There is always a conflict about prioritising the goals in the human life, especially when it comes to funding the child education and saving for retirement. Though both the goals remain important in life, we tend to leap over the necessity that is next to door rather than the need that at distance. This decision would make you regret over the situation later when it is already late to reverse. Which should you prioritise? Your child higher education or retirement saving. I would say, the later one should be prioritised as there is no source of income at that stage of life. However, there is an argument that your distant financial planning should not spoil your child’s current future. You should act smart and plan wisely so that both the goals are achieved without compromising.
Plan Your Child Higher Education without Shrinking Retirement Savings
Have a separate saving plan for each goal
Both the child’s higher education and retirement saving goals have equal importance in life and one cannot be compromised for the other. You need to have separate budget plans for both the goals. Never use retirement croups to fund your child higher education. This attempt will leave you with no financial aid in the later stages of the life. As the education expenses are increasing every passing year, you need to adjust your standard of living and have a control over your spending habits to save a good deal of money towards both the goals. Accumulate education fund as your salary increases. Though it is good to fund the child education from owns pocket, it is not possible for everybody to achieve the same especially when you are managing to help your child pursue education abroad. Instead of emptying on the retirement funds, you can plan to take an education loan from the lending institutions.
Education loan rescue retirement savings
Many banks today are offering education loans to help the students pursue their dream course abroad. As the alternative is available, saving for the retirement should be your priority. A shortfall of the higher education fund can be filled with education loan. You will be able to get an education loan for your children if you can showcase your good credit score, repayment capability and admission in the approved institution. Educational loans come with the holiday period where you will be liable to pay the interest on the loan amount during the period. You can start repaying the loan amount after 6 months of getting the job or one year of completing the course whichever is higher. Taking a study loan will teach your child a sense of financial responsibility and you will get a tax advantage for taking an education loan from the bank.
You should choose an alternative like education loan to fund your child education rather than emptying your retirement funds because you have no financial aids like loans to fund you at that age of life.