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Sep 21 2009 12:00AM


I am 18 years old and work sparingly. I want to start saving money for my future while I'm young. What do you suggest I do?


Assuming that you have enough take-home pay to sustain your normal living expenses, FPA member, Curtis Chen, CFP®, of Chen Financial Group, LLC suggests you do the following:

  1. Build an emergency fund equivalent to three to six months of take-home pay. This fund can be a separate savings account you only "touch" in case of unexpected expenses. The emergency fund is also a source of funds, if you lose your income unexpectedly.
  2. Start investing every month into a retirement plan.  A Roth Investment Retirement Account (RothIRA) is a retirement plan that allows for tax-free withdrawals after age 59½. You are eligible to contribute up to $5,000 in 2009 as long as your income does not exceed $105,000. You can set up an account with an automatic monthly investment from your bank account. In addition, consider participating in your employer's 401(k) plan if one is offered.

It's also a good idea to work with a financial planner who can help you start your financial life off on the right foot.

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