Being an adult has enough responsibilities as it is, but when you add children into the mix there are a lot more items to add to your list of things to worry about. When it comes to having a family, saving money seems to be the biggest concern for parents. Not only do you want a good life for yourself, but children add another element into this equation. Above yourself, you want them to be happy and live the life they want and need. To do this, you need to focus on saving your money for the future. Your future AND your children’s future. You will someday need to retire and your child will inevitably require the funds for their education. Obviously bills and responsibilities can start to overtake your savings plans, but you can manage to save and also balance your savings between retirement and your children’s education costs. Here are a few tips that can help.
Make it Easy
Banks and financial institutions are making it easier for you to save. Having access to your savings and investment accounts on your phone or computer allows you to easily transfer money at the click of a button.
Do What You Can
I often find with savings that if you automatically transfer money out to save than you won’t even miss the money that is taken out of your account. If it isn’t in your account then you won’t even miss it when it leaves. Automatic transfers allow you to make a goal and stick with it. It also makes you stick to your budget. It doesn’t give you the chance to say “Maybe I won’t transfer the money this week and I will go out to dinner instead.” Even saving something as little as $25 a week can get you somewhere in the grand scheme of things.
Both retirement and education savings are important. But there are ways to be smart about balancing the savings of both. You need to pick the best tax-advantaged education savings plan for your child based on your child’s age and when they will need the money for their education. Investigating tax benefits for your retirement are beneficial as well. Besides the tax benefits there are also the returns to consider. For example, with your 401(k), if your employer kicks in 50 cents for every dollar you contribute, that’s an immediate 50% return on your money. It is important to take advantage of that! It is also important to remember that your kid can borrow for college (ideally with federal student loans), but you can’t borrow for retirement.