Mostly rational politics, with occasional rants about how a few crazy Republicans are ruining the country.
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Tuesday, May 24, 2005
Why Save for College?
Another of my occasional personal finance moments...
I'm not a huge fan of Suze Orman, but this article makes some sense of a stipulation that others take for granted, namely that you should save for your child's college education.
Why? Hasn't anyone heard of grants, scholarships, and loans? There are so many vehicles available to finance a college education. And virtually no schools these days have need-based admission policies... ie. your child can get in anywhere whether or not you have the ability to pay. So it makes so much more sense to save for retirement and other life events that DON'T have a whole industry built around helping you to finance.
Here's Orman's paragraph:
Don’t save (or save less) for your kid’s college education. I know we have discussed this one before, and I know you may hate to hear it, but this is such a crucial point: you cannot afford to save for your kid’s college education if it means you will be shortchanging your retirement investing. Your child can get aid and loans for college. No one is going to be ready to help you in retirement. I have recently had the opportunity to talk to thousands of young adults in their late twenties and early thirties, and I can tell you that one of the biggest financial frustrations they voiced to me was that their parents weren’t straight with them about the money situation. Mom and/or Dad thought they were being Superparents by paying for a big chunk of school, but now the kids are realizing that their well-intentioned parents are in horrendous financial shape and basically can’t afford to retire. Even worse, many of the parents try to deal with their problem by taking out big home equity lines they can’t afford, or charging up frightening balances on their credit cards. Please don’t do this to your kid. If it’s a question of college fund or retirement fund, the most responsible parenting move is to choose the retirement fund.