The weather is warming up, which means the school year is winding down. For us, summer vacation doesn’t begin until June, so Lauren and Taylor still have a few more weeks of school to enjoy, although most students are already daydreaming about summer. It’s also the time of year in my community where many High School Seniors start proudly wearing t-shirts and hoodies in their college colors and logos, which is a sign my phone is going to start ringing soon.
The start and the end of a school year always seems to remind parents of college and the need to save for it. I receive phone calls from anxious, new parents to stressed-out parents of incoming high school freshman who all share the same concern — paying for their children’s college education. Of course, this begs the question: Should it be a priority for you?
College or Retirement: Which Should Be My Priority?
The answer is easy—your retirement. I won’t pretend that is is an emotionally easy decision to make or follow. Most parents want to send their children to college and putting their retirement (or essentially themselves) first goes against every fiber in their being. Trust me, I understand. Of course, there is no reason why you cannot do both, but you need to make sure your retirement savings is on track first.
There Is No Retirement Loan, Grant or Scholarship Available to You
As noble and understanding as it is that you want to help alleviate the costs for your child, there are other college funding options available to them. A combination of student loans, grants and scholarships can help pay for their higher education. You may still be able to provide some assistance, and they can also get a part-time job. You, on the other hand, have far less resources to help you live comfortably in retirement.
Without proper retirement savings, you are left with Social Security and continuing to work. In most instances, Social Security does not provide the income most couples need to make their retirement dreams, such as traveling, a reality. It was never designed to do so. If you are fortunate, it may cover basic essentials.
Your To-Do: Determine when you want to retire, how you want to spend your time and how much money you need to do so. Play around with the numbers and see what happens if you decide to delay your retirement by 3, 5 and 10 years. Would doing so allow you to pay for your child’s college education? Are you willing to work those additional years in order to do so? There is no wrong or right answer.
Your Family Relies on Your Financial Well-Being
You’ve worked hard to create a strong financial foundation for your family to survive and thrive through any storm. Now you need to make sure your desire to help your child pay for college doesn’t put your family at risk by destabilizing your financial foundation. I’ve seen parents take out home equity loans or borrow from their 401ks to pay for the children’s college education. This is incredibly risky and can ultimately do more harm than good. Every member of your family depends on that strong family foundation you worked so hard to build, so don’t unnecessarily jeopardize it.
Your To-Do: Figure out how much support you can reasonably offer without endangering your financial security. The most important thing you can do for you college-bound children is prepare them to manage their money wisely in and after college.
Retire on Your Terms and Be Financially Independent
Becoming a parent opened my eyes to a whole new set of worries that I never fully understood previously. From the the countless debates on what to feed your babies to never wanting to be a burden to my kids, being a parent is a huge responsibility. It’s one of the biggest reasons why we sometimes do reckless things to pay for our child’s education. We so deeply believe that it is our responsibility to provide for our children, including their higher education, and feel as though we have failed if we cannot.
I understand the sentiment. I also know that sometimes these same parents wind-up, years later, needing their children to support them financially because they didn’t plan properly. Now should the children feel guilty? Absolutely not. No matter how good or pure our intentions were, we still have to live with the consequences, however. Be careful that the sacrifices you make now, won’t catch-up with you in the future.
College Is Not a Right, But a Privilege
I started saving for Lauren and Taylor’s college education soon after they were born. While they are still young, 10 and 8, they both seem interested in attending college, and I am happy to help offset some (or maybe even all) of their college costs. But I also know (as do they) that it is a privilege to attend college. There is a significant cost to attend, which should not be taken lightly. We complain about the rising costs, which I understand, but we must also remember that it is a privilege, not a right. We, as parents, need to help our children understand the cost and do our best to make sure they truly take advantage of this investment to fullest, whether we pay the bills or they do.
Think of it this way—if you were to hand me a check for $60,000 to invest, you would have expectations, right? The same principles apply here. Your child’s college tuition is a huge investment. Make sure you and they get the most out of it.
On Wednesday, Natalie, aka The Finance Girl, is going to share her student debt story with us and offer some different options to help you pay for that college investment.
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