Approximately 45% of families say they pay for college costs with the parent’s savings or income, according to a 2021 report from Sallie Mae on How America Pays for College‡.

We also know that around half of American adults‡ already aren’t saving enough money for retirement, and that women tend to save less than men in general.

Based on this data alone, it’s easy to see how saving for college and retirement at the same time can be challenging for parents, and women in particular.

Your children have several choices to help pay for college, including loans, scholarships and grants—all of which can significantly offset these expenses. While these are well-known considerations, it’s worth noting as there aren’t alternative options like this for retirement savings. As such, being intentional about how you save for each of these life events is critical.

Below are three steps you can take to help fund your child’s college while not sacrificing your own retirement.

Prioritize your retirement first

Retirement and college tuition may seem like two competing priorities, but you can help prepare your kid for college while actively saving and making smart financial decisions. Focusing on funding your retirement first makes you a responsible parent.

If you stretch yourself thin to help pay for your kids’ college, it could greatly impact your future, which in turn, could also impact your kids’ future. And this savings anxiety exists at all income levels.

According to an American Consumer Credit Counseling survey‡, the lack of retirement preparation in the $20,000 to $30,000 income range (with nearly nine out of 10 individuals reporting they were not prepared) was surprisingly close to those making $100,000 to $150,000 (with nearly eight out of 10 giving similar answers).

Tip: If possible, first fund your employer-sponsored retirement account at the level that earns the maximum employer-match benefit. Then evaluate your excess income to determine how much you can comfortably allocate to your child’s college savings fund.

Look into a savings account designed for college tuition

If you think your child will want to attend college, start saving early. If they are still young, consider opening a 529 college savings plan. From an investment allocation perspective, these plans work like a 401(k).

You can personally select funds or choose a target-date-fund, which is an age-based portfolio that automatically adjusts risk exposure and allocation to when your child will start college. There is no minimum to open an account and you can make monthly contributions or pay as you go.

If your child is older, make sure you hit deadlines for financial aid, and help create a budget for when they are living on their own. This will help both you and your child better understand and plan for upcoming expenses. And, remember, it’s ok if you can only pay a portion of your child’s education—they will appreciate any help you provide.

Tip: Educate your child on what the different savings vehicles and financial options are as soon as college conversations begin, which may be as early as their freshman year. This will make them an active participant in the savings and planning process.

Create a budget and go over your choices

Remember your kids can borrow money for college, but you can’t borrow money for retirement. Using your retirement money to pay for your kids’ college can be a big mistake that impacts your retirement savings for years to come.

There are a multitude of ways to help your child pay for their college. Go over the choices with your kids, whether that be taking out a student loan, working to get scholarships or finding a work-study job on campus.

As important as it is to make sure your child has the best possible education and future, it is also important to teach your kid the importance of saving and budgeting.

Tip: Start the college savings conversation with your child early. This is one of the first major expenses they may help fund. Sharing details on costs, expectations and how to plan is invaluable in preparing them for future financial needs and situations.

Regardless of your income, the best way to alleviate some of the stress when it comes to saving for retirement and for college is to plan, create a budget and determine what you can immediately begin putting away.

While it may seem overwhelming, taking these steps will greatly reduce your anxiety and will also set you up for future financial success.

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