Parents have to make a difficult choice between saving money for their retirement and providing for their kids’ education. With increasing inflationary pressure and rising expenditure, it is difficult to accomplish even one goal fully, and striking a balance between the two can be very tricky. This has become a major concern among many parents as the cost of higher education is increasing rapidly.
Retirement savings are more important
Your first priority should be ensuring a financially secure post retirement life, as this will also help your children in the long run. It is important to stay financially strong by planning well for your retirement so that you do not become a burden on your children in old age. You should realise that taking care of your retirement needs before allocating funds for your children’s education is not a selfish strategy as it will be beneficial for the whole family in the long run.
Putting money into a retirement account has several benefits. Since the contribution is tax deductible, you get more value for every dollar saved. Only after setting a monthly amount for your retirement fund, should you start thinking about how much to contribute to your kids’ education fund.
If you have money to save over and above your retirement savings, then it is advisable to start saving for your children’s education as early as possible. You can open a section 529 college savings account, which provides benefits like flexibility and high contribution limits. The control of these accounts should remain with you so that they can use the money wisely when the need arises.
Seek education loans
Educational loans are easily available for college students as their incomes are expected to rise sharply in the first several years of their career. Many psychologists have recommended getting your children involved in education financing. It has been seen that children who actively take part in funding their education take college more seriously and do well in their studies.
Inculcate saving habits in children
When your children become mature enough, tell them that they are expected to take control of their finances and start saving by taking up summer jobs. It is important to make your children understand the value of money and inculcate saving habits in them. Explain to them the need to keep some of their pocket money and other income for future use.
Speak Your Mind