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What to Save for First: Family Finances Decoded

Jul 05, 2018 4 min read Eric Rosenberg

Key Takeaways

  • Do your best to make retirement savings a priority.
  • Strike a balance between helping children and parents.
  • Take advantage of free resources and government programs.


Do you find yourself stuck between the demands of your growing kids, your retirement aspirations and your aging parents? If so, welcome to the “sandwich generation.”

While it's stressful juggling competing demands, this phase of life doesn't have to be a financial struggle. By taking smart steps to manage your budget, you can fund your retirement goals and help your family at the same time.

Focus on you first

Most parents remember the hazy days of caring for a newborn. Late-night feedings and constant supervision are enough to wear anyone thin. But as you probably noticed, if you don't take care of yourself, attending to your little one is nearly impossible. The same goes for your financial future.

To maintain your standard of living in retirement , experts suggest saving at least 10% to 15% of your gross income every paycheck. If you can make this automatic, you’ll consistently pay yourself first without having to revisit your financial plan every month (and risk shortchanging your priorities).

Balance parents and children

There’s no right or wrong way to organize your other financial goals. Maybe your child's college education is years away, but your ailing parent needs home care today. Perhaps your parents are healthy, but you have two kids bound for college in just a few years. Every family is unique, and only you know how to best utilize your limited resources.

So, use a budgeting tool to see where your money goes every month — and where you can cut spending on the things you value least. From the car you drive to the services you stream, you may be to trim your budget without a major impact to your life.

Then turn on automatic deposits or, if your employer allows, split your paycheck into multiple direct deposits. This way you can effortlessly direct funds toward your most important goals.

Big college savings starts with small steps

College costs may seem daunting, but if you put time on your side, a little saving — every single month — can go a long way. If you invest through a 529 plan, you can watch your college investments grow while also trimming your tax liability. Depending on your state, you may be able to snag state income tax benefits on top of federal tax-free withdrawals as long as you use the funds for qualified education expenses.

Take advantage of free resources

Many companies offer benefits beyond health insurance and a retirement plan. In fact, your plan sponsor might help with college costs or offer a scholarship your child could have good odds of winning. Contact your benefits department for details.

For your parents, research benefits provided by Medicare Opens in new window and Medicaid Opens in new window, which may include home care. You can also contact your U.S. senator's office Opens in new window for assistance from a dedicated elder affairs staffer.


What you can do next

Set up the right accounts for your savings goals. To stretch your dollars as far as possible, consider tax advantaged accounts like 529s for college and a workplace plan or IRA for retirement savings. Talk with your financial and tax advisor to determine which savings vehicles are right for you.



Eric Rosenberg is a finance, travel, and technology writer in Ventura, California. He has in- depth experience writing about banking, credit cards, and investing.


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