We all want our kids to have every opportunity in the world, and to achieve whatever they’re striving to accomplish. As parents, we provide them with every path to success that we can. One of the biggest financial goals out there for parents is to help pay to send their kids to college. Then reality sets in – the cost of a college degree. With tuition only getting more expensive, it probably feels like you’ll never be able to save enough. Add to that trying to save for your own retirement, and you may start feeling like your head’s going to explode.
Managing these two goals at once certainly doesn’t seem easy. We’ve all heard the horror stories of kids entering the workforce buried in student loan debt. You’re probably thinking you don’t want that to happen to your child. At the same time, you have to think about your personal financial well-being and what needs to be done to make sure you’re financially stable in retirement, when your income is relatively fixed.
How do you find the balance between saving for retirement and socking away funds for your kids’ college tuition?
Step 1: Make retirement saving your priority.
First and foremost, you must prioritize saving for retirement. There are only so many years you’ll be able to be in the workforce. After that, you’ll be relying on your savings to live. You deserve to retire comfortably and with confidence, and to be able to afford all those awesome things you’ve been wanting to do for years. The last thing you want is to be forced to work well past your desired retirement age, because you put saving for retirement on the backburner.
Any help you can give your kids to pay for tuition in the future is a commendable gesture. It’s 100% okay if you are not able to pay for the entire cost of college or even any expenses at all. College is expensive people! If your kids have to take out loans, that’s okay too. Taking on financial responsibility is a good thing for young adults. In fact, they may take their college career more seriously if they have some skin in the game. The important thing to do with your child when they face the prospect of taking on loans is to talk about what that responsibility means. We can help with this conversation if you need some guidance and we’re happy to do so.
Don’t have any guilt if you’re socking away most of your extra cash flow into retirement savings. Do what you can for your kids, and that’s more than good enough.
Step 2: Start saving for both early (really early).
Mmmkay, how early? Well, in an ideal world, you start saving for your retirement as soon as you land your first job out of school. And you start saving for your kids to go to college as soon as they’re born. If either of those things didn’t happen, you’re in the same boat as a lot of other folks out there. Get started saving now! A little bit of consistent saving over a long time makes a huge difference. Build the habit of putting money away, and don’t look back.
We’ve found the best way for folks to save early and often is to automate things. Set a realistic goal in your financial plan to fund both tuition costs and retirement savings, and set up automatic withdrawals from your checking account each month. Goal setting can put your mind at ease that you’re doing all you can with your monthly cash flow. An added benefit to automation is people tend to spend what they have in their checking accounts. It takes a lot more discipline to manually put money aside, as there are always unexpected things in life that you need a little extra cash for. Automate those retirement and college tuition savings, and keep on keeping on with what’s left.
You should feel good about saving for retirement and your kids’ college tuitions. So long as you prioritize retirement saving, and do what you can to help your kids out, you’re doing exactly what you need to. Have more questions about how to balance your financial goals, or interested in our financial planning services? Give us a buzz!