If you are contributing to an individual IRA, and are having to choose how to split the money you’ll be setting aside each month, we feel that going with the IRA is more important—but of course, you can’t completely discount the college fund.
Seattle, WA (PRWEB) July 07, 2013
FinanceSpectrum.com financial advice online magazine today issued their observations regarding the debate over which savings account parents should contribute to first: their retirement savings, or college funds for their children. FinanceSpectrum.com voiced their opinion on how to appease both needs, and gave advice on how to maximize savings each month.
In a July 4th article of My Edmonds News, Erin Eddins tackled the dilemma over which savings account parents should put more focus on between their retirement account and savings for their children’s future college education. Eddins is of the belief that the retirement account should come first out of the two, giving several arguments for why it is wiser to make the retirement savings a real priority. Eddins pointed out that college students can always apply for grants, loans, and scholarships to assist with the cost of school, but there is no loan for retirement; the savings rests entirely upon the retirees’ shoulders to procure. Also, she stated that a college student’s income usually jumps after graduation when they begin the workforce, but retirees’ income does not ordinarily increase after retirement.
FinanceSpectrum.com sides with Eddins in the belief that retirement funds need to be made a priority, but stated that college education should still be given a lot of thought and planning. FinanceSpectrum.com advised, “If it’s within your budget, contributing a little each month to a college fund is a great plan, especially if you’ve got a 401(k) through work and are building up savings that way for retirement. If you are contributing to an individual IRA, and are having to choose how to split the money you’ll be setting aside each month, we feel that going with the IRA is more important—but of course, you can’t completely discount the college fund. Giving kids some money to start off with to pay for school is wonderful, and then having them earn the rest can be really fulfilling and rewarding for them. Not to mention it could help them value their education more, after being the ones that helped fund it.”
FinanceSpectrum.com advised readers to stick to a monthly budget as a sure-fire way to save money at the end of every month. They recommended that readers establish a budget comprised of two types of spending: fixed expenses and non-fixed. Fixed expenses are monthly costs that don’t change, such as rent or mortgage, insurance of any kind like dental, health, life, or vision insurance, car payments, and cell phone bill. Non-fixed bills are everything else, costs that ebb and flow like groceries, entertainment costs, gas, and the electric bill. How much you save and budget for now will determine how much money you have to spend if you ever have to pay premiums for Aetna Life Insurance, Prudential Life Insurance, Globe Life Insurance, or any of the other big brands. FinanceSpectrum.com encouraged readers to make the budget work in such a way that they have more income coming in than going out. And if the fixed expenses take up a lot of the income, then the non-fixed need to be adjusted.
FinanceSpectrum.com is quoted as saying, “The simple formula is to have more money coming into your bank account than leaving it. So if one month the car needs costly repairs that wasn’t built into the budget, you’ll need to save in other areas. Maybe you don’t go out to eat for a few weeks, or maybe you rent a movie instead of going to see one in the theater. The point of a budget is to be able to easily and accurately see where your money is going, and keeping a tally on it gives you far better control and can really help you plan out your months so that you have money left over at the end of each month to transfer into savings.”
FinanceSpectrum.com is an online finance and economic advice column crafted specifically for every-day middle-class American consumers to educate, advise, and guide them on every financial topic under the sun. FinanceSpectrum.com takes pride in reporting on a vast range of financial subjects, including money management, budgeting, chipping away at debt, creating a nest egg, and investing.