Boomerang Kids: Moving back in with your parents isn't a bad thing (Image: Thinkstock)

I should have taken the letter sent from my journalism school—the one informing parents of soon-to-be graduates about the current job market and not to be taken aback by brief unemployment—a little more seriously. In my mind, I was going to get a job a month out of college and would then be living the writer’s dream (or struggle, depending on who you talk to)—surviving in a one bedroom apartment with nothing more than my MacBook Pro and a few other necessities.

It’s not until two weeks before walking across the stage that it hit me: I was graduating with two unpaid summer internships and a load of student loan debt. With basically no money saved from my campus job and parents who were willing to assist until I could get on my feet, it made sense to return to my pre-college abode. So on that Tuesday, I emptied out all the items from my campus apartment and moved back home with my parents—hence, my life as a “boomerang kid”* began.

I had friends moving into apartments in their hometowns, others doing travel stints abroad and one or two moving hundreds of miles away, yet I was back home. While I was happy for them, I felt like I wasn’t doing enough and was regressing back to my teenage years. That wasn’t exactly the case, but moving back in with your parents after four years of independence will have you thinking otherwise. My parents have sacrificed so much for me; I want nothing more than to just take care of them in return. Although it’s unrealistic, my inability to support them 100% after college was disappointing.

It wasn’t until a recent content meeting that I changed my way of thinking about my current living arrangement. My coworkers reminded me that it was a financially smart decision; some even remarking they have and would gladly move back in with their parents or family members. In fact, a recent Pew Research Center report shows an increase in the number of Americans living in multigenerational households across the board. The study cites the economy as a major motive.  Between 2007 and 2009, multigenerational households increased to 51.4 million, from 46.5 million.

Not everyone has the option of moving back in with their parents, but, for those that can, I’d urge you not to take it as a letdown. Why not approach it as a mutual, beneficial relationship?

• Start by having an honest conversation with your parents

My mother is more of the talker so she and I sat down and discussed my employment plans and financial obligations.  I got to hear from her my parents’ expectations of me and what this new arrangement would be.

• Construct a verbal or written contract so both parties are aware of the arrangement

Although my parents stayed on me during the job search, as long as I was committed to my internships and actively looking for a full-time job, I was able to stay at home. That commitment also included assistance around the house.  When I did get a job, that commitment grew to include my student loan payments, credit card bill, and any other expenses.

• You’re home, but don’t get too comfortable

If you have enablers for parents, your short-term return could morph into a permanent situation. Unless that was part of the original discussion, you want to use this time to save and build for your future. After paying my student loans each month, I pay my other expenses and try to set aside a very small portion for future endeavors. I have to do better, but it’s a start.

I’ve scrapped my Sex and the City/Living Single illusion and tapped into my inner Suze Orman. Hopefully my current wealth-building strategy will prepare me well to fly away from “the nest.” But for now, that’s not in the cards and I’m okay with that.

*Boomerang kids are young adults that move back in with mom and dad after time spent away from home.

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The bad news: Our most recent Great Recession and the things that precipitated it have exposed our desperate need for financial literacy in America as never before. The good news: The Great Recession and the new economic realities resulting from it has created a generation of teens more hungry for financial education than perhaps any generation before it. They’re ready to listen. But when it comes to teaching kids about money, as parents, teachers and mentors, we must be equally ready to not only talk, but initiate the conversation. Here are some ideas to help you do just that, with the goal of teaching our teens to become financially responsible adults.

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The worst thing you can do is to avoid or delay the talk. Teaching kids about money may mean breaking generations of family tradition making it a taboo topic. Your parents and grandparents never had to face the kinds of personal financial responsibilities that we face, and our children will continue to face. They may not have known better, but we do. It is our responsibility to prepare our children to handle money well. In fact, closing the much lamented Black Wealth Gap requires us to see to the financial education of future generations as well as commit to improving our own financial literacy.

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Accept that you must set the example. For them to be more responsible with money, you must be. If financial literacy and honesty is not a priority for you, it won’t be for them. For example, your kids should see you reading at least one money book a month, and you should be sharing and discussing such books with them as well. Go a step further and buy age-appropriate books aimed at children and teens specifically focused on boosting their financial literacy. Don’t just hand them out and walk away—read them together. Young people within your sphere of influence should also see you reading Black Enterprise and other financial publications, and visiting Black Enterprise.com and other sites that address personal finance and business topics.

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Communicate as early and as often as possible that your money is not their money. Your obligation to your kids is to provide adequate food, clothing and shelter—not necessarily the best money can buy—and to see to their education and character/moral development while they are minors. Going much further than that will not only make teaching kids about money more difficult, but could hurt, not help them, in the long run. Remember, your primary job as a parent is to transform your dependent minors into financially responsible, self-supporting adults. You won’t do that if you insist on providing for their every whim.

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Teach our youth to value earned money over gifts or loans. The latter have their place—and their price. The best money is earned, not freely given. Loans must be repaid, often with interest and fees. Gifts nearly always have strings attached (which is why your parents wouldn’t allow you to accept gifts from your friends without checking with their parents, if at all.) Once you’ve provided for their basic needs, require your kids to work for everything else, by getting on the honor roll, doing extra chores, starting a business, picking up age-appropriate part-time jobs—anything that requires them to put in time and effort to get paid.

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Be open about setting financial goals and priorities for your household. When it comes to teaching your kids about money, transparency is a powerful tool. There’s no better way to help your kids develop a comfort level with saving and investing for long-term goals. Your kids desperately need the reality check of reviewing household bills with you each month in order to understand the true value of money and that cable TV, water, light, food and shelter are not free. Instead of treating the term “budget” as a dirty word, encourage your kids to develop spending plans and stick to them. Find ways to reward such behaviors, for example, by agreeing to match, dollar for dollar, savings toward an agreed upon long-term goal, such as college. Does she want $1,200 dollars for a new dress for the senior prom? Agree to pay for half, but only if she presents a plan to come up with the other half between now and when the money is due. Better yet, encourage her to find a dress for a lesser amount, perhaps by agreeing to match every dollar she saves with a contribution toward a long-term savings goal.

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Teach them the difference between smart money and dumb money. In his latest book, The Wealth Cure: Putting Money In Its Place, actor and best-selling author Hill Harper explains that dumb money is spent on things that decrease in value while you sleep, while smart money is spent on things that increase in value as you sleep. Money spent on credit card interest payments is dumb money. Spending on investments that grow in value and pay interest and/or dividends is an example of smart money. Helping your kids to see the difference will go a long way toward their making smarter money choices.

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Teach kids that spending is not the only thing they should be doing with their money. Require them to put at least 10 percent of any money they get toward savings for long-term goals such as college. Another five to 10 percent should go toward charitable giving, such as tithing at church or buying clothing or food for donation to the less fortunate. That leaves up to 80 percent for them to spend, which is quite a lot given that you are already providing for their basic needs.

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Remove the stigma from the phrase: “I can’t afford it.” Teaching kids about money means taking into account the emotional factors we all associate with money and spending. One of the biggest psychological/emotional factors behind our failure to live within our means is attaching feelings of shame, disappointment or unworthiness to the idea that we can’t always have what we want when we want it. Remove the self-judgement associated with “I can’t afford it” by adding the words “yet” or “right now.” Then help them to come up with a plan to budget and save for what they want.

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Using credit as a substitute for money you don’t have or have access to is credit abuse—teach our kids that it’s unacceptable. Credit is meant to be a convenience to help you avoid carrying all of the cash you have access to, not a way to spend when you are broke. Learning and practicing this simple lesson alone would prevent tens of thousands of our kids from beginning adulthood saddled with credit card debt. Taking on student loan debt should be a last resort for financing a college education, but does fall in to the category of smart money. Excessive credit card debt is a classic example of dumb money.

Want these lessons to stick? Then, again, we have to set the example. Remember, kids, and teens in particular, can spot hypocrisy a mile away, even if they are two respectful to call you out on it. What we preach to them about handling money we also have practice ourselves.

SRT Brand President & CEO and Chrysler Group Senior VP of Design Ralph Gilles (Image: Courtesy of Subject)

This week on The Urban Business Roundtable, UBR Contributor Renita D. Young talks with visionary auto designer and executive Ralph V. Gilles, CEO of the SRT Brand and Senior VP of Design for the Chrysler Group. An established star innovator in the auto design industry, Gilles started his career as a designer with Chrysler in 1992 and quickly rose through the ranks, ultimately overseeing the design of Chrysler, Dodge and Jeep vehicles.

One of the major highlights of Gilles’ sterling career was his design of the best-selling Chrysler 300, which was named the 2005 Car of the Year by Motor Trend magazine. He has earned numerous awards, including the Black Engineer of the Year President’s Award and the Automotive Hall of Fame Young Leadership and Excellence Award. Gilles also serves as the sponsor of the Chrysler African American Network. He joins the Roundtable with Young to share the vision and determination that drove him to succeed.

Also, UBR Contributor Teria Seah sits down with Gerald Grant Jr., director of financial planning for AXA Advisors‘ South Florida Branch and author of Bold Moves to Creating Financial Wealth. Named Banker of the Year by the Miami-Dade Urban Bankers Association, Grant explains what he’s found to be the key difference between wealthy and non-wealthy people, while sharing proven wealth-building tips.

In addition, in my “Alfred’s Notepad” segment, I share great insight on what makes a great business plan from Mark Ferguson, a Chicago-based public information officer with the U.S. Small Business Administration and one of my fellow national judges for the MillerCoors Urban Enterprise Series (MUES) Business Plan Competition.  Each year the MUES competition gives up to $150,000 in business grants to urban entrepreneurs with the strongest business plans. Ferguson says that great business plans are concise, precise, succinct, simple, clear, persuasive and truthful. I believe that his guidelines are an excellent way for every entrepreneur to reality check the viability and potential of their business.

And finally, every week on UBR, you’ll get motivation and inspiration from author and entrepreneurial icon Farrah Gray, a weekly wrap-up of business news from USA Today business correspondent Charisse Jones, our Patient Investor Report from Ariel Investments and key economic intelligence for small business owners from our UBR economists Derrick Collins and Rasheed Carter.

If you have a question you want answered or a topic you want addressed on The Urban Business Roundtable, connect with me at BE Insider, the social media network for people who are serious about Black Enterprise. You can also find me on Twitter and Facebook.

Alfred Edmond Jr. is the senior VP/editor-at-large of Black Enterprise and the host of the Urban Business Roundtable, a weekly radio show, sponsored by Ariel Investments, airing CST Wednesdays at 8:30 a.m., Thursdays at 6:30 p.m. and Saturdays at 9:30 a.m. on WVON-AM 1690, the Talk of Chicago. You can also listen live online at WVON.com. Check back each week for UBR Spotlight, which features additional resources, advice and information from and about the topics, entrepreneurs and experts featured on the show.

Fans of Harper know that he is more than just a good-looking actor on the hit CBS crime investigation series CSI: New York. The magna cum laude graduate of Brown University, who holds law and master of public administration degrees from Harvard, has written a series of books focused on the education and improvement of others, including the New York Times bestseller The Conversation. And while he is not a doctor (though he plays one on TV), he comes from a long line of physicians and healers.

So it should not come as a surprise that he views wealth through the prism of health, without which money and other assets lose their value and meaning. The Money Cure provides great advice and sound strategies, including information about budgeting and the role of insurance, for managing and investing your money more effectively. But beyond that, this is not your typical money book. Using his own journey both literally and figuratively, including a thyroid cancer scare, Harper shows how money alone cannot give you wealth, nor can the pursuit of it make you happy. True wealth-building is about pursuing wellness, not just dollars. Harper’s formula: Money + Wellness = Wealth.

Harper takes the reader with him on a train trip from Los Angeles to Chicago, as he ponders the meaning, uses and misuses of wealth and gets his mind around his cancer diagnosis in preparation for surgery to remove his thyroid. (He’d begun work on the book prior to learning of his illness.) Along the way, Harper uses his personal experiences, as well as those of old friends and new acquaintances in his life, to deliver the kinds of revelations about money and its proper use and role in our lives that will literally stop you in your tracks. The effect is akin to a kind of benign, spiritual shock therapy, designed to prod you into recognizing and changing your relationship with, and feelings and choices about money.

For example, do you know the difference between dumb money and smart money? Harper explains that the former is spent on things that decrease in value while you sleep, while the latter is spent on things that increase in value as you sleep. Money spent on credit card interest payments is dumb money. Money spent on investments that appreciate and pay interest and/or dividends, such as your company’s 401(k) retirement plan, is an example of smart money. In short, dumb money costs money; smart money makes money. It’s hard to imagine someone abusing credit or failing to contribute to a retirement savings account once they grasp this concept. And that’s the gift of this book: Harper has a way of breaking things down to the point where we can no longer use not knowing better as an excuse for not doing better.

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To that end, among other things, Harper urges us to commit to a Smart Money Contract. Some of the terms of that contract are:

Never accumulate credit card debt. If you have credit card debt, pay more than the minimum payments and negotiate lower interest rates directly with the credit card provider.

Research the type of investments that are appropriate for your goals and make investing part of your monthly budget.

Start now. No matter where you are in terms of age or income, you can and should seek to invest in ways that are appropriate for you.

Reinvest your income and dividends to make your investments grow exponentially.

Think long term, not get rich quick. Be patient and don’t ever panic.

Most important, believe that you can become what Hill calls a “Smart Money Master.” His point: Once you change your mindset about money, you will make better money decisions and be on the path to true wealth, which includes physical, mental and spiritual wellness as well as healthy finances.

Sounds an awful lot like the Wealth for Life financial principles we urge you to adopt in BLACK ENTERPRISE magazine every month, doesn’t it? Not bragging. Just saying.

Be sure to pick up and read The Wealth Cure. If you are plagued with money problems, it absolutely could be the cure for what ails you.

Many relatively successful people suffer from a kind of survivors guilt,  which makes us feel obligated to give, pay and lend even when we can’t afford it. We literally give until it hurts, and then give some more. And unfortunately, such people are usually surrounded by family and friends, including parents and children, all too willing to take advantage.

One of the most important mental adjustments we must make as we begin to change our relationship with money and take responsibility for our financial health is to learn to just say no to chronic takers. Not “No, and…” or “No, but….” or “Maybe.” Just “No.” If you want to explain yourself, do it out of love, not obligation.

There is nothing wrong with helping friends and relatives during tough times, commensurate with the abundance you’ve been blessed with. However, you should give willingly, not out of obligation. And it is absolutely wrong for people to use your hard-earned resources as their emergency fund, or to treat you as a living ATM. Allowing them to do so leads to you putting your own financial stability at risk, often with no one to turn to in your time of need.

Never lend money that you cannot afford to give away. Even then, never lend without getting the borrower to sign a written agreement to repay the loan. This policy alone will reduce the number of loan requests you’ll have to deal with, especially if you make it clear that you won’t lend additional money until and unless outstanding loans are repaid, and that you’ll sue for your money if you have to.

Never co-sign on a loan, a car note, or other financial obligation, especially if you can’t afford to make the payments if the person you are co-signing for could later decide that they can’t or won’t. That goes double if that person is a family member, triple if the person is a romantic interest. Love has nothing to do with it. How many television judge shows do you have to watch before you realize that this is a recipe for disaster?

Never be pressured into spending out of guilt or to prove your love. Anyone who would make such demands, including children, parents, siblings, or romantic interests, does not care as much about you (at least not in that moment) as they do about what you can do for them. If money is what it takes to buy their love, you’ll never have enough.

There’s a difference between helping someone and carrying them. In fact, your constant help may be causing them to become even more weak and dependent, which is bad for them and you. Resist chronic takers who would exploit your generosity. Never let the G in your giving stand for guilt. As a wise person once lovingly told me: You can lean on me. But you can’t lay on me.

Artists Meek Mill and Rick Ross tout perks of being a boss with radio hit, "I'm a Boss." (Image: File)

I love me some Rick Ross … (Wait, before you close this window. It gets better. Trust me.)

Seriously. He’s one of my favorite hip-hop artists, with his cocky bravado, Santa Claus-like, tattooed belly, and larger-than-life persona.

Much of Rick Ross’ music centers around being a leader who makes his own lane, creates his own rules and practically answers to no one. There’s a level of confidence and power in his music that can’t be denied, one that often transfers to me when listen to it—questionable content aside. (Not to mention he’s a real-life boss as founder and CEO of Maybach Music Group.)

He, along with many popular music stars, have made what I call a “boss mentality” one coveted and adopted by young people all over the world. And as with any pop culture concept that takes on a life of its own, today’s “boss mentality,” especially among young people, has become the new overexposed green monster.

From 20-something divas boasting about cars, money and men, to young hustlers and businessmen trading stories of their latest conquests, the “boss mentality” has become one based on greed and pride, and built on unrealistic perceptions of what it takes to be a real boss. Even kids are buying into it, barely knowing their ABCs, but singing every word to Meek Mill’s latest hit (with Rick Ross), “I’m a Boss.”

GetaClue.org (as one of my favorite bossy divas, Tamar Braxton, would put it). A true boss practices due diligence to ensure their lives — in every aspect — will be as prosperous and purposeful as possible, all talk aside. They know that the material fruits of their labors are only a small part of the full picture.

Just look at the lives and works of today’s top, real-world bosses, from Tina Wells (Buzz Marketing Group) to Oprah to Magic Johnson to Dr. Farrah Gray (Gray Publishing) — all leaders who took the boss mentality and made their dreams reality with hard work and lucrative action. Even the bosses who aren’t so shy about their wealth — Sean “Diddy” Combs — have earned the bragging rights and can show and prove.

If you don’t have (or aren’t pursuing) the foundations for wealth building: estate plan, savings accounts, an investment portfolio, fair or good credit, and multiple streams of income, you’re not quite a boss.

If you have a closet full of luxury brands, but still cashing checks at the local check cashing spot because you don’t have a bank account, you’re not quite a boss.

Popping $300 bottles in clubs but haven’t paid Dr. Rent, Mr. Child Support or Ms. Student Loan …

Purchasing inexpensive things on credit that should be bought with cash …

Dodging bill collectors‘ calls or cleverly avoiding debts …

Living in the today without planning for a future that could sustain you and your family …

Lacking the means to invest tangible or intangible capital in your family or community …

NOT. A. BOSS.

There’s nothing wrong with enjoying the fruits of one’s labor, but I’ve witnessed too many people claiming to be bosses who have not one qualification to show for it.

I’m not a full boss yet, but I’d like to think I’m in training. I aspire to one day become self-sufficient in all aspects of my life, and pave the way for others to capture their own “bosshood.” I like to take pages from the books of my favorite leaders and mentors, while using my own boss mentality, skills and intelligence to pursue success and fulfill my purpose.

I would challenge anyone else to do the same. Leave the false perception of easy, materialistic bosshood for entertainment and actively take steps to capture the reality of your own greatness.

SHARE YOUR STORY: Comment below about your latest boss move and how it’s getting you that much closer to ultimate success.

Before the Great Recession and today’s tepid recovery, so many of us felt we could buy new cars, take exotic vacations, and engage in other lavish activities at will. The reality is, we borrowed a lifestyle, financing our extravagant tastes with credit cards and home equity lines of credit. It was as if we enjoyed a long, continuous party. We forgot the lessons of our parents and grandparents and now we are forced to spend years cleaning up our financial mess. In the process, we may have handed down unrealistic expectations and a number of bad habits to our children.

We must make money management and financial education a family affair. That means going back to the basics as we repair our finances and put our kids on the right financial course. First, we all need to take a refresher course on the rudiments of sound personal finance. The lessons are quite simple but require discipline: They include living within our means, paying ourselves first by saving a portion of what we earn, creating a budget and sticking to it, and avoiding the accumulation of unmanageable debt. In fact, much of this common-sense approach to your finances can be found in our Wealth for Life principles which you can download at blackenterprise.com.

Our grandparents and parents understood the value of a buck as well as the best ways to maximize dollars. We’re only two generations removed from African Americans who had been locked out of out of mainstream society due to Jim Crow laws and discriminatory practices. As a result, they were forced to scrimp and save and pool their resources to start businesses, build institutions, purchase homes, and sock away money for their children’s future. It was their sacrifice and determination that allowed for the creation and preservation of some of our great black institutions. Our parents, many of whom were children of the Great Depression, witnessed firsthand the aftermath of financial devastation from unforeseen forces. Not only did Mom and Dad realize that they had to adhere to their parents’ rigorous financial planning, they had to protect their wealth by being prepared for the unexpected. By doing so, they created a better life for us.

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As the first generation after the civil rights movement, we gained access to the best institutions of higher learning and top management positions in corporate America. Although we excelled in our careers and earned salaries that previous generations could only have dreamed of, many of us forgot the tried-and-true examples of our forbearers. Instead, we became caught up in the financial madness, trying to time the stock market for quick financial returns or using our homes as ATMs because we believed that home values would continue their endless, meteoric rise. Then, a few years back, our world crashed with the financial meltdown. Due to rampant spending and lack of attention to our finances, we did not provide ourselves with a sufficient cushion to weather the hard times.

As we regain our financial footing, we now have the prime opportunity to take up the mantle of our parents and grandparents and teach our kids the value of budgeting, saving, and frugality. For too long we have taken them on our excursion of wanton spending as we seemingly satisfied their every whim during the illusory flush times. We must bring them back to planet earth.

I have started this process with my college-age children. Like many of our kids, they believe that they can get anything that their heart desires. When they run out of cash, their first instinct is to text me and treat my cellphone like an ATM pin number. To put an end to this practice, I sat down with my daughters and sons and shared the financial facts of life with them: They will receive a monthly stipend, develop a budget for their living expenses, and stick to it. In fact, all four will have to find summer jobs to pay for a portion of their expenses during their college years. 0These rules may fall under the tough love category, but they are necessary if our children are going to appreciate the value of a dollar.

We have the same goals as our parents: to make the next generation more financially secure and provide them with more options than we had. We must put our financial house in order while we lay the foundation for theirs.

These are just a few of the pressing financial issues black enterprise uncovered after surveying be Nexters: 21- to 35-year-olds. When we reached out to young readers and asked them to voice their top concerns via Facebook and Twitter, student loan debt and investing ranked high on the list.

Some readers have even amassed up to $100,000 in debt to attain master’s and doctorate degrees. College seniors who graduated in 2009 carried an average of $24,000 in student loan debt, up 6% from the previous year, according to The Project on Student Debt. These factors may partly explain the lower rates of investing among African Americans. According to the 2010 Ariel Black Investor Survey, since 1998, African Americans have consistently saved and invested less than whites of similar income.

But don’t get discouraged; time is on your side and so are we. That’s why Black Enterprise asked our team of experienced financial advisers to help answer some of your most-asked questions about wealth building. We talked to Ryan Mack, author of Living in the Village: Build Your Financial Future and Strengthen Your Community (St. Martin’s Griffin; $14.99), Zac Bissonnette, author of Debt-Free U (Penguin Group; $16), Dr. Herm Davis, co-author of College Financial Aid for Dummies, personal finance coach Dorethia Conner, and financial adviser Chris Long.

TOBEE- LEUMAS
Nashville, TN
Age 21

Q: How do I jump into investing while juggling my financial obligations as a full-time college student?

Mack: With your future income being such an uncertainty I wouldn’t advise you to invest in stocks only to have you liquidate your positions upon graduation when you find out what your true financial picture is (which for many graduates today is filled with a lot of debt and not as much income as anticipated). Start creating mechanisms that increase your knowledge and exposure to this field. You can start your own investment awareness club and check out websites that can increase your knowledge such as www.moneymovement.org, simulator.investopedia.com, www.bloomberg.com, and finance.yahoo.com. Also, consider finding mentors who can assist your growth.

PATRICE K. COKLEY
Detroit
Age 29

Q: Is it a good idea to consolidate my loans?

Bissonnette: Consolidation doesn’t really do anything. It’s almost like shifting your food around on the plate. It just puts all your loans in one place so you’re not paying a bunch of different creditors. The best way to repay your student loans is by figuring out how you can cut costs, increase your income, and put the excess toward the debt. (Visit www.studentloans.gov)
Davis: It may not be wise to consolidate all your loans especially low-interest federal loans (i.e.Perkins).

SELENA RUTH SMITH
Mayesville, SC
Age 34

Q: I’m a first-time investor and not sure whether I should invest in bonds or stocks?

Long: It doesn’t need to be an either/or decision. For most people your age, stocks are a better bet because they have a higher long-term return. You could invest 80% of your money in stock funds and 20% in bond funds. For stock funds I really like no-load, low-cost index funds. Make sure to include international stocks in your mix. If you are just starting out, and want to keep it simple, you could invest in a U.S. stock index fund, a bond index fund, and an international stock index fund. Or you could choose a target retirement fund that has a predetermined mix of those three types of funds based on your age.

Conner: Visit www.morningstar.com or www.hoovers.com to learn about the companies held in the funds you consider.

ANTWAN CALLOWAY
Canton, GA
Age 30

Q: How much money do I need to start investing?

Mack: Assuming that you have already eliminated any debt and have a stable savings strategy, all you need is a trickle of dollars to start investing. If you go to www.sharebuilder.com you’ll see a great resource where you can start small and build, but again, make sure that you have built a solid foundation before you invest in the market including the following: Do you have a working budget? Have you eliminated your credit card debt? Is your FICO score above 700? Do you have a proper insurance plan in place? Do you have six to nine months of living expenses saved? Is your estate plan in order? Are you investing regularly in your [employer’s] retirement plan at least up to the company match?

ERYK WILLIAMS
Tampa, FL
Age 28

Q: Investing seems so complex. I get overwhelmed with just the basics. How can I create a financial blueprint?

Long: Save six months of living expenses in an emergency fund. (You can use an FDIC insured high-yield savings account.) Have this money automatically transferred out of each paycheck. Build this amount over the next two years. If your employer offers 401(k), 403(b), or 457 plans with a match, invest enough to get the full match. (A common match is $.50 for each $1 you invest on the first 6% of your salary.) If your employer offers a Roth option, use it. This means you won’t get a tax break now but the money you invest will grow tax-free. If your employer does not offer a match, or a Roth option, open a Roth IRA first. (You can start it with as little as $50 with T. Rowe Price, www.troweprice.com).

QUAANI MUHAMMAD
New York
Age 27

Q: How can I maximize the interest I’m getting on my savings and investments?

Mack: For the best savings rate you can go to www.bankrate.com. For investments, rates of return depend upon your asset allocation. The more risky your allocation of assets, the higher the potential returns in your portfolio—but also the greater the potential risk of loss.
Long: The key is finding the risk/return balance that fits your needs. That will determine about 90% of your return. The other 10% is driven by investment costs, which you can control by investing in low-cost index funds.

KIM TELFAIR
New York
Age 29

Q: I don’t make enough to invest. I can barely afford to put 2% toward my retirement plan.

Mack: There are only three things we can do with money—spend, give, or save. If you are having problems in the third category it is because you are putting too much money into the first two categories, you aren’t earning enough to put into the third category, or a little of both. First, put together an estimated budget. How much are you spending each month on all expenses and how much are you earning? Secondly, do a 30-day spending diary and document every cent that you spend. Thirdly, put together an actual budget to more precisely label what you are spending on a regular basis. To maintain your budget you can use various websites such as www.mint.com. If you do all of that and you still don’t have enough money to put away into retirement, then it’s time to start thinking about how to earn extra money.

ATIMA LUI
St Louis
Age 21

Q: What percent of my income should I be investing each year?

Long: I recommend at least 10% of your income. (Wealth for Life Principle No. 4) Make sure you build an emergency fund in a savings account of at least six months of living expenses. Also, check out your employer’s retirement plan to see if they offer a match. If they do, make sure to invest enough in the plan to get the full match. If they don’t, you can get started by opening a Roth IRA and invest up to $5,000 a year.

NATHANIEL TINDALL
Atlanta
Age 26

Q: How can I get started  investing in socially responsible investments and emerging markets?

Long: First you have to determine what socially responsible investing means to you. Many socially responsible funds charge higher fees. If there is something you strongly believe in, you may have more of an effect by investing in low-cost index funds and donating the savings (approximately 1%) to a cause you believe in. An example of a low-cost socially responsible fund is the Vanguard Social Index (www.vanguard.com). It has an expense ratio of only 0.29%. To find out more about other socially responsible funds, check out the Social Investment Forum (www.socialinvest.org).

JAMES STEPHENS
Bryan, TX
Age 24

Q: Should I let my parents help me pay for graduate school by taking out loans, or should they put the money toward retirement?

Davis: It is not a good idea for parents to take out large loans to help their kid go through college. Parents need to say, ‘I’m getting old and I need to save for my retirement.’ If a parent is going to take out a loan it should be no more than $5,000. Students need to keep in mind, ‘If you don’t have the money, don’t buy it.’ Students need to make sure they’re looking at the right school compared to the right cost.

MIYISHIA SLAY
Sacramento, CA
Age 32

Q: How do I find a good financial investment adviser?

Conner: Ask family and friends for references. Pick at least three to five to consider, and meet with each of them. You can check with the securities regulator (www.nasaa.org) in your state for complaints and to ensure they are licensed. Members of the National Association of Personal Financial Advisors (NAPFA) www.napfa.org don’t receive commissions or other incentives for selling or recommending particular investment products.

IVY CARTER
Irving, TX
Age 31

Q: I have $100,000 in student loan debt. How can I pay off my debt, maintain my lifestyle (though I live below my means), and take care of my two children?

Davis: Consider consolidating your loans and then applying for income-based repayment (www.ibrinfo.org). If you qualify, you will automatically be given a 10-year scheduled payment plan if you hold a public service job; otherwise you’ll receive an extended 25-year scheduled payment plan. Your loans should be paid off by the end of the repayment period. The good thing about the new loan regulations is if you make good on your payments for 25 years the loans will be absolved.

Sierra Brown
New York
Age 24

Q: Is it better to take out more loans to go to a better-ranked university than to take out less money (or no money) to go to a lower-ranked institution or a state school? Which option will provide greater earning potential?

Bissonnette: I don’t think young people should bet their entire financial lives on how much money they think they’re going to make in four years. Go to a college you can afford and borrow no money if at all possible.

–LaToya Smith and Renita Burns

Tap into the resources of the Better Investing web site.

Thinking about starting an investment club? Well, it’s definitely an excellent way to pool resources, allowing members to buy more equities and pass along knowledge about investing while educating each other. If part of your wealth creation strategy includes forming an investment club, here are a few dos and don’ts for you to consider before getting started.

Do …

• Draft a written agreement or contract with your members. Most clubs operate under a general partnership agreement, establishing the club’s purpose, objectives and structure. A sample partnership agreement can be found in the members section of the Better Investing website. You should also clearly distinguish member roles such as president, treasurer, secretary, etc.
• Develop a strategy. Aside from the written partnership agreement, members must come to an accord about an investing strategy and how much time will be dedicated to meetings. When starting out, groups may need to commit to meeting two to four hours a week and eventually shorten that time, according to the National Association of Investment Clubs (NAIC). The organization also recommends developing a good mixture of growth stocks and mutual funds. Portfolios should be diversified in terms of small, medium and large companies, as well as market segment.
• Register with the NAIC. For guidance, follow their principals as listed above. Registering with the NAIC will allow you access to the organization’s operating procedures, which describe everyday rules and regulations, such as the duties of officers and time of meetings. The NAIC recommends customizing the operating procedures to meet the needs of your members and revising them as necessary.
• Have the necessary resources to continue to educate yourself and the members about running a club and investing tips. You can use NAIC’s Getting Started curriculum or attend seminars, workshops and events sponsored by your local BetterInvesting Chapter – part of a nationwide network. Also, check out Starting and Running an Investment Club for more information.

Don’t …

• Forget to make sure your club or adviser registers with the Security and Exchange Commission (SEC) if necessary. If the adviser is compensated for providing advice regarding the club’s investments, he or she may need to register, according to the.
• Start your club without understanding state and federal rules. You’re playing with fire when it comes to going head to head with the SEC and IRS. As a business entity, your club must submit IRS Form SS-4 to apply for an Employer Identification Number (EIN). You’ll also file a “Certificate of Conducting Business as Partners” form, which varies by county or state. Your club will file an annual tax return (IRS Form 1065) and may be required to file a state return as well, depending on the state. In addition, members will include their share on their own tax return using the information from IRS Form 1065 Schedule K-1.
• Think short term. A long-term buy and hold philosophy — planning to own every stock for five years or more — has proven to be the best approach for the majority of clubs whose goal is to build wealth, according to the NAIC. Invest regularly. This means that you’re dollar-cost-averaging. You’ll end up owning more shares over the long run. Don’t try to time the market.