Here's smart financial advice for young adults, from the older and wiser. Some of it may surprise you. By David Benjamin November 30, 2006 Thanks to their father, college students Andrew and Eric Carlberg have an edge over their peers when it comes to financial security. No, they don't have a trust fund waiting for them when they graduate. Instead, they have good savings habits and money-management know-how instilled in them at an early age by father Scott Carlberg. Carlberg, 54, of Charlotte, N.C., knew his sons' generation was going to have a harder road to financial security and wealth -- a road that he hoped didn't end in up in his basement. So Carlberg passed on some of the financial life lessons he learned while becoming a corporate professional and entrepreneur. He started his sons saving early by having them get receipts for baby-sitting income and then matching it dollar for dollar to start IRAs. Later, he linked the cereal they ate and the toys they played with to stocks of the companies that made those products. Son Andrew bought shares of General Mills and son Eric bought Toys "R" Us. Now Andrew, 22, and Eric, 20, who are students at the University of North Carolina, look back on their father's help with gratitude. Carlberg's financial planner, John Gugle of Alpha Financial Advisors, says he often sees great financial lessons passed from generation to generation. So in the interest of passing along intergenerational wisdom about money, we've assembled nine things parents and planners recommend to Gen Y. 1. Build a network. A good network of business contacts and friends can help advance your career, a business and your personal life. This skill is recognized to be so important that many business schools have classes to teach networking. The key to networking? Don't expect it to be a one-way street. Bringing skills and talent to the table is essential, says Monte Ford, chief information officer at American Airlines and the father of twins Anthony and Arius, 17, and Derek, 14. "The best way to view networking is as a mutually beneficial exercise." He also recommends that before you start networking, make sure your communication skills are polished. 2. Learn to cook. You will save a small fortune on groceries, fast food and even dating. After you've impressed a date with an expensive dinner out, try a cozy dinner you've cooked yourself. No fair getting a caterer. 3. Live below your means. "Whatever you make, spend less," says Jean Fullerton of Lodestone Financial Planning. Getting into that habit early means having money to invest rather than going into debt and paying interest on things like credit cards and car loans. If you already have a load of credit card debt, pay it off before starting to save. If you don't, the interest paid on those high rate cards will more than cancel out the interest earned on other investments. Remember: Earning interest versus paying interest always means a quantum leap in lifestyle. 4. Start a Roth IRA. With a Roth, you don't get a tax deduction for your contribtuions up front as you would with a traditional IRA, but the money invested won't be touched again by the taxman, even when you withdraw it. And you can withdraw contributions without penalty at any time, not just after you reach retirement. The compounded interest you earn in such a tax-free account "will provide a significant boost" to your investments, says planner Emily Sanders of Sanders Financial Management. If you contribute $4,000 (the limit for 2006) each year starting at age 25, assuming an 8% return, you'll have more than $1 million in your account when you reach 65. For more, see Why You Need a Roth IRA. 5. Marry wisely. Says Avani Ramnani of Lighthouse Financial Advisers: "You and your partner make the most important team of your lives. If your team works well together and has similar financial values, it will make you much more likely to achieve financial success." Partners in a good marriage also have openness in their relationship and are less likely to lie about financial issues, Ramnani says. Washington, D.C., architect Thomas Marable tells his teenage boys to "make sure there's more to love about your partner than physical attributes. If you do that, you're likely to have a lasting marriage and avoid divorce, he says. Divorce not only takes an emotional toll, but also it can be a financial disaster. "There are expenses such as legal fees, child support and selling property," he points out. When all those bills mount, you'll be hearing the smooth sounds of Johnnie Taylor singing, "It's cheaper to keep her." 6. Buy a starter home. Building equity in a house is like a having a savings account, while renting is spending money you'll never see again. Plus, you can deduct the mortgage interest and property taxes on your income tax. So that money you've saved by living below your means can help toward a down payment on a house. If you amass a 20% down payment, you can avoid extra costs, such as private mortgage insurance, and can get a lower rate on your mortgage. See Why You Need a Down Payment. 7. Get health insurance. No matter how healthy you are, an accident or serious illness can devastate your finances if you're not insured. So when you're in your 20s, the first insurance priority usually should be health insurance. Fortunately, rates are cheaper for the young and fit. Janet Bodnar, deputy editor of Kiplinger's Personal Finance magazine and Money Smart Kids columnist helped her son John get a policy after he graduated from college. As a short-term solution, Janet bought John health insurance with a high deductible and low premium until he had his first job after college that provided insurance. Once he had such a job, Bodnar advised him to go with a health maintenance organization (HMO) plan versus a preferred provider organization (PPO) plan. True, an HMO requires you to go to doctors within the plan, but it's cheaper, and he didn't already have a relationship with any particular doctor. If you're a college student graduating soon, consider a student health insurance policy to help avoid a gap in coverage between graduating and landing a job that provides health insurance benefits. 8. Don't rush to pay off low-interest student loans. Student loans are typically long term (10 to 20 years), have flexible payment arrangements and are tax deductible for most taxpayers (see IRS Publication 970, Tax Benefits for Higher Education. Instead of paying off these loans, you should make other financial moves that will benefit you more, such as saving for a house down payment or paying down high interest credit cards. 9. Make a financial plan. Henry "Bud" Hebeler is a retired Boeing executive who is an expert in retirement issues and has passed along some pearls of wisdom to his children and grandchildren. First among these is making a financial plan. The plan doesn't have to be complicated, but it should take into account how much you make and pay for living expenses and taxes. Use the plan to help you start an emergency fund, to insure you're debt free and to save. "Get to the point where you can buy an automobile without a loan or replace your roof from savings," he says.