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Give to Your Future Before Giving to Others
Angela told me she is planning to invest in a low-cost Vanguard mutual fund for retirement. (Most Vanguard funds have a $3,000 initial requirement, though some let you start with $1,000.) I pointed out that she has limited herself by focusing on a specific fund company. What she should really be focused on is how to contribute $5,500 a year—the annual maximum for someone under age 50—to a Roth IRA. (The maximum is $6,500 if you are at least 50 years old.)

That means setting aside $458 a month. A tall order for someone with pretax monthly income of $2,500? Sure, but Angela has always heeded Mom's sage advice to "pay myself first." She splits $200 a month between emergency savings and retirement. Her $12,000 in savings could cover eight months of expenses, so I told Angela all $200 should go toward the Roth IRA. I also noticed she spends $150 a month on gifts and donations. I love the sentiment but not the financial hit. Give your attention and time to people and causes that matter; right now that $150 goes toward retirement. For the last $66 she needs each month, we agreed that Angela will negotiate a more respectful salary. If she can't, then it's time to seek other opportunities.

If Angela can save $5,500 a year in a Roth IRA, she could have more than $800,000 by retirement. And she'll likely earn more in the coming years and be able to amass even larger savings. That will not only break her family's cycle of poverty but also give Angela the personal security she needs to step up for them in the future—if they need the help.

Suze Orman is the author of The Money Class: Learn to Create Your New American Dream.