You want to give your children a hand up in life, absolutely. You want to provide them with all the opportunities and luxuries that you never had, sure. What if you do all these things but never save for your own retirement? Will that help your children in the long term? Probably not.
Sometimes parents get so caught up in “providing” for their children that they never take the time or resources to ensure that they are providing for themselves in the future. I want this article to ask the question: if you stretch yourself financially to give to your children without saving for your own future are you really helping them?
This is a difficult topic, no one wants to hear that they should hold back on college savings to contribute more for their own retirement. There is a basic human element that floods our emotions with a desire to provide for children. I am sure there are many underlying reasons why giving everything to your children is detrimental to their development of character and work ethic but I am not a psychologist, so let’s leave those arguments out of it.
Let’s just focus on the dollars and cents of it.
I have to argue that your kids have a longer time horizon to save and more opportunities for low cost student loan debt than you do. Saving for college in a 529 plan or through some other savings method is a great goal to have – but you have to remember when you start saving for a college goal you are embarking on a savings pilgrimage for someone else!
Why would you start a new pilgrimage if you have not yet made it even half way up the mountain of financial freedom? Let me put it to you this way, if you focus all your efforts on saving for your children’s future then your future will involve living with your children. Maybe your family culture is different than where I come from but when I close my eyes and dream about retirement it does not involve asking my kids for a few bucks to pay my greens fees for the day.
Friends, if you do not save for your retirement thinking that you are doing your kids a favor, your wrong. The only thing you are doing is ensuring that you will be a financial burden to them in the future.
Your kids will have the opportunity for scholarships, low cost student loans and part time jobs to get through college. And guess what, speaking from experience, they will value the education that they earned and paid for far more than if it were free. The other good news is that your children are quite a bit younger than you are. They have a good twenty years to create their own financial freedom.
If you can afford to put some money away for your children’s education it might be a good idea. I would strongly encourage you to talk with a professional to determine if you can truly afford it.
How about this idea, instead of giving your kids a free education and housemates in their 50’s. Why not give them the opportunity to earn their education and a big fat inheritance when you no longer need it.