Updated on 03.06.09

Saving for College or Saving for Retirement: What’s Best for Us?

Trent Hamm

This past weekend, my wife and I were watching Clark Howard’s show on Headline News. During the program, Clark stated a canard that I’ve heard several times from personal finance “gurus” over the past couple years: instead of saving for a child’s college education, parents are better off saving for their own retirement.

Clark’s main reason was pretty simple: people can’t receive scholarships or student loans for retirement. Obviously, that’s true: my children will be able to get all kinds of assistance for their college education, while I won’t be able to get any sort of aid for retirement. Not only that, if your child does have to get into debt for college, they’ll have many, many years to earn their way out of it, whereas when the children go off to college, you won’t have too many years to keep saving for retirement.

On paper, the argument does make a lot of sense. On paper.

This equation leaves out an enormous human element. For many people – myself included – retirement isn’t the big ultimate goal. I might like to think about retiring a bit early, but my big motivation in life isn’t related to retirement at all.

My big plans right now involve guiding my children into adulthood with enough life skills and opportunities that they can basically choose to do anything they want – and run with it. In most ways, my financial choices revolve around that motivation. I started 529 accounts for my children before they were even born (starting them with myself as beneficiary, then changing it). I’m already investing in educational opportunities for them.

Yes, I’m saving for retirement. However, I could be saving substantially more for retirement if I were not directing significant money to my children’s future – and I don’t just mean college savings, either. Other opportunities, such as camps that revolve around their interests, international trips, equipment and instruments they might need, and so on are also important – and by planning for them and saving for them now, I reduce the chance that changes in my career will affect the opportunities that my children have.

Clark’s advice is correct on paper, but it leaves out one of the biggest aspects of personal finance: setting your own goals. Most of my goals revolve around my children – thus, my savings and investment choices revolve around what paints the best future for them.

The lesson here is not every “rule” of personal finance applies to every situation. Instead, you should figure out what your own goals are and then seek out advice on how to make those goals actually happen.

Good luck!

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  1. Great points. As always, it’s about finding balance and doing what works for you and your family based on your goals. A good reminder that all-encompassing advice isn’t necessarily best for everyone.

  2. Trevor - 14 Year Old Blogger says:

    Great post. Not always doing what is best on paper is the way to go. It really depends on your situation though. If you really just can’t fund your child’s education, then you should just let them earn it themselves while giving them smaller inject of funds in periods of time.

  3. Ramona says:

    As Derek Foster says why should parents have to fund their child’s education? This is a bit drastic to my mind, however I do believe that children should have some part to play in paying for their education, whether it be by saving, or by getting scholarships. When you participate in the cost of something – anything – the rewards are all the more appreciated.

  4. Johanna says:

    As with all things, there needs to be an element of balance involved. Obviously, if you are struggling to save anything at all, then you’re better off saving for retirement. But if you’re on track to have a luxurious and/or early retirement, or if you’re living a luxurious lifestyle for yourself now, then you owe it to your kids to put something aside for their college expenses. I don’t see this as a “depends on your personal values” type of issue – if a person’s personal values do not include giving his kids the best shot in the world that he can reasonably afford to give them, then maybe that type of person should not have kids.

  5. CPA Kevin says:

    Were watching what?

  6. The Personal Finance Playbook says:

    My wife and I go back and forth on this – which is more important – retirement or college savings. To her, it’s really important that our children graduate without the burden of student loans. Her family did that for her. My family on the other hand, was more of a – go to college, find a way to pay for it family. It’s all about personal preference. Hopefully we have a couple years before we have to start making those decisions;)

  7. Christina says:

    You should also consider that saving for the kids’ education at the expense of your own retirement puts you in a position where if something drastic happens and you have to retire early (or even if you just retire at normal time), you won’t have enough money to sustain yourself. Your kids can get loans that have tax deductible interest for school. If instead they want to help you in your retirement, there is no such benefit. Also, it would almost be better to save that money and gift it to them when they are getting married or buying their first house, these are situations where having the cash on hand saves you on mortgage and credit card interest. Also, what financial skills are they learning by just receiving the money for school at the point where they should be learning the ins and outs of money themselves? I fully agree that while they are children you should be spending money on their education, but when they are adults, they can earn their own money and are supposed to be learning from their own successes and failures. You can’t treat them like children forever, at college age they are supposed to be maturing into adults. No wonder so many people graduate college still with a high school mindset about money. I think a kid who learns the theory of money from his parents, which we know you are already doing Trent, and then gets a chance to put that theory into practice in a safe environment (you can’t screw up that badly when there is no mortgage or landlord or children to support, it’s not like you will be living ont he streets) would have the best opportunities to learn this life skill.

  8. Oskar says:

    If you have to choose save for retirement but for most financially resposible adults you should be able to save for both your kids and your self. For me a medium has been to save enought for retirement and kids furtures (i don’t want to label it just ‘college’ it could be so much more than that). The ‘extra’ savings we rack up go towards paying off our morgage, some savings i cash and shares (easily accessable for any reason) this adds up to lower living expenses (morgage payment) some extra income (dividends) and flexibility to spend on the kids if our situation remains favorable.

  9. Oskar says:

    If you have to choose save for retirement but for most financially resposible adults you should be able to save for both your kids and your self. For me a medium has been to save enought for retirement and kids furtures (i don’t want to label it just ‘college’ it could be so much more than that). The ‘extra’ savings we rack up go towards paying off our morgage, some savings i cash and shares (easily accessable for any reason) this adds up to lower living expenses (morgage payment) some extra income (dividends) and flexibility to spend on the kids if our situation remains favorable.

  10. CPA Kevin, I was just coming to ask the same thing! lol

  11. Jennifer says:

    I really enjoy Trent’s writing and believe, for the most part, that he’s got his heart in the right place. One thing that has always bugged me though, is that he stays home during the day and yet sends his kids off to day care. A lot of money could be saved for his childrens’ future if he kept the kids home with him and worked during nap times and evenings. Not to mention the investment of time with his kids would reap huge dividends in the future. I think that is the most important investment to make in your children.

  12. Seth says:

    Here’s what Trent was watching: Clark Howard’s show on Headline News

  13. J says:

    I disagree with a lot of the points here.

    You are making the dangerous implicit assumption that you will be able to work till retirement age. Like many things, life does not always go as planned and you may be forced into early retirement — due to something like cancer, a heart attack, stroke, etc. My father wanted to work just about forever, but had to retire 15 years early because of a stroke.

    Another immediately related item is life insurance and disability insurance. If you don’t have those now, your family will have serious problems if you are disabled and are not able to provide for them. You are far more likely to be disabled than die early, too — and like anything else you insure against, you never know when you’ll have a horrible auto accident or get blinded by something.

    Keep in mind that at some point you need to be able to say “no” to your children. If they can’t attend a camp, take an international trip, or get a drum set, they aren’t going to die. If their father can’t generate income to keep a roof over their head for whatever reason, at least having the money from an insurance settlement will keep them going.

    And the financial planner is 100% brutal and 100% right — kids can pay for college with loans, working, military service, saving, living at home, etc. You can’t do ANY of that with retirement — and you have no way of knowing how long you will need that money.

    Also, do you want to be a burden on your children in retirement? If you don’t have an adequately funded retirement, you very well could be. If you die with a pile of money left over, then you can always pass that onto your kids so they can use it — you certainly don’t need it anymore.

    I’m a parent, too, and yes I want to provide my kids with all that they want and need in life. However, I always keep in mind that I need to provide for them even if I’m not around, and also that they will want many more things than I’ll ever be able to provide — but I should teach them HOW to get things they want even when it seems impossible.

  14. Battra92 says:

    Retirement 100%. If/when I ever have kids I will not be saving in a 529 nor will I be sending them monthly checks to college nor will I be paying any of their loans. If they want to live at home and commute to the local college that’s fine but I won’t be paying their way to Harvard. That’s what student loans and scholarships are for.

    I resented a lot of the rich kids at college who had the cash coming from home while I was working two jobs to pay for school. A lot of them are working retail now or are barely making ends meet (many have moved back home) so who’s in the better position?

    @Johanna: Going to college is not the best shot they can have – though many of them probably will be downing shots on your dime.

  15. 444 says:

    Just make sure you thoroughly understand the process of paying for a college education. I’m pretty sure that those 529 plans get eaten up – chomp, chomp, chomp – right off the bat before any computations are even made about how much aid and what kind will be considered. I’ve heard of people saving for a child’s lifetime only to be told, “That takes care of part of one semester. Now that that’s gone, let’s look at how to pay for the rest.”

  16. Maggie says:

    Having aged parents who now need constant nursing care, I now see saving money for retirement is very important. It’s expensive being old, and there are many horror stories of retirees in cheap, understaffed nursing homes. Thankfully our parents saved enough money for retirement.

  17. Johanna says:

    @Battra: Har de har har. Yeah, not every kid is cut out for college, and not every kid has the emotional and academic maturity not to party the opportunity away. But some do. And it probably won’t be clear whether a particular kid does or not until she’s already well into her teens, at which point it’s kind of too late to start saving if you haven’t been saving already.

    Also, shots on the parents’ dime? I don’t think so. Why do people all seem to think that it’s a choice between paying the whole cost (including tuition, room, board, and spending money) or paying nothing? I think it’s perfectly reasonable for a parent to say “If you want money for booze, you can earn it yourself.” I just don’t think it’s reasonable for a parent to say “We have enough money to help send you to Harvard, but we’re not going to give it to you, because we’d rather keep it all for ourselves.”

  18. Maureen says:

    I agree with Jennifer. The first 5 years of a child’s life is so important. Trent you are missing a huge opportunity to enrich your childrens’ lives (and your own). Fow example, one of the most rewarding things I have ever done is teach my children to read and launched them on their way to becoming lifelong readers and learners. I believe this was so much more valuable to them than any monetary boost I could give them. (One of them is now an engineering student in university and the other is a university bound highschool senior – and they both hope to complete at least their undergraduate education without debt). Those precious preschool years go by all too quickly.

  19. femmeknitzi says:

    Firstly, let me say that I agree not all financial advice applies to everyone. There’s always an exception. Also, I think that this particular advice is designed to keep people from completely ignoring retirement while saving for college. If you’re young and maxing out your 401 K but focusing the extra on a 529 instead of an IRA, you’re probably fine.

    But for most people, I think the advice is critically important to understand.

    Saving for retirement isn’t just about sippin’ martinis in Florida. It’s easy to put your kids before that. Retirement is about making sure that when your body or mind causes you to no longer be an asset to the workforce, you still have a means of income.

    My mother was an OR nurse for 30 years. She’s in great health but being on her feet 12 hours a day for 30 years takes its toll. A year ago, when she was 58, she’d come home in tears because her body just couldn’t take it anymore.

    But she couldn’t retire because she saved for my college, instead of for her own retirement. So she was 58 and physically worn out but she was going to be lucky to retire by 65.

    To further prove a point, let me share that the money she saved for my college, my father blew on racing cars. Still, I was able to go school with financial aid and get a master’s degree.

    Yes, I have debt but because I’m fiscally responsible, it doesn’t hinder me from saving for my own retirement, owning a home and doing all the things I need to do in life. Also, if something happens and I lose my job, federal student loans have flexible repayment options and will work with me until I’m back on my feet.

    Meanwhile, my mom still doesn’t have much for retirement because she lost all those years of compound interest. Luckily, she recently got an administrator position at the hospital so she’s off her feet. That will allow her to keep working until she can afford to retire.

    But what happens when people don’t have those choices to make? It’s noble to want to put your kids first but if you can’t make ends meet in your golden years, you’ll just become a burden on them in the long-run.

    The other thing to consider is that saving for college doesn’t depend on the factors of time and compound interest nearly as much as your retirement. Since you can only reasonably save for 20 years or so for college, compound interest will help but that’s probably not enough time to double your money. In retirement, time is everything and no one can afford to lose those 20 years.

    Its a really hard thing for parents to put themselves first. It goes against everything in our nature. But in the long run it’ll serve your whole family better.

  20. Jen says:

    I’m almost positive that Trent has insurance needs covered for his family.

    I used to think that I would try to 100% pay college expenses for my children. I am an older parent at 39, with a 1 year old, and we plan to have one more. One benefit to being an older parent is that I have learned so much over the years by observing how others raise their children. I know I won’t be a perfect parent, but I know MANY things I will or will not do from watching others.

    The number one thing I will do is teach them everything I can about personal finance. This will include their participation in setting goals, and making a plan to achieve those goals, mostly on their own. I will never deprive my children of rich and rewarding life experiences. However, I will strive to avoid creating a sense of entitlement.

    I’ve seen too many parents throw everything they could at their children (whether they could afford it or not), to the point that the children were overwhelmed. They learned to appreciate nothing, and expect more and more. No, thank you. I was sickened at more than one birthday party, when there were so many gifts that the child would open one, glance for a second, then toss it aside to go for the next one. It was sad, because in the end, they would sit there surrounded by a mountain of material items, looking a little dazed.

    So we have decided that we will help our children with college to a certain extent. However, they will definitely have a financial stake in their own education.

    @Battra92: I agree. Children who have been raised by having everything handed to them have no clue how to take care of themselves as an adult in the real world.

  21. Jamie says:

    The point of saving for your retirement instead of saving for college is to ensure that your children will not end up having to pay for your bills when you are old. If you have to choose one or the other, make sure YOU are covered so that down the road after your kids get that college degree they don’t end up spending their income to put you in a nursing home.

  22. Mari says:

    My parents gave me the choice growing up. They can pay for my college and I would take care of them in retirement; or I pay for college and they pay for their retirement. I worked hard and paid for my own school through scholarships and my job. No student loans. So I’m debt free.

    My parents did help me by keeping me on their insurance until I was 25; letting me stay at home and commute for my first 2 years; and loaning me money for my first semester (which was paid back in 3 months). Plus the occasional bonus of a $20 bill from my dad.

    I’m glad my parents thought about their retirement first. A few years ago, my mom got really sick and her savings and good insurance allowed her to retire early. My dad gets to retire in 2 years as well. If they paid for my school, they would be working for many more years sick or not.

    Think about yourself first. You don’t want your debts and burdens on your kids later.

  23. Chris says:

    My parents didn’t pay a dime for my college education. I joined the Navy and got a full ride, plus some money on the side for my MBA that I will start in May. There are PLENTY of options to fund college. There are FEW options to fund retirement once you stop working.

    I’d like to buy the house my kid is living in while in college. It would help him out while having a nice little rental property.

  24. Michele says:

    I agree that we shouldn’t take general financial advice; we need to apply general advice to our unique situations. However, I do agree that in most cases saving for retirement is more important than saving for college. That doesn’t mean you shouldn’t live life to its fullest and help your children grow socially, academically, and emotionally. I believe all of those things can be done on a low budget. But at the end of the month if you have $100 left over, then putting it away for retirement is better than putting it away for your child’s college education. There are many ways to keep your child’s education costs down – community college for two years, state schools with local campuses, etc.

    If you teach your children well, then maybe they will grow up and start saving early and not get themselves in debt. Then maybe they will save for their kids’ college and for their own retirement. That is what we are doing.

  25. sue says:

    Hey, you could have your kids shackled to helping their parents who are underfunded in super AND paying off their excessive student loan.

    One out of two doesn’t sound so bad.

    None out of two is nice if you can do it.

    But if I had to choose….

    I think paying off the student loan will be less demanding overall than providing for their elderly parents.

  26. Paul says:

    If I understand your situation, you are making the wrong compromise here. This seems to be something that is prevalent in the USA and to a lesser extent in my country, Canada. The question isn’t Retirement savings vs Educational savings.

    The question should be Retirement savings vs Dept payment.

    The attitude is of trying to play the market or “invest wisely” instead of paying of your mortgage. The culture of risk taking has led us(canada and the USA) to our current situation.

    First, lets compare educational savings to debt repayment. Lets say a 3 year diploma costs $45,000 in 2024. Lets also assume you have a $100,000 mortgage at 6% that comes due in 2024 with monthly payments of $839/month.

    In order to save the money for school you need to invest about $19,000 today at 6% interest. Or save $154 a month for the next 15 years.

    Alternatively, if you put that $19,000 against your mortgage, your payments either go down to $680/month or you can pay off the mortgage 4 years early. Or, if you put that $154/month against your mortgage you would pay off your mortgage in 11 years and 8 months.

    So you end up with 3 years and 4 months to save $45,000 for school. But you have all of that money you are no longer putting towards your mortgage! $993/month. By 2024, after 3 years and 4 months, you will have 44000 in the bank.

    This is called a zero sum game. Both ways of doing it have the same result. But the fact is that we made extremely conservative assumptions: 1. Borrowing money always costs _more_ than the interest made from conservative investing. 2. Interest rates have no where to go but up. This includes both borrowing and lending. Paying debt down while rates are low makes good sense. Investing while rates are low and getting lower is risky. Paying off debt is always the lowest risk option. 3. Having a mortgage is a high risk situation. With 20% in equity, you are leveraged 400%! So If your home does down in value by 10%, you loose 50% of your equity. This realization is only now dawning on people.

    Now, for Retirement savings vs Debt payment, this depends entirely on your tax situation (essentially which government incentives are more lucrative; incentives to save or incentives to pay debt). In Canada the incentive is for Retirement savings, in the USA it also appears to be for Retirement savings, but it must surely change soon.

  27. GS says:

    What do you think about this advice:

    I am seriously considering it for my children.

  28. PF says:

    I think that stay at home parents have the hardest job out there and kudos to those that have done it. However, Trent has to write to earn money and I’m not sure how you can do that with two small children. Have you ever seen those supernanny episodes where the parents try to work from home while keeping their children at home? It is a DISASTER! The kids always end up getting ignored, which leads to lots of problems. It seems to me that the kids are better off in daycare than being at home with a parent who can’t attend to them.

    @Jen (#17) I’m an older parent and I feel like I could have written your post. I’m 41 now pregnant with #2. Quite frankly, retirement and college might happen at the same time for us!

  29. Genevieve says:

    What about saving for your kid’s college and your retirement in the same account? My husband and I fully fund our Roth IRAs every year and since you can withdraw contributions at any time without paying taxes or penalties, we plan to do that when it comes to paying for college. What our kids don’t use, we will have left over for retirement. Granted, we also max out our 401ks and will have a pension so we have other sources of income for retirement and are not just relying on our Roth IRAs, but for people who have 401ks, I think Roth IRAs might be a good alternative to 529s for saving for the kids college.

  30. J says:

    Jennifer and Maureen — The most important thing in a child’s life is a parent. Many, many studies have been done that show that daycare or not doesn’t matter one whit. Plus, at probably two or three years old you send them off to some sort of preschool, as well. Also, it may be that Trent and his wife need to both work to live, and daycare is a necessity. It seems that Trent is very interested in the lives of his children and is “there” as a father, so if they spend some time at day care, then so what.

    You also fail to consider the effect on Trent’s marriage if he worked nights to stay home with the kids. He’d have less time to be with his wife alone. I know I need time with my wife, alone, as an adult. Arranging everything around the kids would mean he’d be “working” from probably 7 AM till 11PM, with no time for this valuable down time. That’s a way to grow apart, not together. In addition, his wife would work a full day and then have to take care of the kids, cook, clean up and then fall into bed exhausted at 11pm.

    Kids are important, yes. But YOU are important, as is your spouse, not to mention friends and family. Like anything else, it’s a balancing act, but I’ve seen time and time again that putting everything towards any one of the above inevitably leads to disaster.

  31. J says:

    Jennifer and Maureen — The most important thing in a child’s life is a parent. Many, many studies have been done that show that daycare or not doesn’t matter one whit. Plus, at probably two or three years old you send them off to some sort of preschool, as well. Also, it may be that Trent and his wife need to both work to live, and daycare is a necessity. It seems that Trent is very interested in the lives of his children and is “there” as a father, so if they spend some time at day care, then so what.

    You also fail to consider the effect on Trent’s marriage if he worked nights to stay home with the kids. He’d have less time to be with his wife alone. I know I need time with my wife, alone, as an adult. Arranging everything around the kids would mean he’d be “working” from probably 7 AM till 11PM, with no time for this valuable down time. That’s a way to grow apart, not together. In addition, his wife would work a full day and then have to take care of the kids, cook, clean up and then fall into bed exhausted at 11pm.

    Kids are important, yes. But YOU are important, as is your spouse, not to mention friends and family. Like anything else, it’s a balancing act, but I’ve seen time and time again that putting everything towards any one of the above inevitably leads to disaster.

  32. JS says:

    How is “Guiding your children through to adulthood with proper skillset” related to “Being able to pay for their college education”? Do you think that if they graduated with student debt, they will be less skillful or they would have less opportuniites?

  33. Laura says:

    I also completely disagree with this post. He assumes that any money you put into “retirement” will only go toward yourself. In my life, as a recent college grad, I have benefited from the generosity of friends and family members who have prepared well for retirement, as they have more available funds now to give toward school, books, etc. “Retirement” funds you set aside, if you prepare well, could go toward anything you desire, including your childrens’ loans or ongoing education expenses. A little delayed gratification on their part might do them well.

    In addition, my husband and I are learning to pay off school loans and budget responsibly and we are glad that our parents are preparing for their retirements. Knowing they’re financially secure alleviates our financial uncertainty about if we’ll have to provide for them in the future, too.

    Retirement first, education second.

  34. Connie says:

    @johanna–“if a person’s personal values do not include giving his kids the best shot in the world that he can reasonably afford to give them, then maybe that type of person should not have kids.” WORD.

    @battra92–I think you’re being a bit narrow-minded when you talk about the “rich kids” at college. While admittedly there are a lot of spoiled kids who don’t appreciate the generosity of their parents in paying for college (I know, I go to school with many of them right now), not all students whose parents pay for school are like that. Imho, the ideal situation would include a combination of parent contribution, student loans, and student contribution. That way the burden is divided and kids appreciate the expense of college and the help they are getting from their parents. I think it makes kids value their education that much more.

    While I agree that the amount put into retirement and the amount put into college savings should be unique to each family, I strongly believe in putting at least SOMETHING aside for your kids’ education. College is hideously expensive, and even if you strongly encourage your kids to attend higher education, the enormous expense can be emotionally and physically daunting (I have a friend who is literally going grey from stress and exhaustion trying to complete her academic work while balancing 2 jobs) and can definitely affect viable choices for school. I’m not saying that this is necessarily wrong, but I think that if parents can in any way spare their children some of that burden, they should. Plus, putting a little bit away for college sends a strong message to your kids that you value their future and that their education is important to you. Relieving some of the monetary burden can also widen their choices of schools, enabling them to attend a college that best suits their needs.

  35. guinness416 says:

    Seems perfectly reasonable to me. It’s not forever, by the time your kids are up and out you’ll be in your forties, right? That seems like plenty of time to save for retirement.

    Jennifer/Maureen – are you insane? Trent isn’t a stay at home parent, he has a job. It’s pretty insulting to assume that he can knock out this blog and whatever other things he does to make money in between the needs and whims of a couple of toddlers.

  36. Rob says:

    I would sacrifice everything I have to put my son through private school, then college.

  37. Des says:

    Don’t be a martyr. If you don’t save for retirement and maintain outside interests other than your children you WILL be a burden to them when you are older.

    If you MUST choose between the two, it would be better that your children be burdened by working their way through college while they are young and single as opposed to having to take care of you when they are middle aged and trying to raise kids of their own.

    You have a responsibility to them beyond age 22. Saving for retirement is an investment in their long term future as well.

  38. todo es bien says:

    I do not suppose I “owe” my daughter anything, though she didnt ask to be here(neither did I for that matter). On the other hand, because of the way I feel about her, I want the following for her: get the kind of education she wants to get without sacrificing her future, buy a home without an onerous mortgage, and have a small nest egg. I do not owe her anything, but because of the way I feel about her it is how I want to spend my money. I am willing to sacrifice plenty of financial pleasure right now to assure the future pleasure of helping her enjoy her life. I wish I could do more.

  39. CBus says:

    As a recent graduate, I resent several of my coworkers for complaining that they just wrote another tuition check for their kids 5 semester and they have to keep sending money to their kids for ‘rent.’

    Any college planning my parents did disappeared in the ’99-’01 tech crash. As soon as I found out I wasnt going to be skating off to the college of my choice, my focus became laser sharp on how to raise the money to go there anyways. I applied for every single scholarship imaginable and ended up fully financing my college years with scholarships and stipends. And I worked my tail off to maintain my eligibility requirements and ended up graduating without student loan debt and the choice to pursue a military career as a commissioned officer.

    If not for that situation, I doubt I would have worked as aggressively, not only to get funding, but also on my schoolwork. It was a wake up call to the real world.

    I plan to secretly save for my kids’ education, but I think they could learn a very valuable lesson through internalizing the costs and benefits of secondary education. I see more often than not that kids with daddy’s money take it for granted.

  40. Jessica says:

    My parents helped some with my undergraduate education, but most was paid through scholarships and loans. I’m actually fine with it, and paying a loan payment every month is a great way to learn responsibility. If I ever have children and its possible for me to pay for their whole education, it will be in an interest free loan. That may sound harsh, but I know kids who got a free ride, and there still a mess, while I’m one semester from a Master’s degree. That to me, is more important than graduating without student loans.

  41. Marc Rohde says:

    The point of saving for retirement before college is that you can’t provide financial stability for your children if you can’t give it to yourself. Too many parents put all their efforts into their child savings and forget that they have long term needs.

    The first reason to not save for your child’s eduction, especially not in their name and certainly not in a 529 is 100% of that money will be considered when qualifying for financial aid. You may disqualify your child from grants and scholarships based on financial need even if you can’t pay for the full ride.

    Next, education remains a valid reason to withdraw money from an IRA. If you put the college savings in an IRA in your name you can use the money at a later date for tuition. The funds aren’t earmarked for education but you can still choose to help your child out.

    Finally, you child may not choose to go to college or may be willing to make the sacrifices without your financial support. Not every child wants or needs a hand out from their parents and will be more successful for not taking one.

    I’m not implying that one should not save but the idea of saving for your child eduction seem useless if it means sacrificing your future when there are penalty of opportunities to use retirement funds (if you can afford to) or get financial aid because you have not earmarked funds for your child’s education.

  42. Sherri says:

    It sounds like everyone commenting on this story has a lot of theory and not very much reality! Most comments seem to be from people with no kids or younger kids.

    We have two kids in college this year. We always promised them we would pay for their college. We paid off our mortgage early, so now tuition is our “mortgage payment”.

    Now for reality: The kids don’t seem to work that hard on our dime. No one seems to graduate in 4 years.

    If I had to do it over again, they would have to contribute more and know what they want to do. I think my generation of parents raised kids thinking they are owed a handout. I’ll report back if they ever become self-supporting responsible adults :) (that is my goal)

  43. Susanne says:

    We will help our son as much as we can, but it’s likely he’ll need to fund a good portion of his college education himself. Our priority is setting ourselves up for retirement so that he never has to worry about us. That is what my parents did for me, and I so appreciate it now. They have the means to support themselves for the rest of their lives, thereby allowing me and my husband to focus on our own financial goals, needs, etc.

  44. Rob says:

    There are pros and cons to all debates. Most arguments have valid points on both sides. I am 43, and my son is 2. It’s not about me anymore. It’s all about him. I will do what it takes to put him through school, and then college. I would rather live in a one room apartment, financally ruined, knowing he has the basis of self sufficancy, and one heck of a start in life, than being comfortable, and watching him with low paying jobs, struggling to get by. He is in montessori, will go on to private high school, and hopefully chooses college. If not, his choice. I have lived long enough to have seen the uneducated, the educated, and the lucky. I prefer him to be educated. He will have that chance.

  45. Michelle says:

    I also completely disagree with Trent here. I think kids/teenagers need to make real world decisions. My husband and I are saving a bit for our kids to go to college, but in the end it won’t be enough. They are going to have to decide how they are going to pay for the rest. Will they go to a state school where the money we do have will go farther? Or a private school where it will pay for far less? Will they go to school part-time? Work? ROTC? I think these kind of decisions help kids grow up and develop maturity.

    I don’t do everything for my 3 year old, I make her do things on her own so she’ll learn. Why would I do anything different with an 18 year old?

    I even disagree with setting aside money to pay for everything educational that comes along. I want my kids to be well-rounded, but part of that ccomes from understanding that we can’t do everything we want, and sometimes we have to work for what we get. I worked through High School so that I could partipate in other activities, and even though my parents helped when they could, most of it came from my pocket. If I wanted something I was expected to pay for it, not just go to the MOM ATM.

    THOSE are the kind of life skills I want to give my kids. No playing the Oboe (no offense to any Oboe players out there!).

  46. J says:

    Rob — have you ever considered that by giving up so much you might be doing your child a disservice? I am thankful to my parents not only for helping me out with college (they paid some, I took out loans, and I worked the whole time I was there), but also because they taught me

    frugality — making your money work for you

    how to fix things — saves money on hiring out

    the importance of work — paper routes, odd jobs, regular employment, commitments made are commitments kept

    the importance of sacrifice — saving now to enjoy something later

    Sometimes the more valuable lesson is in NOT getting something, not in getting it — because it makes you figure out how valuable whatever you want really is. Working minimum-wage jobs in high school was a powerful incentive for me to work to get to a better place in life. It becomes painfully obvious that for the vast majority of people, dropping out of high school and not going to college (or trade school) is not a route to success and security. For every one person who “makes it” as a high-school dropout, there are a thousand who never are able to get ahead and realize their mistake when it’s far too late.

    I’ve seen too many kids become entitled because their parents put them up on a pedestal and give them everything they want and more, so they don’t have to “struggle” — which means that the child never has to make a difficult choice until they are much older.

  47. Mule Skinner says:

    Presumably when your child goes to college you will still be earning. You can therefore help “in the moment” using current income. When you retire you are by definition not earning.

  48. GEoff says:

    “my children will be able to get all kinds of assistance for their college education, while I won’t be able to get any sort of aid for retirement.”

    Okay, in most cases this is blatantly untrue. Most of us will tap Medicare, Medicaid, and Social Security to partially pay for retirement. The same way that I tapped Perkins Loans, Pell Grants, etc to pay for college and then still had to throw extra money on top.

  49. J says:

    GEoff —

    Most retirement planning takes into account those programs already. And in the case of Social Security especially, the amount of money you receive is most certainly not sufficient, you need income from retirement savings and investments (bonds/interest/CD’s).

    In addition, these programs are likely to be revamped at some time in the future since the money going in is not equal to the money going out. The most conservative route for retirement planning it to assume it won’t exist at all.

  50. partgypsy says:

    This is all about values. For Trent (and myself) a very big value is that my children get a college education. Yes, putting aside money for retirement does come first but I would rather save money for my children’s education than at this point give them more toys or expensive vacations. And college is so expensive even with my best intentions my children will have to take a vested interest in their education, through scholarships, work-study, loans or some combination. From my own experience I don’t think that having parents help pay for college makes one a “lazier” student. On the other hand poor financial planning may prevent an otherwise bright young adult, in light of the daunting cost forgoe an education and enter the workforce directly.

  51. guinness416 says:

    Some of the bitter sounding opinions in these comments are a bit much. My parents didn’t pay for my college education – tuition is taxpayer paid where I come from and I worked for spending money – but the sweeping statements here are ridiculous. Not everyone who gets parental help is a bum and not all the up-by-my-bootstraps boasters are hard workers, seriously.

  52. J says:

    @guinness416 – it’s the Internet, that’s what it’s for!

  53. Mule Skinner says:

    When my son was ready for college, we had saved nothing for it. Nevertheless, I told him “get into the best college you can, and we’ll find the money”. He got into MIT, and had a scholarship that paid about one-third of his expenses. We took out a “parent loan” that covered the second third, and paid the final third from current income. The parent loan was for a longer period than his time in college. I made the payments while he was in school, and asked him to take over afterward. Effectively, his debt on graduation was about 1/6 of his overall college cost. He paid that down in three years.

    I now have a keen daughter coming up on college in three years. I’m going to tell her the same thing “get into the best college you can and we’ll find the money”

    Retirement? Well, if I fall into the poorhouse, I will have three supereducated kids paying taxes to support it.

  54. Kevin says:

    I’ve gotta disagree with Trent on this one. Here’s why:

    Let’s assume I have a child who is of college age, born when I was, say, 25. I’ve just spent 18 years supporting him, providing for his every need, ensuring he has food, clothing, shelter and some luxuries as well. During that time, my earnings weren’t as high, so I had to put aside my own wants and needs to met his. To be sure, my earnings grew during that time, but so too did the costs associated with his needs.

    Now I’m 43, I have another 22 years of work ahead of me before retirement. Sounds reasonable, I should easily be able to sock away several hundred grand. But will that be enough by the time I retire? And, what happens if I become ill, get laid off, or some other calamity strikes that prevents me from working until age 65? Will I have enough to live on?

    Meanwhile, my child exits college debt free (thanks pop!) and begins working, marries and the cycle begins again. I would like to think that he would return the favor and help me out if something untoward happens, but isn’t that really unlikely? After all, he’ll be putting his meager earnings into building his own life and saving for his child’s education. If he does help me out, will he have enough to put back for his own retirement?

    What I see is a cycle that not only doesn’t end, but becomes increasingly difficult to maintain. Sounds kinda like the current economic situation doesn’t it?

    You see, the biggest problem in my eyes is that should something disasterous happen to me, there are few recourses. I couldn’t put things off, borrow my way out of it, or get a grant, scholarship etc. The responsibility for managing that situation is solely mine. So, if I put money away for my own future, then at least if something calamitous happens, I’m protected.

    But what about my child’s future? He can put off school for a few years, if needed (I did). He can work to pay for part of his schooling (I did). He can apply for scholarships, loans and grants (I did). And, he’ll have longer to pay off any debts he incurs. Moreover, having not had his education handed to him, he might just be a bit more appreciative of it!

  55. guinness416 says:

    I hope it’s just the internets J! All these commenters muttering under their breath and scowling darkly at their parentally-funded coworkers may be badly impacting their real life!

  56. Brent says:

    I think there are some good comments here. I think as always a balance needs to be struck. My parents payed for the bulk of my education because it was a cheap school. I got a small scholarship and held onto it. Later in school I paid for more and more myself. I started paying all the extras and the last year I was told to chip in on the room/board too. I always valued my education, but dropping out once I chipped in my own dollars was just out of the question. I think that making your children at the very least get a loan for it (assuming they have the sense to not like being in debt) Is perfectly reasonable. An increasing gradient lets them wake up to the real world while working at the university part time job. Also if the kid comes with a request for more money, it doesn’t hurt to ask to see their budget(they have one right?)

  57. Johanna says:

    It sounds really nice to say things like “You appreciate an opportunity more when you struggle to pay for it yourself” and “Kids only learn good financial sense from taking on financial responsibilities” but I think that in the case of college, there’s a point beyond which these things stop being true. College is *such* a huge financial responsibility that simply throwing it on a child with little or no preparation could really be counterproductive. The kid might think, “Oh well, I’m going to be massively in debt anyway, so why should I bust my tail to be (say) $30K in debt instead of $40K in debt?” On the other hand, if busting your tail means the difference between being $5K in the red or $5K in the black, that can be a lot more motivating.

  58. harry says:

    just fyi trent, the rss post for this post got the link botched and the whole post gets underlined like a link.

  59. Sarah says:

    I’m always amazed by these parents who think that if they don’t dump responsibility for raising six figures or more for college onto their child’s lap, the child won’t appreciate college. Exactly how bad a parent are you planning to be, to raise a child too apathetic to work at college because they enjoy learning and too useless to work at college to build their career? Maybe instead of begrudging your kids money you should try teaching them a value or two.

  60. Steve says:

    My parents didn’t save much me going into college. I paid through a combination of scholarships, grants, loans, work, and money my mother squeezed out of her current income. My wife’s grandparents and parents saved for her education, and so my wife didn’t work during school and didn’t have any loans when she graduated. Out of the two of us, my wife is by far the harder worker. There may be a correlation between those who get a free ride through college and those who slack off during that time period, but that doesn’t prove correlation. There are so many other factors at work in a person’s personality.

    I definitely believe that saving for your retirement is a higher priority than saving for your kids’ education. As some commenters have mentioned, money saved for education may actually end up not worth much at all, because it is taken into account when deciding how much aid a student gets. So you end up with no savings when your child graduates, all for naught.

    However what I do think is that saving for your child(ren)’s education is more important than a lot of the other things we all waste our money on. Saving for retirement is more important than saving for college, but saving for college is more important than drinking a latte every day or having the right flat screen tv for your superbowl party.

    Also, It’s a LOT easier to say “I will live in a shack in my retirement and eat only cat food” than it is to actually give up something today, in the present. You’re basically sticking it to your future self in the shorts, just so your present self can feel better about living up to some arbitrary values about their kids being more important than anything else, no matter what.

  61. partgypsy says:

    I wanted to point out from what I have read (correct me if I’m wrong currently 529 plans are treated as asset of the account owner (parent) and not beneficiary, therefore have a low impact on financial aid. Even if it was considered the child’s asset it would be assessed at 20%, not 100%. There is legislative talk of changing 529s to not be considered at all in financial aid elibility, to encourage saving for college.
    But you are true, if money is saved in a retirement account that money is not taken into account in financial aid calculations at all and so is the most conservative way to avoid being dinged.

  62. SP says:

    Always a touchy subject!

    If you can afford to (and by afford, I include “make sacrafices in order to afford”), save for your kids college, but first be sure they won’t have to care for you if you get too old to work.

    If you can’t afford much, PLEASE help them make smart choices to minimize their loans and the burden. Be knowledgeable about schoalarsihps and financial aid, try to stop them from going 100k into debt to be a kindergarden teacher. You can have a fine life going to a state school if you are focused on your long term goals.

    Most of all, support them emotionally. My parents didn’t pay for my college (and they sent me to daycare!), and my little $120/mo low interest payment is not a burden considering my career. The most important thing is, they always supported and encouraged my education, even if they didn’t pay my tuition.

  63. GEoff says:


    “the amount of money you receive is most certainly not sufficient, you need income from retirement savings and investments”

    Yes, this is exactly my point. In the same way grants and scholarships are generally not sufficient to pay for college. You need to supplement this with either savings or bank loans. In my case my parents were poor and so I qualified the maximum amount of federal loans and federal grants. I went to community college for two years to reduce my college costs, qualified for a President’s academic scholarship, went to a school that cost $13k a year, and still ended up with $20k in unsubsidized bank loans.

  64. J says:

    @GEoff — I totally agree with you that both retirement and college savings are things best approached from a point of view of “how many little things can I put together to reach this goal”?

    When my kids go to college, I expect that their education (and I’m using the term to mean all aspects of going away to school — from tuition to beer money) will consist of a mix of
    – savings/investments (from me)
    – payments (from me)
    – savings (from them)
    – payments (from them)
    – grants
    – scholarships
    – loans
    – other sources I can’t count on, like GI Bill, ROTC, contributions from grandparents, etc.

    Similarly, retirement will likely look like
    – Medicare
    – Social Security
    – Dividends (from investments)
    – Interest income (bonds/cd’s)
    – Savings
    – Side work/consulting (maybe)

    and (right now) Medicaid will be my healthcare

    However, I don’t have the option of adding income via loans, grants or scholarships, and I may or may not be able to work. But prudent planning is needed in either case to assure that retirement brings you the lifestyle you want — you likely have worked probably for 50 years, and won’t have too much time left!

  65. Andrew says:

    I’ll throw my hat in with those that disagree with this post. I think contributing towards your childrens education is fine, but they should have some responsibility for it too. If my kids put money into their college fund from their allowance I tell them I will match them dollar for dollar. I contribute towards there college fund in addition to that but I am not going to give a “free ride” through college.

  66. KC says:

    I’m 35 and when I was growing up many parents felt it was part of their obligation to pay for their child’s education. But even 20 years ago it was far cheaper to send a kid to college than it is now (adjusted for inflation). But I was still expected to choose an affordable college, as well as expected to apply for as much financial aid/scholarships/grants as possible, and work to pay for some of the expenses and extras I might incur.

    But the “obligation” to pay for a child’s education is a much greater burden today. Even public colleges can get costly, quickly. Parents want to contribute and probably should. But the burden can’t be on them alone. I think one of the biggest mistakes a parent and/or the student makes is choosing a private school they can’t afford. I went to public colleges (1 undergrad, 2 grad) and so did my husband (undergrad and med school). All of our friends that we have kept up with from college are quite successful (and some are wealthy) despite going to public schools. I really can’t imagine why anyone would choose an expensive private school over a public one w/o considerable aid being offered by the private school.

    So if wise choices are made the parents should be able to save for both retirement and school – w/o either being too great of a burden.

  67. We’ll save what we can, but our retirement will come first if we have to choose.

    Our kids can go to the community college for the first two years and live at home to reduce expenses. And they can take some time off to work if they need to.

    Of course, if we have the money to help them when they’re college age, we will, but it won’t be 100% and it won’t be at the cost of our retirement.

  68. Meg says:

    It’s all fine and dandy if you can’t/won’t pay for your kids’ post-secondary, but don’t tell them it’s all covered and then wait until September to tell them you aren’t paying a dime… this is what my parents did. Add to that the fact that I was not allowed to get a job during high school, since they thought it would adversely affect my grades (which would prevent me from getting into top schools which I got into but cannot afford). This has made paying for college a frustrating experience, even with scholarships and a very tight belt. Make it clear to your kids very early on how much support they can expect from you, and make sure you follow through.

  69. Johanna says:

    Sarah, SP, and Meg: Good points, and well said.

  70. I have to be honest, I think that a parent should not finance a child’s life entirely. I am in college right now and I see the people who don’t have to pay for their education. They get poor grades and don’t try hard. Why should they? They don’t have anything to lose, it isn’t their money, so big deal. Mom and dad keep handing out money in hopes of doing these kids a favor and it backfires.

    Helping a child pay for education is important, but it should come with some sort of obligation from the beneficiaries, maybe a part time job or summer job and paying a portion of their tuition and living expenses while maintaining a certain GPA.

    Trent, I know your heart is in the right place and I don’t question that your parenting abilities will no doubt create fine human beings, but be careful of the golden spoon syndrome.

  71. Ken says:

    I love this old clip from the Cosby Show.


    Has nothing to do with saving for college vs. saving for retirement (both are important!), but imparting the worth of a college education (or other post-high school education) to a child is a very important point…

  72. Jess says:

    Just to throw my 2 cents into the ring:

    Started college when I was 17 with zero assistance from my parents (just wasn’t feasible; we were pretty poor). I worked three jobs (at one time), crammed as many hours into each semester as I could (usually 18+), and worked my bum off to get as many scholarships, grants, and loans as I could.

    I did it.

    Was it hard? You bet. There were many moments when I thought I’d never make it and when I was so tempted to throw my hands up in the air.

    But now I have a great job in my area of study (fine arts!) and a whole lot of gumption/character/smarts that I don’t think I would have developed with parents paying my way.

    7 years post college degree, I look at my high school peers–most of them are just now learning the financial lessons I learned my second year in school. (You can’t buy $300 jeans on a grad student budget, for instance.)

    Parents, if you’re saving for your child’s education, just remember that in addition to helping them financially, you must also help them learn to help themselves.

  73. Connie says:

    @everyone who seems to think supporting your children financially through school leads to spoiled brats

    I would just like to point out that not all kids are the same. Yes, some will behave immaturely by wasting their own opportunities and their parents’ money by slacking off in college. However, paying for your child’s education does not necessarily make them spoiled or think that they don’t have to work as hard. In my opinion, ungrateful children can be a result of parents failing to teach their children respect and compassion. My parents are paying for ALL of my private school tuition and the knowledge that they are shelling out over $48,000 a year for my education has the opposite effect on me that many commenters believe is a natural response. I am deeply appreciative of the help I receive from my folks and it makes me work MUCH harder knowing that any slacking on my part would dishonor the sacrifices my family has made on my behalf. My parents’ confidence in my abilities and my judgment and their wholehearted desire to give me the best opportunities they can has bolstered, rather than detracted from, my sense of personal responsibility.

    That’s not to say that they are constantly trying to make me feel guilty or indebted to them. Quite the opposite. They did their best while I was growing up to teach me that everything has a cost and included me in discussions on family finance so that I felt connected to our family’s future. That way I understood when I went to school that the money we spent on my education was significant, and that failing to try my best to succeed was wasteful and harmful to all of us. Once this idea was established in my mind, they backed off, letting me pursue my education while constantly reaffirming their support and love.

    To sum up, each child is an individual. The behavior generalizations rampant in the previous comments fail to take into consideration the many personalities involved (of both the parents and the children). Both of my sisters and I were fully supported by our parents through college without negative results. While this may not be the case for everyone (after all, my point is that no generalization is accurate), it demonstrates that if you DO choose to pay for your child’s college education, it is NOT a guarantee that they will come out of the experience with poor academic performance or a rotten attitude.

  74. Alexandra says:

    I’ve just finished the paperwork for my little angel. Yes, 529s are in the parents’ names, if you set it up that way. As little money as possible should be in the child’s names but 529s are fine. UGMAs and UTMAs are in kids’ names. I think it’s fine to have kids participate in their own education, but remember it is MUCH more expensive proportionally than it used to be. When I went to a state university years ago, a kid could work full time at minimum wage and pay tuition and for living. Now, it costs $20,000 to go to a state university–twice as much as one year at minimum wage. A private college used to cost roughly the same as an average car (say about $25,000 today). Private colleges are now $50,000 a year. Also, kids get scholarships or not based on what parents make. So if you are middle class and you don’t help your kid at all, you are really screwing them up.

  75. Alexandra says:

    I also agree that Trent should not watch his children while trying to write. Let him do his job, which is hard enough, then pay attention to his kids when he’s with them. It won’t kill them to play with other little kids their age for a few hours a day–it’s probably great for them!

  76. Elisabeth says:

    @Mule Skinner who says “Retirement? Well, if I fall into the poorhouse, I will have three supereducated kids paying taxes to support it.”

    Do you really think your three supereducated kids are going to let you survive on government assistance?

    If the parent doesn’t save enough for retirement, the kid(s) will wind up supporting the parent. Then EVERYONE is struggling to pay for retirement.

  77. partgypsy says:

    Not to hijack this thread if you had a choice would you put $200 a month towards college funds, or $200 extra per month for mortgage. If we do the first we will have ? depending on how the stock market performs to apply to college. If we do the latter our house will be paid off just in time the first goes to college, and would apply current salary towards helping with college. As we are planning to help with college either way, which do you think is a better “investment”?

  78. Michele says:

    I haven’t read through all of the comments, but how many of you not wanting to pay for a child’s college are taking into account the fact that your children will be forced to put your information on their FAFSA applications. Its almost impossible for people under 25 to be considered “independent” these days, and if you’re doing well financially, your child will pay for it out of pocket.

    I’ve heard horror stories about people struggling to pay their way through college because the government assumes by default that parents will contribute.

  79. Amy says:

    I just want to say thank you, on behalf of your kids. My parents saved to make sure they could pay for the bulk of our educations, and I can tell you, we had it a lot easier starting our adult lives because of it. I did get some small scholarships, and I did work a part-time job in college (10 hours/week) for spending money, but I did not graduate college with mountains of debt that I would be paying off until my forties. Let’s face it, most kids will need to go to college to make a reasonable living. Parents who realize that fact up front are that much ahead of the game.

  80. You’re no good to anyone if you can’t take care of yourself.

    You sacrifice your retirement for your kids education, but then your kids – swimming in debt – have to take care of your retirement because you put others ahead of yourself.

    I’m with Trent, but perhaps there is a balance between saving for retirement and college. I still think saving for retirement would be the financially smart move – but saving for college would be the choice I make.


  81. rob says:

    I have read all the posts. I m objective to all that wrote. But I still say that my child comes first. He is the most important. His future is the most important. He is the focus. I am done being selfish. Remember not all parents, just like like cops, judges, and lawyers, graduated at the top of their class.

  82. Courtney says:

    I have to agree with Maureen and Jennifer. I bet that if it was Trent’s wife staying home to be a professional writer, those kids would be staying home with her.

    And you know what? I have a toddler at home with me and I still manage to work from home, pulling in some serious dough. It can be done, without a SuperNanny.

    I work before she gets up, when she naps, and after she goes to bed. So do most of my female peers.

    There have been many studies done, but the dirty secret in academia is that daycare is only beneficial to children of the lower socioeconomic class. Children of the upper socioeconomic class in daycare actually do worse than their stay-at-home peers. It’s the quality of the parenting that counts, and nobody wants to admit that publicly. See also:

    Positive Discipline: The First Three Years
    Elsewhere, U.S.A.
    Emotional Life of the Toddler
    A Toddler’s Life: Becoming a Person
    Montessori from the Start: The Child at Home, from Birth to Age Three

  83. Trent: I am astounded that you would use the term “canard” in characterizing the concept of saving for retirement as a priority that ranks above saving for college. Most Americans do not have enough income to successfully do both. On top of that, there are way too many people going to college for the wrong reasons and at too great an expense. The “canards” are that college is for everyone and that parents must sacrifice to provide it. On the other hand, retirement is inevitable, whether you are prepared for it or not.

  84. Rachel says:

    We never saved for our children’s education. We were young parents, and money was always tight, and it just did not seem that important. I am glad we did not. Our 27 yr. old son had a scholarship that paid 75%. We paid for his books and he went and got an AA. Our daughter did not have a scholarship and she went to the same community college, but only for three semesters. Even though we paid her tuition and books, it was not outrageously expensive. Our 15 yr old shows not interest in college. We are just trying to get him through high school. Now we are concentrating on retirement, and it is discouraging to see the losses our 401K’s have suffered. Still I would not do anything different.

  85. lindsay says:

    I think a lot, maybe most, of this discussion should center on the age of the parents at the time they have children, and, of course, how healthy their financial situation is when they begin bearing.

    It seems obviously to me that if you’re an older parent (as many, many today are), you need to save for your own retirement. Not that anyone is entitled to a “retirement,” but we do live longer today because of medical advances, and we are not likely to be physically or mentally able to work in our later years.

    Kids, OTOH, can attend state colleges or universities and can begin saving for those insignificant (IMO) fees by working in high school and putting away their earnings. It’s very inexpensive to attend a public university.

    I agree that having to get student loans is a tough option. We didn’t finish paying my husband’s off until our older son was 12. Our kids were allowed to live at home while going to public university (both did) and both graduated without any student loans. It can be done. But we had our children younger (in our 20s) and still couldn’t afford to put money away for their education OR our retirements back then because of our debt, though there was no such thing as IRAs, SEPs or 401(k)s then. :-(

  86. KoryO says:

    It wouldn’t be a proper “saving for college” post on the Simple Dollar without a few gratuitous swipes at people lucky enough to get their tuition and expenses paid for by mom and/or dad, would it?

    Yep, I got that. Hate on me all you want. I hope to do the same for my boy, and if we are lucky enough to have another, for him/her too. I don’t think I was alone in appreciating what my parents did for me at the time, and I appreciate it more and more each year. I was able to save up for retirement at about the same time my peers were paying for college, and even with the market meltdown I’m still way ahead.

    I will save what I can, and encourage them to go to the local public university (since very very few private universities are worth the premium price) after completing the pre-req’s at the local community college. Hopefully that will cover it, or most of it.

    Then…..I’m starting to save for the grandkids. ;)

  87. rob says:

    Courtney….you have said it all in one sentence. Its the quality of parenting. Thats the bottom line.

  88. Cake says:

    “Its the quality of the parenting. That’s the bottom line.”

    I think that is the bottom line in the discussion on spoiled vs hard working children and the discussion on stay at home vs day care.

    It seems like many people will not save for their child’s education because their child will then be spoiled and ungrateful. By the time your child goes to college they will already be or not be spoiled and ungrateful children. That is a lesson they should be taught long before they are 18.

    I think every parent wants to raise their children to be adults with integrity. There is no one way to do this. It can be done with much or little money and much or little time; it is all about quality not quantity. There are successful adults out there with varied backgrounds: College, no college, day care, stay at home, rich, poor, middle class. There are unsuccessful adults coming from the same places. What values are important to your family and how are you going to pass those values on to your children? These are the lessons that will inform your child’s adult behavior.

  89. Anitra Smith says:

    We have a 6-month-old, and we have agreed that we can’t really afford to put aside money for her college education until we are done paying for our own (especially now that we are a one-income family). We both went to a private university, and graduated with a lot of debt.

    I also have elderly parents; although they can provide for themselves, seeing how much everything costs them has impressed upon me the importance of saving for retirement.

    That’s not to say we don’t have ANY savings for our daughter – we opened her a savings account as soon as she had a Social Security number, and any gift for her we’ve deposited directly into there. Once she’s old enough to understand, we’ll let her have a portion of monetary gifts to buy toys with, but most of it will still go towards savings.

  90. PirateKitty says:

    It’s an interesting debate.
    I don’t have kids, but to me it would seem foolish to neglect your retirement for your childrens’ education.
    The best gift you can give your kids is to let them live without the stress that they may have to take care of you financially one day.
    My parent’s are not yet at retirement age, but I seriously worry about how they will afford retirement. They’ve worked hard all their lives, but didn’t really focus enough on future planning. Mind you, they didn’t pay for my education either (they didn’t have the money), but if they had been able to I’d have told them to keep their money and save me the worry later.
    Personally, I think there’s a certain amount of pride and work ethic gained in covering your own education through loans and scholarships, that can’t be bought by a parent paying tuition.

  91. marie says:

    Please keep in mind that it is not just your own retirement that you are funding: it is also your children’s peace of mind. I am 35, and my parents are retired and self-sufficient. They are not rich, but they have saved enough money to take care of themselves. Barring a complete meltdown of society, I will not have to support them. They have given me some lovely pieces of jewelry over the years, and they have taken me and my DH on some fantastic trips, but the absolute, positive best gift they have ever given me is the knowledge that they have planned for their old age.

  92. Leah says:

    I really like this post — it encourages folks to think about what is best for them. My parents taught me the value of money early; we sat down and talked about credit cards, savings, etc. When I got my first job, my mom took me to the bank, helped me start an account, and had me put all the paychecks in there. By the time I got to college, I was already fiscally responsible.

    I earned some scholarships, and my mom paid the remainder of my tuition (~45% of private school room and board, or about $14k a year) by working overtime and being thrifty. I still thank her on a regular basis for releasing me from the burden of student loans; I’ve been able to pursue opportunities and low paying jobs that have enriched my life but not my bank book. And thanks to the lessons in being thrifty, I still put away money every single month no matter how little I am making. When I wanted to switch jobs to something lower-paying but much more satisfying, I knew I had to pay off my car loan, so I tightened my belt and took an extra job for a month to pay off the loan two years early and allow me to switch fields.

    For my family, having undergrad tuition paid for was part of a larger overall plan of fiscal responsibility. All that is expected in return is that I do the same for my kids.

  93. al says:

    if you are going to pay for your kids’ college education, please at least engage them in conversations about how you planned for and managed that…make them appreciate it. the kids who didn’t “get it” made the absolute worst roommates…i couldn’t believe the sense of entitlement from some of my college peers! yeesh

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