Parents always care for their children. Particularly, education is the most important. Education secures the future of a child. Who can deny that? But have you saved enough for your kids at the first place? Did you know that college financial-aid system can punish you for having money savings outside of retirement accounts and even more for investments being made that bears the name of your child?
It is a complete paradox. You first married to your spouse, hoping to build a happy, healthy family. Then you have your first born child. Few years down the road, you may or may not be struggling to make ends meet. You realize that you still have to save for your kids’ education and future. What about purchasing a car for going to school or university?
Funding your child alone could mean sacrificing all personal gratifications for the love of your children. Some parents are even struggling at the idea of being selfish or being loving to their children. The key is to maintain a balance here instead of overspending on a child or yourself at the first place. This also teaches him or her (your children) to be a better parent next time.
It does sound a little bit not right at first. It can even sound very self-centered. But truth to be told, you, even as a parent, must control your future first. First and foremost, take charge of your retirement account which is tax-protected. Only then you can proceed to save money in your children accounts.
What if you had given it all for your children first and you yourself second? Well, this is not a smart move. In the end, you might have to depend on your children in future. In turn, this creates a burden for them when they become adults themselves.
On the subject of saving for huge spending, never ever do it with credit. Huge spending includes buying a boat, plane ticket, and so on. These kind of spending are branded as consumer items, contrary to the wealth-building assets and investments (such as real estate and businesses).
The subject of instant gratification is always at hand. Instead, learn how to delay those impulses. Saving for large purchases is always better than spending on credit. Spending on credit will make a person spend first and pay later.
In the end, you should know that debts caused by credit spending will slow you down from achieving financial freedom. Just to illustrate, a figure of 20% of interest rate is enough to let you know how high it is.