Why Saving for Our Kids' Education Is Not Our Top Priority

Four college students studying on the lawn in the campus, Studying, Education
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When it comes to providing, a parent's job is never done. Food, shelter and clothing barely scratch the surface. What about college, weddings and help as children start their first careers? Balancing those latter costs with the priority of saving for your own future costs, like retirement, is tricky at best.

I spoke with investors who proudly admitted they had saved up a significant amount of money for their children's college education at the expense of their own retirement savings. While I applaud the desire to help your child pay for college, I believe it shows a misaligned priority and one that my wife and I hope to avoid. I'm not saying that we're aiming to be part of the 50 percent of parents who aren't saving for college, but simply that, as a priority, college savings must come after saving for retirement.

Retirement Planning Should Be Job No. 1

I know this isn't a popular statement, but it's my opinion that retirement planning should be the primary concern of most parents, with saving for college being a distant second. The average millennial will need at least $1.6 million if they retire at 65, so it's safe to say that regardless of your age, you're going to need a sizable chunk of money to enjoy a relatively secure retirement.

What tugs on parents' heartstrings is the nagging feeling that prioritizing retirement saving ahead of saving for a child's college education equates to loving your children less than yourself. I understand that feeling, on one level, but it shows a misplaced priority, in my opinion. There are loans and scholarships for college. Nobody is going to give you a scholarship for retirement.

We Don't Want to Be a Burden to Our Children

The main reason my wife and I aren't prioritizing saving for college is because we don't want to be a burden on our children as they get older. Whether or not we like it, putting their college accounts ahead of our retirement accounts will only hinder our efforts build up the nest egg we'll need to. That might not seem like as big an issue now, but fast-forward 20 or 30 years, and the lost investment time will be felt.

What gets lost in the saving for retirement vs. saving for college debate is what is in the best interest of the child long-term. Putting enough away to fully fund a college education is great. However, what good are you to your children if you need to live with them as you age because you didn't prepare for yourself? That also assumes they'll be in a position to help you. If they're not, then what becomes of you? Of course, that's the extreme end of the spectrum, but it highlights the importance of finding a healthy balance.

Saving for College Doesn't Have to Be All or Nothing

Too often we view saving for our children's college education as an all-or-nothing situation. You can balance saving for retirement and college –- even if the latter isn't the priority. That is what my wife and I do. We save each month for our children's college education, but it pales in comparison to what we put away for our retirement. There are two more reasons for our approach, other than not wanting to be a burden later in life:
  • I believe that children should be prepared for the cost of things so that they can live financially responsible lives as adults. This spans from budgeting for everyday expenses to larger-ticket items like college.
  • We want our children to view the college question through the paradigm of whether or not it's best for them. We want them to consider deeply what's going to make them happy and what's going to allow them to earn a decent living. We want them to see there are ways to fund or lower the cost of college that don't solely come down to student loans. All of those things go back to financial literacy.
I don't believe that means we love our children any less, but it means we love them enough to not be a burden on them while also helping prepare them for college (and their lives as adults thereafter) as opposed to just fully funding their college experience.

While we don't make saving for college a priority, that doesn't mean we don't view it as important. We view it in light of other factors that are going to both meet our retirement needs as well as help prepare our children for a life of sound financial discipline.

John Schmoll is the founder of Frugal Rules, a finance blog that regularly discusses investing, budgeting, and frugal living. He is a father, husband and veteran of the financial services industry who's passionate about helping people find freedom through frugality. He also writes about wise ways to manage your money at WiseDollar.org.

6 Financial Issues to Tackle in the Fall
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Why Saving for Our Kids' Education Is Not Our Top Priority
For many employers, open enrollment season for some benefits happens in October. This usually sneaks up on some people, who scramble to decipher benefits and make elections last minute. Although you won't be able to see the options until the enrollment period opens, take time now to review your benefits. Are you taking advantage of any 401(k) matches? Are your fully funding your Flexible Spending Account? What about employer offered life and disability insurance? (A fun infographic from the Council for Disability Awareness shows your risks). Maximize your benefits and don't leave any money on the table.
Back-to-school time can be expensive if you're not prepared. Money is spent on clothes, books, supplies and technology -- and that's before the doors to the classroom have even opened. Before hitting the stores, do these two things:
  • Conduct an online search for "coupon code" along with the name of any store you'll be shopping at. Typically you can find some great online deals.
  • Get a list from you class or teacher of specific type of notebook, calculator, etc. required. If you can't get child's "must haves" from ahead of time, buy just the bare minimums until school starts and the list is available.
It's hard to think about the holidays when we're just making it through summer, but now is the time to build up a financial cushion. Set yourself up with an automatic transfer to a separate savings account and participate in the Holiday Fund Money Challenge to build up a savings of $450. How much do you need for the gifts, travel, parties, entertaining, food and other holiday activities you anticipate? Planning will help to ease the stress that comes around the holidays.
In lieu of scrambling at the end of the year to make contributions to retirement accounts by Dec. 31, double-check your contributions now and determine if there's room in your cash flow to allow for an increase to possibly max out by year end.
Summer is a typically a time of transitions. There are weddings, moves to new homes, possibly a new family addition and more. If summer is the time when these events take place, fall should be the time to take stock of how they're panning out. If you're recently married and haven't already, now is the time to have the money talk with your spouse and make decisions about spending plans, merging (or not merging) accounts, beneficiary updates and more. If you've moved, check out how the new location has affected your cost of living spending in terms of activities, gas costs, groceries and more. Ultimately with any transition, you need to review your spending plan and determine what areas (if any) need to be adjusted.
If you're lucky enough to live in one of the states that actually experiences seasons, fall is the time to prep for energy savings by caulking and weatherstripping doors and windows, turning your thermostat back for a fixed period each day and insulating your attic, basement or outside walls.
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