By instinct, every parent gives priority to the interests of his or her children. You devote your energy towards ensuring that the kids have a better life than the one you had when you were young. You decide to set up a savings fund to avoid the hassle you went through to complete elementary and college education. As you diligently put the money away, you also realize that a time is coming when you will also retire from active employment or participation in business activities. When that time comes, you would want to live comfortably perhaps go on holiday as frequently as you can.
The dilemma now is whether to prioritize saving for your children’s college or your retirement. What comes first? Here are suggestions on the most prudent way to prioritize:
Boost your retirement savings
If you are worried about relying on your children during old age, you are thinking in the right direction. In that case, consider solidifying your future when you still have the strength. By opening a retirement account now, you can tap into a wide range of benefits. For example, your money will grow over the years and increase in value. Also, tax concessions help boost your savings.
Have money for basic needs
Before the children came, you could afford to buy food, pay rent and drive a small car. Several years later, and now you have kids that are growing up fast. The situation calls for moving into a bigger house, increased expenditure on food, more money for healthcare and buying a bigger car. These expenses stretch your budget leaving little or no room for college savings. Are you operating under such conditions? You need to focus on boosting your savings to meet the basic needs before you think of a college kitty.
Pay your debts
Having got into parenthood recently, you still have a load of obligations to clear. Perhaps you are also repaying your student loan. On the other hand, the family car has arrears. You are yet to offset your outstanding credit card payments. Starting to save for your children’s college while these obligations are still pending is counterproductive.
Save for tough times
Your family looks up to you for their survival. Daily expenses such as buying food, medical, paying for cable TV are all part of your responsibility. These costs will keep cropping up every so often. To cushion against a possible job loss or, God forbid, a time when you may not be around to provide for the family, your focus should be on building an emergency fund.
Your children depend on you for their upkeep until the time when they can stand on their own. Therefore, cushion them against tough times ahead by saving adequately. Ensure that they get their basic needs sorted. Also, ensure you pay-off all past and present debt. Before venturing into the project of putting money aside for children’s college, secure your financial position first.
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