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A Jewish girl’s bat mitzvah typically takes place when she’s 12, and signifies she’s old enough to have certain adult rights and responsibilities. Depending on the family, the gift money that a girl receives while celebrating her transition to spiritual adulthood can easily run into the thousands of dollars.

It’s common for girls to spend, donate or save their bat mitzvah money — or do some combination of the three. Eight years ago, then-12-year-old Becky Rudin made a fourth choice: She invested hers in the stock market.

To Becky’s best friend, that move felt “reckless.” She put her bat mitzvah money straight into a savings account.

Becky’s friend is certainly not alone in her view of stocks. According to a recent UBS Investor Watch, millennials hold 52 percent of their assets in cash, with just 28 percent in equities. But saving money in a bank account earning less than 1 percent can actually ruin your financial future.

So How Did They Fare?

I described Becky’s investing experience in my book, “Every Woman Should Know Her Options.” She couldn’t remember the precise date she first invested her money, so we picked one that was in the ballpark to do our calculations: Feb. 27, 2006. Around that time, she invested $5,000 in a low-fee mutual fund that mirrored the S&P 500 (^GPSC). Despite being in the market during a period that included the worst stock market crash since the Great Depression, Becky came out ahead of the friend who was proud to be a good saver.

Even after the losses of the 2008 crash, Becky achieved an 18 percent gain, while her friend achieved about a 7 percent gain. That might not seem too bad, in principle — a smaller return in exchange for safety. But actually Becky’s friend money, because the interest she earned each year was less than the rate of inflation. According to a Bureau of Labor Statistics inflation calculator, one would need $5,777 in 2013 to equal the buying power of $5,000 in 2006. After the 15 percent or so that six years of inflation subtracted from her gains, Becky still had around a 3 percent profit, rather than an 8 percent loss.

“Every Woman Should Know Her Options”

You can see from the chart that Becky’s investment in SPY (SPY), an exchange-traded fund that tracks the performance of the S&P 500 index, was during a particularly volatile period. Market corrections are a regular occurrence in stock investing, but the 2008 plunge was one of the deepest since the Great Depression. Had Becky needed to pull cash from her investment account in 2008 or 2009, she would have indeed suffered a large loss on her principal while her friend would have achieved a small nominal gain. But she didn’t — which reflects the point that the stock market is particularly well suited to long-term investors, especially millennials.

In 2013, Becky decided to cash out of her mutual fund. But not to put her money in the bank — she’d been growing as an investor, and decided she was ready to build her own portfolio by investing in individual stocks. Becky has a long time horizon. If she keeps up her forward-thinking financial choices, she’s likely to one day enjoy a comfortable lifestyle in retirement. And her friend, who’s still losing ground every year that bank interest rates don’t keep up with inflation? That future doesn’t look nearly so promising.

Let’s hope that sometime soon, that young woman stands up in front of her finances, and declares, “Today, I am an .”

This is the granddaddy of them all. Start to type "emergency" into Google (GOOG), and the first suggestion is "emergency fund." The rule is to make sure you have six month’s of living expenses tucked away in cash in case you losefyour job or suffer a financial setback. Of course it’s important to have a financial safety net, but when you earn virtually nothing on your cash, this rule can cost you. For example, if six months of living expenses for you is $25,000, you’d be sacrificing close to $1,000 of income a year by keeping this money in a checking or money market account.

For years, I’ve broken the mold on this financial rule by telling clients they shouldn’t have their emergency fund in cash. Instead, choose a short-term bond fund that pays 3 percent or higher for your safety net. If you need the money quickly, you can easily sell the fund and get access to the cash. If you don’t need the cash –- and these emergency fund accounts are rarely used –- you can still make money on the assets.

1. You need six months of living expense in cash

Not so fast. There are many good reasons to contribute to a 401(k), such as tax savings, tax-deferred growth and a possible employer match, but there are also good reasons not to contribute as well. Don’t blindly dump money into your 401(k) if you don’t have an emergency reserve of some sort and there is a chance you will be laid off. It is taking longer for most to find a job, so if you think you may be out of work, make sure you have the resources to pay rent and buy food until you land a new job. 

‚ÄčAlso, if your employer doesn’t provide a match and you are in a low-income tax bracket, it may make more sense to pay the tax now (since you are in a low tax bracket) and invest in a Roth individual retirement account instead. Use this 401(k) vs. Roth IRA calculator to crunch the numbers.

2. Max out your 401(k)

You cannot cut your way to wealth. Too many people and financial advisers focus on trimming expenses when they should be focused on the other half of the equation — income. I’m a proponent for living within one’s means, but too often that creates an artificial barrier or ceiling. "This is what I make, so I have to cut back to save more," is often the thought process. Rather than living within your mean, work on increasing your means.

There are many ways you can make more money, including asking for a raise, boosting your skills –- your human capital –- and getting a promotion, starting a side project in the after-hours or going back to school and starting a new career. What you make today is not necessarily what you can make tomorrow. Cut unnecessary expenses and then use your energy to increase your income.

3. They key to financial success is cutting expenses

You should only save for your children’s education if you can afford it. That means when you’re on track to having enough assets for your retirement. Assuming you have the retirement assets and now want to save for college, most advisers will recommend a 529 college savings account.

Not so fast. These 529 accounts have some real advantages, such as tax-free growth of contributions if they are used for approved higher education expenses. This tax-free growth is a big benefit. However, if you withdraw money from this account and do not use it for approved higher education expenses, the gains will be subject to ordinary income tax and a 10 percent penalty.

The big risk is if you fully fund your child’s college education but he or she decides to not go to college, drops out, finishes early or goes to a less expensive school. You have the ability change the beneficiary to another qualifying family member without penalty, but if you have just one child, there may not be anyone you can transfer the funds to. You would then have to liquidate the account and pay the tax and penalty. If you are undeterred and still want to pay for your child’s college education, start with a small contribution into the 529 and fund up to a maximum of 60 percent of the cost in case one of the above scenarios occur.

4. Fully fund a 529 account to save for college expenses

The average age of cars on U.S. roads is 11.4 years. So if you’re average, then it may make sense for you to buy a car -– especially a car a year or two old –- instead of leasing. However, if you do not intend on driving the same car for over a decade, a lease may be a much better option. A new study by found it was better to lease than buy based on its criteria. And under certain circumstances, you may be afforded a larger business deduction with a lease compared to a purchase.
5. It's always better to buy a car than lease

The certified financial planner designation is the gold standard when it comes to financial planning. I wouldn’t think of hiring a financial planner if they weren’t a CFP practitioner. However, just because you are working with a CFP doesn’t mean you shouldn’t research your adviser, his or her areas of expertise and how he or she charges. The CFP tells you he or she has advanced training in areas related to tax, investing and retirement planning; has passed a comprehensive and difficult exam; and has agreed to adhere to a high code of ethics.

The onus is on you to know what you need and to make sure your CFP financial planner can deliver. Don’t get lulled into thinking that just because he or she have three letters after his or her name that he or she has been screened. Ask tough questions before you trust your money to anyone -– even a CFP.

6. A CFP designation is all you need

Most financial pundits will advise taxpayers to have just enough taken out of their paycheck so when April 15 comes around, they will neither owe money nor receive a refund. The rationale is if you get a refund from the Internal Revenue Service, it means you paid too much in over the year — and the government has had use of your money without paying you any interest. Keep the money and invest it yourself is the theory.

‘Again, that’s the theory, but reality is much different. It all comes down to psychology. I look at paying a bit more to the IRS as a forced and automatic savings account. Sure you won’t earn interest, but human nature tells us you probably won’t save the money anyway. There is a greater chance you will squander $100 a paycheck then if you receive a $2,400 check from the IRS. One approach takes a plan and discipline each month to save and invest while the other doesn’t. A check from the IRS isn’t an interest-free loan; it is an automatic savings plan.

7. Don't give the government an interest-free loan

Nobody wants to endure an IRS audit, but too often I see honest and ethical taxpayers avoid claiming certain deductions or taking certain positions that are completely legitimate because they fear it will increase their chances of an audit. First, your chances of being audited are small –- about 1 in 104 chance. If your return doesn’t include income from a business, rental real estate or farm, or employee business expense deductions, your chances are even smaller -– 1 in 250. Second, if you and your tax preparer are not crossing the line, you have little to worry about. In fact, thousands of taxpayers get a check from the IRS at the end of the audit. Don’t let a small chance of an audit keep you from taking advantage of every tax strategy for which you qualify.

8. Avoid IRS audit red flags

Do what you love, and you’ll never have to work a day in your life, or so the saying goes. It sounds good and feels good, but it’s not necessarily true. Sometimes –- often, actually –- doing what you love can be a great hobby but not a good career. There are a lot of things I enjoy that I’ll never make a dime doing. A better approach is to find something you enjoy, are good at and that you can get paid to That is the financial trinity you should aspire to find because it ties your interests with your skills with the marketplace

9. Follow your passion, and the money will follow

Follow this rule, and I’ll send you straight to detention. We know college costs are soaring, and we don’t want to bury our kids in college debt, so most parents prioritize college saving over retirement saving. Big mistake. If worse comes to worst, Junior can get a loan, work while in school or go to a less expensive school. Basically, Junior has decent options, and you have tough choices. 

‚ÄčIf you haven’t saved enough for retirement, you are stuck. There’s very little you can do other than slash your expenses, work longer or both. Save for your own retirement first. That’s the financial rule you should follow. If you have amassed so much wealth when your children head off to college that you can afford to help them, go for it. If you haven’t, you’d be doing your kids a disservice by jeopardizing your own retirement by paying for their tuition.

10. Start saving early for your kid's college education

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