This is part of our Financial Literacy Month Question and Answer series

Question: Our children are starting high school and we want to be able to help with their college expenses. We also need to save more for our retirement. With time passing so quickly what should we do?

Answer: You are in a fairly common situation. We all want to do whatever we can for our children and we worry about retirement savings. In this case there are several things you can do:

• The first thing to do is make sure you’re living below your means and reducing any credit card debts you might have

• Start now to save, no “if, ands or buts”. Remember $2.74 per day will equal $1,000 at the end of the year.

• My opinion is that your retirement savings should come first because you can’t borrow for your retirement, you have much less time to do both, and you don’t want to be a financial burden on your kids in your retirement years

Now for the kids:

• They should be working their hardest to earn top grades and apply for scholarships. Have them check with their guidance counselor for local scholarships. In our little town of Hood River, Oregon, there’s over $100,000 available in local scholarships!
• The kids should be putting aside at least 10% of any earnings they have or gifts they receive in their college savings.

Check out the college savings plans called “529″ . They are administered by your state and there may be some tax advantages. The earnings are tax-free if they are used for approved college expenses and they don’t count as your children’s assets (or in financial aid calculations). They also belong to you so they can’t go out and buy that cute little red car when they turn 18!

Warmly, Cindy