This is a wonderful opportunity for her to begin practicing financial planning basics. She should “pay” herself first by saving at least 10 percent to 20 percent a year, in total, through several mechanisms. First, she should establish an annual retirement savings goal through tax deferral into her employer’s retirement plan. I recommend contributing as much as she can to achieve any employer match first (usually 4 percent to 6 percent). Because she is young and has a long time horizon to retirement, she should consider contributing next into a Roth IRA (the maximum for 2008 is $5,000 ($6,000 for those 50 and over). Contributions made to a Roth IRA can be withdrawn tax- and penalty-free (earnings are another story), so this is a great vehicle for emergency savings as well. When she finishes funding her Roth IRA annually, she should go back to that retirement plan and increase this by a minimum of 1 percent a year until she is contributing the max. She may not be able to do this initially, but as her salary increases, open a savings account (FDIC-insured account) with the goal of having at least three months of net take home pay in the account within 3 years (e.g. if take-home pay after taxes and deductions is $2,000 a month, the cash reserve goal is $6,000 and monthly contributions would need to be $167 per month before any interest). There are a lot of basic financial planning magazines that might be useful to start off young people off with, such as Kiplinger. There are also great tools on brokerage websites (try Vanguard, Fidelity and Schwab) or try www.kiplinger.com for more broad financial planning topics.

First off, having three daughters myself, congratulations on getting one off the payroll! The first thing your daughter should do is start saving for her retirement right away. The longer she waits to start, the less likely she will actually contribute. I strongly recommend that all young people start with establishing a Roth IRA. A Roth will allow her to save money that will grow tax-free if used for retirement. For a young person, this is a huge advantage that they have to save tax-free. After she has maxed out her Roth, she should also establish a 403(b) through the school system so she can contribute additional dollars on a pre-tax basis. If she happens to work in a district that provides a match to her contributions, then I would take advantage of that match before contributing to the Roth IRA. In addition, your daughter should start working toward establishing an emergency fund that is liquid and available for emergencies. This should be equivalent to about a minimum of 3 months to hopefully at least 6 months of expenses. Again, congratulations to your daughter on choosing one of the noblest professions — teaching our youth!

Congratulations on the new job! Keep things simple. First, create a budget that is practical and honest. The more you are in control of your expenses the better you will feel, and the more efficient your household will operate. If you don’t already have an emergency fund to cover 3 months minimum (preferably 6 to 9 months) of expenses, make that a top priority. If you are renting and have a goal of being a homeowner, start to squirrel away money in a designated “down payment” fund so when the opportunity presents itself, you will be in a better position to act. Once those things are in place, adjust your withholdings to maximize your retirement contributions. The earlier you put these disciplines in place, the better off you’ll be. Teach well!