Sheri’s Advice To Her Niece: Saving & Investing


I’m so proud of my niece Jessica Iannetta.  She graduated from Syracuse University’s S. I. Newhouse School of Public Communications in May 2015 with degrees in newspaper and online journalism, and political science. She is now working as a reporter and photographer at the Cecil Whig, a newspaper in Elkton, Maryland.  Today I helped her enroll in her company’s benefits plans, which got me thinking that some of my advice to her may also help other readers and their younger family members.

jessicaAmong the most important suggestions I have for a new wage-earner is, even though it feels great to finally earn a good paycheck, before you get used to living at this new income level, I recommend setting up automatic transfers to savings and investment accounts.  I emphasize “automatic,” because otherwise we tend to let that new-found money slip away before it gets stored away. By having it auto-transferred first, you can feel better if you end up spending what remains in your checking account.


Resource: Get Rich Slowly

Start an emergency fund and try not to touch it unless you really truly have an emergency.  Aim for $1,000 in a high-yield online savings account; you can start shopping for one here. As your savings grow, you can eventually apply the proceeds to investing …


Resources:  “If You Can,” by William J. Bernstein, CNN Money, Money Under 30

Investing is for money you don’t plan to touch for decades, so you can let it earn long-term returns while tolerating the market’s dips and dives along the way. Try to contribute a percentage of your pay to your employer’s 401(k) plan, at least up to the company match.  (If you change jobs sooner than later, you may not get to keep all or most of the match, so if you are contemplating a change, check out the company’s vesting schedule.)

If your company offers a Roth 401(k) plan, you are probably better off with the Roth over the traditional 401(k) plan (although it never hurts to seek personal advice from a financial professional, such as your parents’ adviser, if he or she is available to weigh in on that).  You don’t get that initial tax break, but that’s probably okay when you are first starting out. You generally aren’t making the big bucks yet, so a tax deduction won’t have as much impact as it will for you in future years. By giving up the tax break, you should receive tax-free withdrawals at retirement, when you reach financial independence.

If you can afford to set aside even more monies for investing, then fund an individual Roth IRA, up to the maximum allowable amounts.  There are limits to how much you can contribute as well as income limits, so be familiar with the rules before you get started. We wrote about this earlier on our blog, “Time Is Money – Start Saving Now.”

Do you still have money you can save for the long haul after paying your bills?  If you’re not sure, try using a tool like Mint for a few months to help you track your spending. Your bank may also offer a similar tool.  No worries if you determine you don’t have any more disposable income to invest – especially if you are aggressively paying off student loans or other debt.  We will address how to deal with balancing debt versus savings in a future blog post.

If you determine that you do have excess cash flow, then:

  1. Consider increasing the percentage you save to your employer’s 401(k) up to the maximum allowable.
  2. Or you could open a second savings account (same place as your emergency fund) where you automatically deduct monies from checking to save for a nearer-term goal, like buying a car or an affordable home.

Getting Started

Resource: SAGEbroadview’s Investment Basics Summer Series

There’s no time like the present to embark on your financial journey through life … with one important caveat: The first time the markets take a tumble under your watch, expect it to be excruciatingly difficult not to panic and bail out at the worst possible time, especially if all of your friends are doing the same. By understanding how markets function before you put your money to work in them, you stand a better chance of maintaining a personal voice of reason to help you maintain your long-term resolve. To that end, our SAGEbroadview Investment Basics Summer Series is a good place to begin your financial education.

Next week: Choosing From your Employer’s Insurance Plans

apocalypseSage Serendipity:  Have you been thinking that climate change may ruin a (now) 25 year old’s retirement?  In the Opinion Pages of  The New York Times, Anna North gives us something to think about in Getting Older After the Apocalypse.


Sheri Iannetta Cupo, CFP®, Founding Partner (Retired) & Director
[email protected]

SAGEbroadview Wealth Management is a Fee Only firm offering ongoing financial planning and portfolio management, with tax planning woven carefully throughout our services. We work virtually across the country, with offices in Farmington, CT, Morristown, NJ, and Burlington, MA.