We shouldn't put our kids’ education before our own retirement security. There is no financial aid or loans available for retirement. And unlike college expenses, with retirement there is no potential for enhanced future earnings to look forward to.
But these facts don't remove the burden of both needs. We all want a secure retirement and we all want to help our children afford college, at least to some degree. Here are some tips for trying to save for your child's education after you've taken care of your retirement planning.
Start small. If you're already contributing to your retirement account you might not have much money left over. Start saving a small amount for college each month. Set up an automatic contribution from your checking account into a college savings account. Most people report not missing the money they contribute automatically. Try not to think about the entire burden of college and just focus on the fact that you're contributing something. As you get raises you may find that you're able to increase your monthly contributions.
Use a tax-advantaged savings plan. Boost what savings you do end up providing by putting the money into a 529 college savings plan. Your savings will grow tax-deferred and the withdrawals are tax free when used on education expenses. Some 529 plans also offer instant bonuses just for signing up. That's free money.
Look for free money. Speaking of free money, there are many college savings programs attached to credit cards or online shopping sites that will give you cash back for college savings, such as Upromise. Also consider using a regular cash back credit card and put the rewards into college savings. Just make sure you don't spend more than you normally would.
Enlist the whole family. Encourage your extended family to contribute to your kid's education. At the first few birthday parties, ask for a small college fund contribution instead of an expensive gift. Also, encourage them to sign up for the same rewards savings programs that you use.
Apply for grants, scholarships, and subsidized loans. Make sure you apply for all of the grants and scholarships that you can. There are many resources online that can help you determine what money might be available to your child. Then consider a subsidized federal loan if you qualify. No interest is charged on these loans until your child is through with college.
You can balance saving for college for the kids with saving for your own retirement. It doesn't have to be one or the other. Just make sure you keep your priorities straight and use all the free resources you can.
Phil Taylor is the author of the popular 52 Ways to Make Extra Money. Find out how to save more money and get the latest news on the best online savings accounts and the best online stock brokers at his blog, PT Money: Personal Finance.