You Bankroll the Kids
It’s part of raising a family: You want to give your children a leg up by helping with college tuition or contributing to a down payment on their first home. But you can’t always be The First Bank of Mom & Dad. Your own financial security should be your priority.
“One of the most common financial mistakes parents make is funding their child’s education before taking care of their own retirement needs,” says Schwab-Pomerantz. “The point is that you won’t be of much use to your child or anyone else in the future if you can’t take care of yourself. So as long as you’re saving enough for your own retirement, then by all means help your kids with college. But if you’re paying for college at the expense of your own retirement savings, remember that there are many ways to cover the cost of college including financial aid, grants, student loans and scholarships. But there aren’t any scholarships for retirement.”
As for that new house, talk to your kids about their funding options. If they don’t have enough for a traditional 20% down payment on the home of their dreams, they might need to rent a cheaper place or (gasp!) move into your basement until they save enough. Or, they might need to scale back and target a less expensive starter home. Or, they might need to think unconventionally and find a roommate to share housing costs.
