Make a good choice by saving early

Many of the reader questions I receive have family issues at their core: saving for a child's college education; writing a will to take care of heirs; planning for a leisurely retirement of traveling with a spouse.

Which is why this week's e-mail from Daniel caught my eye.

Daniel wrote to say he is a single, 28-year-old guy with no children.

"I do contract work for the government and look to make about $144,000 for the remainder of the year on W-2 and also have an (S Corporation) for my side business," Daniel wrote. "I plan to make at least ($25,000) from that, from now until Dec. 31."

First off, Daniel, allow me to wallow in a silent moment of jealousy regarding your financial situation.

OK. Now we can move on.

"How would you be investing if you were in my situation?" Daniel asked. "I know that the cutoff is ($150,000) to be able to contribute to a traditional IRA, and I can't contribute to a Roth. I'm lucky in that my contracting company offers a 401(k) with Schwab, so I'm contributing ($15,000) tax-deferred this year, which I think is the maximum. I would really appreciate any advice you could give."

My first advice would be to get ready for your phone to ring. Once the single women out there hear about your situation, they're bound to e-mail me, trying to get your number!

But for financial advice, I called Roger Smedley and Sharla Jessop of Salt Lake-based Smedley Financial Services.

Both Roger and Sharla say you should be congratulated for saving at an early age.

"He's got a 25- or 30-year advantage, because most people don't even start to think about this until their 50s," Roger says. "People say all the time, 'If only I could go back 25 years. ..."'

But Sharla says you still have work to do.

"You should always invest with a purpose, so you have a time frame associated with an investment," she says.

For example, Sharla says you should build up an emergency fund that is equivalent to three to six months of your net income. That money should not be in an aggressive investment, but rather should be in an interest-bearing vehicle that is both safe and easily available, like a money market account or money market fund.

Also, because you have a significant amount of time before retirement, you should plan some investments for the intermediate term. Those investments can be more aggressive.