Sometimes we worry so much about saving for our child's future that we forget these other essentials.
Most millennial parents are now saving up for their kid’s college education, after facing their own student debts. They don’t want their kids to go through the same struggles they went through.
If you fall under that same category, don’t rush off to build a nest egg for their tertiary studies. Read this first.
There ARE more important things you ought to be saving up for. Your child’s education should come a little later.
So here is a financial priorities list that you should, as parents save or spend on, before a college fund for the kids:
1. Retirement fund
You might already have your central provident fund (CPF) account in place or some other kind of government backed retirement fund. But it is a common fact that this alone is not enough. Many young working professionals are starting to open up Supplementary Retirement Scheme accounts to build a larger retirement fund. After all, you wouldn’t want your kids to end up supporting you in your old age, do you?
2. An emergency fund
It is important to have at least 6 months worth of your household’s expenses stashed away in savings. In the event of an emergency, this money will tide you over. You won’t have to dip into other savings or liquidate assets when this happens.
3. Paying off outstanding debts
Whether it is your hire purchase loan, your mortgage or a personal loan, it is always best to set aside more money to pay off debts first. You will save on a lot of interest in the long run if you settle your outstanding debts as soon as possible. Only once this is done, then you can consider using the leftover money for a college fund for the kids.
This is another important element for every household to consider. Insurance – be it life, health or medical, deferred annuity, home or car – you should hedge your family against any risks by being sufficiently insured. Premiums can come up to a hefty sum when you’re paying it for the whole family, but do remember that it is a crucial part of being financially stable.
5. Household expenses
As the family progresses and needs change, ensure that your financial goals remain on the same trajectory. If your needs for the family requires you to pull back a little on saving for your child’s college fund, don’t be ashamed to do so. You can save up for your child’s college education only once you are stable in other aspects of your life.
Tell us your thoughts on what parents save for in the comments!
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