The article, Expecting the Expenses in the Washington Post highlights issues couples should consider when deciding to have children. Here are the some of the main points gleaned from the article:
- If you are planning on having children, save as much money as you can before baby gets here. Kids are expensive, but do I really need to tell you that?
- Look into a short-term-disability policies such as one from Aflac, a secondary insurance provider, to help cover the loss of salaries while the new mom is home taking care of baby
- Increase your withholdings (check with your financial/tax advisor) to help make up for the loss of one salary for a few months
- Create a will. I know its scary to think about this but it must be done. The fact is, should something happen to either parent or God forbid both, you want it very clear what’s to happen and who retains custody of the child.
- Set up a trust
- Enroll in your employers dependent care savings account. Otherwise known as a health savings plan which allows you to set aside up to $5,000 of your earnings annually, tax-free
- Decide how you will pay for college. Will you allow your little one to take out loans or do you want to start saving now to pay for college later?
The last point brings us to our main point of discussion: Will you save for your child’s education? Or will you allow them to take out loans?
The debate in my home is as follows:
Mr Latte contends that we should save for baby Latte’s college fund so that they will not have to struggle with paying back student loans upon graduation. I think otherwise. I believe that if our child understands that they will be paying for their own education they will value the experience and education itself more than the child that was sent to college knowing that mom and dad paid for it with no sacrifice on their part.
Furthermore, the value of a college degree is debatable these days and I don’t see the need to lay out 6 figures for it. At the very least, 2 years at a community college and then the other 2 at a state school.
I go back and forth on the issue but I would be so hurt if we sacrificed for so many years by saving for their education only to have them blow it all by dropping out or getting bad grades warranting expulsion.
Furthermore, “you can get a loan for college but you can’t get a loan for retirement“, is pretty self explanatory. I want to be more than just comfortable in retirement because who plans to rely on Social Security? I don’t! Admittedly, I still have a 6 figure loan balance myself so saving for my future child’s college fund is somewhat off my radar at the moment.
What’s your stance on the debate? Will you save for college or will you focus on other areas such as retirement? Will you do both?
This article was originally published on December 23, 2007 and updated on March 6, 2012.