How to encourage young adult to save

Ask NJMoneyHelp

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Q. My son just got his first job and he doesn’t want to start the 401(k) because he has big college loans. How can I convince him to save for retirement now? I know there are projections that can show how much a little saved now will be worth later.
— Dad

A. Before we get specifically to your son, we want to point something out to all those prospective college students and their families.

Hefty college debt might not seem so bad when you’re taking the loans for college, but the future payments will hurt the rest of your financial plan for years and years.

“It’s hard to convince a drowning man that they should be saving for retirement,” said Jerry Lynch, a certified financial planner with JFL Total Wealth Management in Boonton. “Not trying to be a jerk but it would be much better to not have big college loans by going to a less expensive school, and avoid the problem that he has now.”

Lynch said so many parents out there are thinking about having their kids finance a very expensive degree that isn’t from Harvard, Stanford or a similar school, and they’re probably “dooming your kids to a lifetime of debt — and not saving for retirement.”

The best way to solve the problem is to avoid it, he said.

But what’s done is done, and Lynch said it’s a very difficult question to answer without knowing his expenses and income.

One strategy would be to try incentives.

“For example, if he has a 5 percent match, tell him if he does 5 percent, you will give him 2 percent back as cash to help him with his expenses for a period of time,” Lynch said. “It gets him started and that is what is most important.”

For what it’s worth, Lynch had one more thing to add.

“I have met people from great schools that are broke, and people from state schools that are wealthy and vice versa,” he said. “An education definitely helps but it is mainly about the drive of the individual, not the bumper sticker on the parents’ car.”

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NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.