We have all heard it said before, “You can’t take out loans for retirement.” Retirement should be your first savings priority, but what do you do if you feel like you are short changing your child and his college fund by not contributing to it? After all, you likely don’t want to see your child have to take out thousands of dollars of student loan debt because you didn’t have enough money to save for both retirement and college.
First, keep in mind by taking care of yourself, you are helping your child because your child will not have to financially support you when you are older as he would if you have an insufficient retirement.
Also, keep in mind that there are several other strategies that you can use to help your child save money on college costs, as mentioned in a recent article by The Huffington Post, “Savings: Five Ways to Save for College and Retirement.” Keep these ideas in mind:
- Teach your child to budget. Teach your child to set aside some of his money for savings, including college savings. Teach him how to budget. Tweens and teens will likely have fun with a budgeting calculator such as Quicken or Genworth’s. As your teen gets older, put him in charge of buying his clothes for the year so he learns how to budget and comparison shop, which will help him know how to budget when he is in college.
- Let her know your college budget. You may not have enough money to help her attend a private college, and that is okay. Let her know how much you can help with college BEFORE she even begins her college search.
- Educate her on student loans. Let your child know how much she will be paying back every month, how much interest she will pay over the life of the loan and how many years she will be repaying. Compare this against the potential salary she might make so she realizes how much student loans can limit her future lifestyle.
- Encourage him to take AP classes or graduate early. If your child can handle it, encourage him to take AP courses during high school or to graduate early so he can begin college early. The more college credits he can get under his belt while in high school, the less he has to pay for in college.
- Encourage her to attend a community college. Attending a community college for two years can save your child quite a bit of money, plus she can save on living expenses by living at home. A big university, and its expense, can wait for the last two years of college.
If you can’t afford to save much for your child’s college education, don’t feel bad. There are still ways you can help your child afford college, mainly by teaching them to be financially responsible, while still taking care of your own retirement needs.
Post by Melissa