A valuable lesson.

Beverly Green uses market smarts to send her son to college

Whereas most people spend all of their life "working for money," Beverly Green is making her money work for her. Green, a human resources specialist with OTG Software, a Bethesda, Maryland-based provider of online storage management and access solutions, took advantage of her company's employee stock option program. When the company filed an initial public offering (IPO) last March, Green purchased 31 "friends and family" shares at $19 each.

Divorced and a single mother, Green admits that a lack of knowledge about the stock market was an obstacle to her establishing an investment plan many years earlier. The 42-year-old Washington, D.C., native came to a critical juncture in her life two years ago when her son, Linwood, was a sophomore in high school. She had the challenge of footing a huge college tuition bill.

"There are a lot of single mothers facing this problem and unfortunately it is so big that the solution may not be readily visible," says Mark Spradley, a financial advisor at PaineWebber Inc. in North Bethesda, Maryland. Spradley worked with Green to identify some quick fix solutions, namely encouraging her to help her son apply for scholarships to ease the financial burden.

Spradley also recommended a diversified portfolio of equity-based products, starting with the Putnam Research Investment Funds (Nasdaq: PNRAX) in the large cap growth sector. She started small, making monthly contributions of just $25 two years ago. However, that was enough to help her become disciplined, overcome her fears of the stock market, and begin an investing regimen. The fund has grown to a few thousand dollars and had an average annual total return of 21.04% over three years and 13.07% for one year.

Next, Spradley advised Green, who is in a 28% tax bracket, to make contributions to her employer's 401(k) as part of her overall asset allocation plan. Green currently allocates 5% per pay period to her 401(k) account--valued at roughly $5,000. She intends to increase that amount to about 7% during the company's next enrollment period. In addition, she owns a PaineWebber proprietary money market fund. It has a seven-day yield of 6.11% and totals $2,000.

Green is maintaining a self-induced "spending diet" and focusing on accumulating disposable cash in order to exercise future stock options. The rewards? A welcome alternative to working odd part-time jobs to help bankroll her son's $16,000-a-year tuition at Cheyney University of Pennsylvania.

When the 31 "friends and family" shares of OTG that she initially purchased for $19 a share were trading at about $30 a share, she decided to exercise her stock options. She used a portion of the recent stock earnings to pay off some of her consumer debt--decreasing her monthly expenses from $1,700 to $1,300--and to make a $1,000 lump sum deposit to her Putnam fund. "It's been a learning experience," says Green, who even became part of an investment club with her sister and four of her girlfriends.