Why You Shouldn't Be Saving For College
Recently a financial planner who works with new parents (See: “You’re A Parent, Now Plan”) said something that surprised me so much, I'm still thinking about it: The biggest mistake many parents make is to immediately save money for their kids’ college. It seems crazy to not start preparing for school costs right away. Some schools are charging more than 50,000 a year in tuition and fees alone. Then come textbooks (See: “Be Smart: Save Money On Textbooks”) and a computer. While a cheap Dell might do, many students want an Apple. It all <a href="http://www.cheapnorthface-outlets.com"><strong>cheap north face</strong></a> adds up. That’s why when you have kids, "the first place people look to is college funding," says Certified Financial Planner Kristin Harad, founder of VitaVie Financial Planning in San Francisco. It's understandable to want to start there, it's a new savings goal just for your child. "But you really need to back up," she says. Before you start putting aside money to pay for Harvard, you need to have a few other things taken care of. First, you need an emergency fund that could cover your expenses for five to six months if you were to need that. Second, you need to be on track for retirement. That's because your child can borrow money for college need be, but no bank will lend you money to retire. Try asking Citi, Bank of America, or JP Morgan Chase – and get back to me if you hear differently. Or think of it this way: college may be 200,000 or more, but you’ll need more than 1 million to retire. (See: “1 Million in Retirement May Not Be Enough”) When it comes to <a href="http://www.monclerjacketscoats2011.com/"><strong>cheap moncler jackets</strong></a> retirement, "many people find themselves deficient there," Harad says. "It takes college off the table, or puts it on the back burner." Third, you need to have your budget under control and be spending less than you are making. That may sound obvious, but it needs repeating these days. After saving for retirement, and then paying for housing, food, childcare, life insurance, utilities, cell phones and transportation, <a href="http://www.monclerjacketscoats2011.com/moncler-shoes-c-9.html"><strong>moncler sales</strong></a> many people with seemingly good jobs are living paycheck to paycheck. Then, only after your immediate and long-term needs are met, you can save for college. That may be tough to hear because a lot of people badly want to pay for their children's education and will have to rethink their expectations. You might consider cheaper colleges overseas (See: “Royal College Bargain”). If it makes you feel better, Harad says, put a lump sum in a savings account, then try to make at least one contribution a year. But frankly, you really shouldn't do it unless you've covered all your other bases first.
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