Starting out smart with money
Question: My daughter is 24 and just completed her master’s degree. She has a job (YEAH!!) and I really want her to get a good start with her financial affairs. What is the best way? I was thinking of a financial planner…. is that the way to go? How do I choose a good financial planner? I just want her to get a good start and I was sewing and listening to your show and thought I would give you folks a shout. Any help would be appreciated. Thank you!!!! Karen, Wooster, OH
Answer: I love it when I hear someone got a job. And it’s wonderful that you want to help your daughter get off on the right financial foot.
Your thought about a financial planner is intriguing. Problem is, a good financial planner such as a certified financial planner (CFP) won’t want your daughter as a client.
She doesn’t have enough income and assets to make it worth their while. The business model is really geared toward high-income high-net-worth families. It’s really a shame, but the industry doesn’t want to work with the people who need its help the most.
Here’s the thing: the basics of good personal finance are really pretty simple: Live within your means, borrow wisely and stay away from credit card debt, save for retirement and financial security, and carry adequate insurance. What’s hard is turning these insights into money habits that last a lifetime.
With that in mind, if you know a good CFP I would hire her (or him) for a couple of hours to go over the basics with your daughter and share some insights drawn from experience. Or perhaps you know someone with money savvy who could talk to your daughter about finances for the price of a dinner or a cup of coffee? That’s all she’ll need to come up with her initial checklist and start off right.
With her master’s degree just behind her she may not want to crack open a book for awhile, but when she does I have three suggestions of personal finance books you might get her. The Random Walk Guide To Investing by Burton Malkiel is only 224 pages. It covers the basics of investing well, and it includes some valuable personal finance insights. I’m a huge fan of Jane Bryant Quinn and in Smart and Simple Financial Strategies for Busy People she keeps it simple. The writing is charming, too. My book The New Frugality: How to Consume Less, Save More, and Live Better is geared toward helping people manage their money simply and well over a lifetime.
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