I wrote an article on DailyFinance which went live yesterday. It was talking about how I plan to save for college and pull back on my retirement. Now, this goes against all traditional advice. The main reason it does is because there are no student loans or financial aid for retirement. You have what you have invested and earned over your lifetime. I get that. While I understand how retirement works completely, my job as a parent is to provide for my children.
You can go read the entire article, but the main points are simple. I fund my 401(k) up to my employer match. I also have a Roth IRA through Betterment which I do not quite fully fund, but try every year. The reason I do this is I have certain goals for my money. Not everything I have coming in is funneled toward retirement. I also have an individual investment account through Motif Investing and Scottrade. Either way, my money has different purposes at different stages.
My parents afforded me the luxury of going to college with no student loans, or at least not in my name. My parents held the loans in their name. The reason they did this was to give me the best opportunity to succeed after I graduated. I had to keep up my grades, work, and keep on the straight and narrow when I was in college. If I got into trouble or my grades slipped, then there would be repercussions. I understood it and did well in college. I also graduated, got a job, and have held one ever since. I don’t have a job in a field similar to my degree, but that is because I took it upon myself to learn a skill in a field I wanted to be in. My degree got me in the interview and my skills got me the job.
I want to provide the same luxury to my son. I feel my main job as a parent is to provide for him. Not only emotionally and physically, but also teach him how to succeed in life. I want to provide him the tools to make a difference and be a contributing member of society. While there is a massive debate about if college is worth it, I feel it still is. Yes, there are many trades out there which don’t require a degree. Unfortunately, if you want a white-collar job, then having a degree is almost a necessity. I talk with recruiters all of the time who can’t get some of their clients in the door because they lack that piece of paper. I do believe our system is broken, but I can’t change that right now. All I can do is plan for the future. Since he won’t be going to college for another 17 years, all I can do is use the information I have now to look into the future. Where will college educations rank in 17 years? Who in the hell knows.
I will save for my son’s college education. I will still invest in my 401(k), but will roll back my contributions to my Roth. Pushing the money into college is a better investment for my son. He will be required to hit “goals” while in college and probably even work. The main plan is to have him save up for college and then we will contribute $2 for every $1 he saved. Hopefully that will be incentive enough. Since watching over, protecting, and teaching a human life is the biggest investment we will ever make, why not give them the best chance to succeed? Isn’t that the entire point of having kids? It certainly isn’t for the tax benefits. This is just my view point. Yes, I will lose out on some compound interest, but in the grand scheme of things, I am doing what is best for my son. That is my role as a father. I put him first ahead of myself. If we had little food, he would eat and I would wait. That is what a parent does. I am investing in in him to increase human capital.
Before writing my article on DailyFinance, I spoke with some parents in regards to this question. The funny thing was that most disagreed with me. I expected the disagreement, but the funny part was their rationale seemed odd. I asked a few of them if they would die for their child. They answered “yes” without blinking. So, they would be fine dying for their child, but they gave me issues with providing a college education for their child. They didn’t want the expenses to get in the way of their retirement. Unfortunately, those two stances go against each other. You will do so much as die for your child, but you don’t want their education to ruin your retirement. It makes not sense to me. Now, this was just a small sample of parents, but it helped me form my opinion more.
Many of you may disagree with me, but remember I am not forgoing retirement entirely. I am still saving in my 401(k). I also make a good chunk of change outside of my main job. My drive and determination to make more money is ever growing. This extra money affords me luxuries which many do not have. This is the reason why I choose to save for college instead of funneling everything toward retirement. Who ever said you can’t do both?
OK, let the bashing begin. I can take it, I am an adult!
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