Teaching and guiding a young dreamer

[FireDreamer]

I had a wonderful experience this past week I wanted to share and get advice from the forum.

My DW's adult niece was staying with us for several days this past week, she's in her mid-20s. Her parents don't manage their money well and don't quite get LBYM concept. Our niece asked us for advice about money, saving, and retirement. It felt good that she'd look to us for help on finances. It showed me she recognizes the problem, is willing to ask for help and take action. Three necessary components to success! I jumped on the opportunity to help her.

She's currently in school studying to be a nurse, working part jobs in her field as she can. Not a lot of income, but not many liabilities either.

Here's what I discussed and gave personal examples on each -

• Time is her biggest advantage and asset right now.
• Pay yourself first - start small, increase each year with raises
• Described LBYM concept
• High level overview of the stock market and investing in general
• IRA vs Roth vs 401k

It was a lot in a very short time and I don't expect her to remember much of it at this point. My goal was to start building a foundation with broad understanding for future discussions and personal research.

Before she left, I gave her the book the started it all for me - The Wealthy Barber. I also had her open a Roth IRA. My DW and I seeded it with cash on the condition she pay off her credit card debt and after it's payed off, invest 5% of her earnings into the Roth. I went on to change her thinking about a credit card - its not a loan; pay it off each month, etc..

I'll continue to ping her for updates, answer questions, and provide guidance.

I don't want to overwhelm her, so I'm going to have her focus on three things:

1. Budget
2. Credit control
3. Saving (Roth until full time job provides access to 401k)

Thoughts? Are these a good start? Too much? Too little? Other areas I should guide her?

It's been so long since I've been at that stage so it's hard for me to recall what confused me the most

Thanks for reading!

 

[pjm-7]

Another book for her is "Your Money or Your Life". Good Christmas gift.

 

[DrRoy]

Sounds great to me. I also like "Your Money and Your Brain" by Jason Zweig.

 

[ERD50]

That's fantastic. It certainly depends on the person, but I'd consider taking it slow. Small, digestible pieces. Let them absorb a little at a time w/o overwhelming them.

I know a lot of people recommend a number of these books, but I imagine a lot of people think " Uhggg, I gotta slog through some boring book to get this? OK, maybe later", and never get back to it.

The basics of personal finance don't need a book, it can be done on one page (you covered most of it already).

-ERD50

 

[The Cosmic Avenger]

Nurse managers, specialists, and traveling nurses can make very good money; the last is well-suited for younger single people. It can be a very good career with a lot more room for advancement than most people realize, especially if she's willing to go back for an MSN or NP later on in her career.