Ask Terry Questions Young college graduate has first paycheck coming. What do you suggest for him

Young college graduate has first paycheck coming. What do you suggest for him

By Terry Savage on December 12, 2017 | Wild Card

Hi, Terry, I listen to your advice on wgn radio and love your energy and wonderful suggestions. My 22 year old son just started his career in engineering and will be getting his first paycheck soon. He is living at home with me and my husband for a bit to save up money. He has no student debt thanks to some scholarships and 529s and is driving a 10 year old car that he paid off, so basically he is debt free. I don’t want him to go too wild with that first paycheck! It will probably be more money than he has ever held in his hands. Do you have any advice for him? He will be paying some rent to us, but we would like to advise him a bit on how to invest for the future. Should he consider maxing out on his 401k and looking at investing in any index funds that follow the sandp500 or Fortune 500?. (are there ones out there that don’t charge a ton of fees) should he start investing in the crypto currency craze funds that are coming out soon? Now would be the time to do it since he could still recover if it does not perform well? Any advise is truly welcomed. Thanks terry! You are awesome. A mom

Terry Says

Well, my first comment is that he will probably be surprised at how SMALL the paycheck is after all the deductions for taxes, insurance etc!  It might be shocking to him.  Of course, he should max out his 40l(k) contributions-- especially if the company is matching his contribution. That's "easy money."  Then he should spend some time deciding how to invest that 40l(k) plan. And then, I would suggest you step aside.  From all  of the above, you have raised a sensible young man, who is very conservative about money, and has done all the right things so far.  Let him pay you rent -- and you set it aside as a "gift" back to him when he decides to move out on his own.  He will need some savings for a rent deposit and some basic furniture.  When that time comes, you can tell him you were "saving" it for him! He is likely to make some financial mistakes along the way.  Definitely NOT by speculating in Bitcoin!  Just remember: Good judgement comes from experience.  And experience comes from bad judgment!    

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