What is more important, saving for retirement or your kid’s education?This question goes through the mind of every American parent and the choice is tough to make. Most of us go for the option which feels right. However, any financial decision that is made on feelings and not on facts turns into regret at some point. Today’s time don’t allow the luxury of paying for both.
First thing to keep in mind
- Consider if you put all your financial resources into your child’s education then down the road your retirement finances will get severely impacted. Your child will feel obligated to support you financially. Is this the “successful life” you envision for your kid? Most probably not.
- You have plenty of time. Always remember that your future financial situation will continue to rise over time. The challenge you are facing is that you want everything at once. Rather take a long-term perspective and then look at the ways to manage the cost of your child’s education.
How to help kids fund their college education?
Here are some ways with parents can save towards their kid’s future education costs.
- Ask your whole family to contribute
Encourage the grandparents and other family members to contribute some portion of the money that they use to purchase birthday or Christmas gifts for your child. Deposit it in Registered Education Saving Plan. Federal government will provide a grant equal to 20 percent of deposits made to an RESP account. That is free money.
- Adjust your budget after paying off all your loans
Try to save the money that was going to paying off your loan into saving for education once the loan is paid in full. If your child has a sibling, then talk to get a family RESP rather than one per child.
- Build money skills early
Developing money skills from a very early age can help your child a lot. Strong money skills will stay for a long time and teach how to live within a tight budget and save the money for future goals.
- Prepare to apply for grants and bursaries
You might think it’s too early to think about this but many of those who receive the best non-repayable funding for post-secondary education start early. The reason is that grants, scholarships, and bursaries have so many varieties.
When your child is only two years away from attending college, then start preparing for various financial aids. You will be startled to see how many opportunities you have.
The final words on prioritizing retirement or post-secondary savings
If you take all factors in consideration in long term span, then you can save for retirement and help your child’s educational finances. The most prevalent problem is that people fail to plan and consider all of their options before making a decision. When you expand your viewpoint, you will discover all the options you have and make a significant contribution to help your daughter better manage the finances.