Priorities in Saving: Kids' College, or My Retirement?

Q: I need to save for my kids' college, but also for my own retirement. Since you can only cut a paycheck so many ways, I need to start with one thing, and let the other wait. Should I save for college first, since my daughter will be starting college years before I retire?

A: It's a good question. We all want to put our kids first, but the earlier you start saving for retirement, the better. And having put your own need for a good night's sleep on hold for your newborn, giving up many of your 'druthers' during their toddler years, and possibly putting your own career or other dreams on hold to raise your child, it seems natural to put your child's needs first again by saving for college and forgoing your retirement savings for now.

Don't do it.

For one thing, your child can get student loans, work their way through college, or get scholarships and/or grants. None of that can be said for your retirement. Many people have put themselves through college, and came out stronger because they did. But reaching your retirement underfunded is not a good idea. Not only will it leave you in a vulnerable position, it'll put a financial pressure on your child, possibly at a time that he's just starting to build a family of his own.

So, for the good of both you and your child, start saving for your own retirement. As his college years approach, you'll be able to see how--and if--you'll be able to help finance his education.

Recession-Proof Habits
With the economy the way it is right now, you may believe that building wealth is the last thing to be thinking about. However, the economy is ALWAYS going up or down. Right now, we are in a downward swing, yet wealth-building habits are still the same.

So here's a reminder of the number one wealth-building habit: save 10% of your income. Whatever you're earning, 10% goes into savings.

Just a little bit? Maybe. But if you really put that 10% away regularly, in just ten years time, you’ll have a full year's salary put away. Sounds good, doesn't it? Get started!