open, transparent and discuss about your expectations of rent, cleaning/cooking, etc. If you want him to move out, give him plenty of notice of that end date and let him know what, if anything, you'll do to help (if requested).

Answer questions if asked. Offer advice if requested. Tell him you're more than happy to help him out, but he needs to ask you, you're not going to intrude. Mostly, let him figure it out. Pretend that he's another adult, not your child, and treat him accordingly.

StarBright

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I think the biggest thing at that age is making sure he throws as much as possible into retirement savings. Building up retirement in his 20s will be one of the best things he can do long term.

I think most people believe that Roth's aren't particularly helpful once you make over a certain threshold of income, but I will say we used the "take out 10k for your first house downpayment" provision and it came in very handy.  We had been saving for a down payment but the financial crisis presented the perfect house (at a great discount) sooner than we were ready. Having the Roth let us grab the rest of the funds, penalty free, quickly.

Also, I don't know if you have anything to spare towards your kids' retirement savings, but I love a lot about this post about creating generational wealth:
https://actionecon.com/building-generational-wealth/

Here is a takeaway:
2.  Retirement matching funds:  Starting with their first paycheck We will match 50% of what they put into retirement funds for 5 years, up to $5,000 per year, for a total of $25,000 per kid.  What this does is ensure that they get to $64,000 quickly, which is a major step in building a retirement nest egg, as outlined in my article Double Your Money.

Congrats to your son for stepping out into the world in a way that makes success probable. And good job you for some A+ parenting.