Julie has spent years focused on building her career and strengthening her family’s financial position. Now, she’s in the next phase—helping her newly graduated son make his own smart financial decisions. He just received his first full-time paycheck and, like many early-career professionals, he has more questions than answers.

Julie didn’t want to overwhelm him with information, but she also didn’t want him to wait too long to build good habits. Together, we walked through a simple, actionable roadmap—one that balances short-term stability with long-term growth.

1. Start With an Emergency Fund

Before diving into investments or tax strategies, we focused on something foundational: liquidity. For a new graduate, having 3–6 months’ worth of essential expenses set aside in a high-yield savings account can be the difference between peace of mind and credit card debt when the unexpected happens.

We helped him calculate a reasonable monthly baseline—rent, groceries, transportation, insurance—and set an initial target of $10,000. He’s committed to saving a few hundred dollars per paycheck until he reaches that goal.

2. Understand and Maximize Workplace Retirement Plans

His new employer offers a 401(k), which opens the door to long-term investing and tax-advantaged savings. We reviewed the plan together and found something even better: a generous employer match.

Many 401(k) plans match employee contributions up to a certain percentage—for example, 100% of the first 4% of salary. Julie’s son was eligible for that structure. In simple terms, if he earns $60,000 and contributes $2,400 (4%), his employer contributes another $2,400. That’s a 100% return—before any market growth.

Because he’s in a low tax bracket today, we discussed routing his contributions to the Roth 401(k) option rather than the traditional pre-tax version. This allows him to pay tax now and enjoy tax-free growth and withdrawals later, when he may be in a much higher bracket.

3. Fund a Roth IRA While Eligible

In addition to the Roth 401(k), we helped Julie’s son open a Roth IRA using money from a part-time job he worked last summer. He earned $6,000 and didn’t need all of it for current expenses, so we contributed $6,000 into a Roth IRA for 2024 (the annual limit).

Even small contributions now have decades to grow tax-free. And because Roth IRA withdrawals are never required during his lifetime, this account adds flexibility to his long-term retirement strategy.

4. Use 529 Leftovers to Jumpstart a Roth IRA

Julie’s family had been diligent savers during his childhood and had leftover funds in a 529 college savings plan. Thanks to a recent provision in the SECURE Act 2.0, certain 529 balances can now be rolled into a Roth IRA for the same beneficiary—within limits.

We confirmed that:

• The 529 account was over 15 years old,
• Her son had earned income,
• The rollover would be within the annual contribution limit ($7,000 for 2024), and
• He hadn’t yet reached the $35,000 lifetime rollover cap.

That opened the door to a no-penalty transfer of unused education funds into a retirement account. A quiet but powerful move.

5. Parents Can Still Help Without Doing It All

Julie asked a great question: “Can I help him with his Roth IRA contributions even though he’s working now?” The answer is yes—as long as the child has earned income, a parent can fund the account.

We often see parents provide a “match” on their child’s savings to encourage participation, much like an employer would. For example, if her son contributes $3,000, Julie might contribute another $3,000 to bring it up to the max. It’s not a gift in the traditional sense—it’s an investment in good habits and future freedom.

The Transition From Dependent to Independent

Julie’s situation is one we encounter often. Parents who’ve done well financially and want to pass on knowledge—not just money—to their children. Starting the next generation on a strong financial path doesn’t require complexity. It requires structure, consistency, and conversations that normalize smart decision-making.

As Julie put it, “I don’t need him to get it all perfect. I just want him to start strong.”

We agree. Because the earlier someone begins thinking about liquidity, savings, and tax-smart growth, the more options they’ll have when life inevitably gets more complex.

If you're thinking about how to guide your kids financially after college—or want to revisit your own plan now that they’re launching—we’re here to help.

The strategies described above are complex legal structures that must be tailored to each family’s circumstances. Always consult with your own estate planning attorney and tax advisor before implementing any trust, gifting, or insurance strategy. Members’ Wealth does not draft legal documents and works alongside your legal counsel to support and coordinate your estate planning efforts.

These examples are for illustrative purposes only and do not represent actual client experiences. Individual results will vary based on personal financial circumstances and tax laws.

About the Author – Stu Caplan, CFP®

Stu Caplan is Senior Wealth Strategist at Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions.

The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of industry experience, Stu and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations.

Stu received his MBA from The Robert H. Smith School of Business at the University of Maryland and his bachelor’s degree from the Eller College of Management at the University of Arizona. Stu resides in Bucks County, PA with his wife and two sons. He’s an avid golfer and is thrilled that his boys have embraced the game. He also volunteers his time as a board member of the PKD Foundation and Abrams Hebrew Academy.

To get in touch with the Members’ Wealth team today, I invite you to email info@memberswealthllc.com or call (267) 367-5453. 

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