The Importance of Retirement Savings Over College Tuition
For many parents, one of their main responsibilities is to provide their children with as much financial support as possible when the time comes for them to attend college. Whenever possible, parents try to get this helps for their kids without incurring in any debt, but more often than not they have to acquire personal loans to do so. Naturally, helping their children to earn a college degree without needing to worry about repaying a personal loan after exiting their school would be the ideal scenario. But everyone has their own financial circumstances to consider.
Many families start living frugally in order to be able to afford college tuition, which is definitely a worthy goal. However, it stops being worthy if, in order to do this, they have to sacrifice all or part of their savings plan to do so.
Let’s take a closer look at why it is not a good idea to sacrifice your retirement funds or to get many personal loans in order to pay for your children’s college:
Teach Your Children About the Importance of Money
If you have your children pay entirely (or at least partially) for their own college costs will help them tremendously when it comes to learning how hard it is to earn money quickly. It is a proven fact that until we have to assume our own costs and pay our own personal loans we don’t learn how valuable earning money really is. If you teach your children early on to budget for college bills, this will teach them to value the effort you put in paying those personal loans.
Student and Personal Loans for School are Among the Best Investments
One of the best benefits of student loans or personal loans for studying is that they tend to have very low interest rates and beneficial tax deductions. These kinds of personal loans also don’t require students to offer any collateral before getting them. Also, in case anyone in the family needs to get a personal loan, student loans are a great alternative to acquire those funds. In fact, there are some kinds of personal loans, like the ones granted by the Federal Subsidized Stafford Loans and Federal Perkins Loans, that remain completely free of interest rates even up to a few weeks after kids graduate, which allows you (or them) to have time to plan your personal loans repayments.
Don’t Depend on Your Kids in Retirement
If parents have no retirement assets, they can become a huge burden for their children, especially after they exit college, since they will have to tend their parents on top of having to take care of their personal loans repayments. In fact, if you analyze it coldly, it can be a lot cheaper to repay a personal loan after college than it would be to support your parents in their retirement.
Let Investments Grow
Normally, the money you can save or get for a personal loan to pay for college will usually have a much shorter time horizon in your hands than your retirement savings, which should stay with you for years, and even decades, to come. Considering that, you should invest your retirement funds very wisely, and not in paying tuitions. This conservative approach to savings will be beneficial for you down the road and will prevent you from acquiring personal loans down the road if you invest in a sound opportunity.
As you can see, investments and retirement funds go hand in hand, but only when it comes to investing wisely. If it is for education though, as important as it is, you should seek personal loans or other types of fund sources to fund them, since meddling with your retirement fund for this can be risky.