Comments on: Trading Off Your Financial Security For Your Kids

By: Advanced Personal Finance » Blog Archive » Carnival of Personal Finance #104

Mon, 11 Jun 2007 16:49:41 +0000

[...] Flexo at Consumerism Commentary discusses the trade-off every parent feels between their own financial security and caring for the kids. [...]

By: pf101

pf101 — Mon, 11 Jun 2007 08:04:33 +0000

I am firmly in the save for your retirement first camp. If you can afford to save for both retirement and your child’s education, great but if you have to pick one, it should be retirement. This is what I teach in my classes and this is what I follow. However, there are some things you can do to start saving at least a little for education.

I recommend that everyone join Upromise. It’s free money and you don’t even need a kid to join. I’ve been saving for my child’s education for a few years now – now I just need to have a child. :-) You won’t make a million with this program, but it’s free money. Have your family sign up and when your kid starts making money, have them put a portion of it into the 529 account for their education to help build it up.

There is nothing wrong with a child paying for their education. Spend time with them to help them develop good study habits and outside interests that could help them get some scholarships.

IMO, kids should also go to a local community college for the first 2 years of school. The costs can be 1/10 the cost of a university and you get pretty much the same education – in some places better.

It’s an important issue and one people should talk about way in advance.

Great article. I’ve linked it as a Post of the Day

By: The Sunday Review #24: Hair Raising Facts Edition

The Sunday Review #24: Hair Raising Facts Edition — Sun, 10 Jun 2007 14:22:01 +0000

[...] Trading Off Your Financial Security For Your Kids by Flexo @ Consumerism Commentary. Retirement or kids? Your life or their life? Keep your kids out of debt by giving them your retirement money? How far would you go to ensure your children’s financial security? [...]

By: Posts I Enjoyed Last Week | The Sun’s Financial Diary | A Personal Finance Blog on Saving and Investing

Sun, 10 Jun 2007 13:08:02 +0000

[...] at Consumerism Commentary uses an article on Smart Money to discuss priorities in financial planning: save for ourselves first, or save for our children’s future first. One thing we should keep [...]

By: KMC

KMC — Fri, 08 Jun 2007 12:46:48 +0000

Two things to contribute:

It’s important to keep in mind with stuff like this is that the most expensive thing isn’t necessarily the best thing.

Secondly, I think people who do things like this are actually doing their children a disservice. When you kid graduates and gets an entry-level job, will he/she be able to afford the standard of living mom and dad have provided to date? Not likely. At least not without spending more than they earn.

By: Journey2Retirement

Journey2Retirement — Fri, 08 Jun 2007 05:50:57 +0000

Agree with all the comments above. Another issue I see with spending $600 on birthday parties, is that you’re teaching your kids from early ages that splurging money is OK.

I currently put $100/mo in my kid’s 529 and I’ll prob start putting more once I finish some auto loans (hate these auto loans)

By: dong

dong — Fri, 08 Jun 2007 03:21:18 +0000

I think get teased for not having the right stuff builds character. I’m personally glad in hindsight for growing not so well off. It taught me lessons, i value today.

By: Emily H.

Emily H. — Fri, 08 Jun 2007 01:29:47 +0000

Anything your child isn’t going to remember is worth thinking twice about: lavish birthday parties for kids under 4 or 5, expensive nursery furniture.

The other end of the spectrum is the things that are life-expanding, not just college, but piano lessons or kayak lessons or fencing lessons… though there is the peril of overscheduling.

To me the really tricky part is when your kids are old enough to feel envy or to get teased for not having enough stuff. I don’t want to buy into consumerism to that extent, but I also know what it’s like to get made fun of for not having the right stuff.

By: dong

dong — Thu, 07 Jun 2007 23:30:33 +0000

I think there’s balance to all of this. My parents made tons of sacrifices so that I could go the college I wanted to. They took on loans, but at the same time they didn’t throw me big parties. Parents should be putting some money into their 401k first before saving for College. But they shouldn’t be going on expensive vacations for themselves before they save for their kids colleges. Kids should be treated fairly within the family without special privileges but unselfishly.

By: Chris

Chris — Thu, 07 Jun 2007 17:31:47 +0000

There are many parents who do this. I am a firm believer in saving for a child’s college education from birth, but also feel your own retirement and household finances should be funded and in order first.

I don’t think the common problem is parents contributing to 529s instead of their 401ks, I think the problem is overspending on material goods for kids. Like that $600 party. If you make $30,000 a year and spend $500 on presents for one birthday, that sends a pretty confusing message. It says “My parents can afford to buy me expensive presents, they just don’t want to. See? They just bought me all these toys!”

Not exactly the appropriate model that you were describing. I wonder if any of those toys were put on their $30,000 debt? I think we now know why their credit card debt equals their yearly income.

Long ago I was working retail with a woman with 1 kid, and she spent almost $1,000 on xmas gifts. She made $5 an hour and her ‘boyfriend’ didn’t work.