Saving For Retirement Or Your Child"s College Education?
If you are a parent, you will face many important decisions in your lifetime.
One of those decisions will be should you save for retirement or for your child's college education? Since the economy and recent stock market turmoil has caused many hard-working people to lose a good percentage of their retirement savings, the choice is a hard one to make.
As a parent, you want to provide your child with a good education but you also don't want to keep working until you are 80 years old either, so what should you do? Start Saving for Both: The earlier you start saving for your child's college education, the better you will be.
For example, even if you are able to put aside $5 dollars a week, that $5 will add up to $260 a year.
You are looking at a total of $4,160 if you save for 16 years.
While this doesn't seem like a lot of money, it can grow in a high-interest savings account.
Moreover, remember that any bit of extra money is better than none at all.
The same with your retirement savings.
Say you have $10 extra each week; spilt the money between a savings account for retirement and one for college.
Try to keep contributing to your 401k as normal.
Have the Talk with Your Child: If your child is in their freshman or sophomore year of high school and if it is looking like you cannot afford the cost of a college education, it is time to have the "talk.
" Now, you aren't saying that your child cannot go to college, but they are going to have to accept some of the financial reasonability too.
Don't feel like a bad parent, but it is important to state this fact because many kids are just used to mom and dad footing the bill.
Just like you, encourage them to get a part-time job and put aside $10 or so dollars a week for college or college spending money.
When it comes time, help them fill out financial aid forms.
Scholarships and grants do not need to be repaid; loan repayment only starts after they have finished schooling.
In short, if you have the financial freedom to save for your retirement and your child's college education at the same time, go right ahead and do so.
However, realize how lucky you are because many parents do not have this freedom.
One of those decisions will be should you save for retirement or for your child's college education? Since the economy and recent stock market turmoil has caused many hard-working people to lose a good percentage of their retirement savings, the choice is a hard one to make.
As a parent, you want to provide your child with a good education but you also don't want to keep working until you are 80 years old either, so what should you do? Start Saving for Both: The earlier you start saving for your child's college education, the better you will be.
For example, even if you are able to put aside $5 dollars a week, that $5 will add up to $260 a year.
You are looking at a total of $4,160 if you save for 16 years.
While this doesn't seem like a lot of money, it can grow in a high-interest savings account.
Moreover, remember that any bit of extra money is better than none at all.
The same with your retirement savings.
Say you have $10 extra each week; spilt the money between a savings account for retirement and one for college.
Try to keep contributing to your 401k as normal.
Have the Talk with Your Child: If your child is in their freshman or sophomore year of high school and if it is looking like you cannot afford the cost of a college education, it is time to have the "talk.
" Now, you aren't saying that your child cannot go to college, but they are going to have to accept some of the financial reasonability too.
Don't feel like a bad parent, but it is important to state this fact because many kids are just used to mom and dad footing the bill.
Just like you, encourage them to get a part-time job and put aside $10 or so dollars a week for college or college spending money.
When it comes time, help them fill out financial aid forms.
Scholarships and grants do not need to be repaid; loan repayment only starts after they have finished schooling.
In short, if you have the financial freedom to save for your retirement and your child's college education at the same time, go right ahead and do so.
However, realize how lucky you are because many parents do not have this freedom.
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