Sunday, December 23, 2007

A special gift for my sister

I am the oldest of five children and my sister is the youngest. Thirteen years separate us but there is one thing we have in common--we are both the only ones in our family who graduated from college. While our degrees are worlds apart, we both had really clear ideas about what we wanted to do. She wanted to get a job as a legal secretary and I wanted to go to graduate school. It took my sister six months after graduation to find the job she wanted but she is excited to be working for the lawyer she is and revels in her new job. While I attended graduate school, I decided a Ph.D. was not for me and left with a Master's degree, worked at the same university I received my degree from then jumped the academic ship for industry, where I have been for the last 5.5 years.

I started working when I was 27; my sister is 22. I knew I wanted to save for retirement but did not do anything until I had a job. I put about 6% of my pretax income in my 403b plan starting in 1999. Unfortunately, this meant I bought while the market was high so my portfolio lost half its value. I left my job in 2001 and waited until 2007 before the plan value matched what I put in to roll it over into an IRA. I wish I had known better and placed more of my pretax money into retirement. Presently, I invest 16% of my income for retirement and will keep increasing that percentage as I receive raises. Hopefully, this will get me to a comfortable retirement. I would like to think so but it is hard to predict something 30 years in the future.

Since my sister has the opportunity to invest in a 401k with her new job and they do have some matching, I know she is planning on joining the plan as soon as she is allowed. She also has a student loan to pay off but she was smarter than I and does not have credit card debt. Currently, she lives at home with our parents and drives the family car to work, a 40-minute commute.

I want her to start off on the right foot, start saving for retirement and get herself on the right track for the future sooner than I did. I was never truly in a bad place but I see now as an opportunity for my sister to situate herself well earlier than I managed to do. Therefore, she is getting a gift of a personal finance book for Christmas from her wonderful older sister. The book I chose was based on The Simple Dollar's recommendation for recent grads: Automatic Wealth for Grads. I included a card with a handwritten note listing my wish for her to get off on the best financial foot possible. I hope she reads the book and learns some techniques to apply to her situation.

The more sensible my sister is with money now, the more years she has to double it for the future. She already has an ING Direct account and plans to save for a car of her own. Living at home gives her a great opportunity to save without other expenses. Our brother stayed at home until he was married, and he and his wife put a nice down payment on a house.

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