I'm a parent of two young kids, and I hope to one day be able to pay for their college educations so they don't have to start adulthood saddled with debt. I've been fortunate enough to save for their schooling and my retirement at the same time so far.
But if I ever find myself in a tight financial spot, I'll prioritize my retirement first. It might sound callous, but I actually have my kids' best interests in mind, and I don't plan to leave them without help. Here's why you might want to consider the same strategy.
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Why I won't prioritize my kids' college over my retirement
Student loan debt can be expensive and make it difficult to save for other financial goals. But there are no retirement loans. If you prioritize saving for your kids' education and fail to save enough for retirement, that decision could have a big negative effect on your kids.
If you're not able to pay for your living expenses, your kids might be forced to care for you while also trying to raise their own children, save for their college educations, and save for their own retirement. For some families, the financial strain of all these responsibilities could be worse than paying a monthly student loan payment.
By saving for your retirement first, you ensure that you can remain financially independent as you age. You may even be able to save enough to help your kids financially in the future, for example, if they're saving up for a down payment on a home, or if they experience an emergency and need quick cash.
How to help your kids with college costs without giving them a bunch of cash
There are other ways you can help your child manage the cost of schooling if you're not able to pay their tuition directly. You can help them track down scholarships and grants they might qualify for. You can also help them compare student loan options and payment plans to determine which is most affordable for them.
If you have extra cash now and then, you can give it to them to put toward their loan payments. But only do this after you've made your retirement account contributions for the month.
Talk your plan over with your kids so they understand what you're doing and why. If they need help developing a financial plan to cover the rest of their expenses, sit down with them and build a budget together so they understand what they need to do. Remember to keep each other in the loop about lifestyle changes that might affect your financial plans, so you can adapt accordingly.
