The household bills and babysitter are paid. Food’s in the fridge. So what’s the smartest way to allocate the dollars left for savings?
First of all, pay off those credit cards. Why put money in a savings account that may pay less than 1 percent while shelling out 14 percent on a credit-card balance?
Once you’ve gotten into the habit of paying credit card balances in full each month, start that emergency savings account. Your goal is to sock away enough to cover emergencies, so you won’t find yourself revolving that credit card debt again. Read Budgeting and saving for parents to learn more about how much you should aim to save.
Next, start saving for retirement—get it on autopilot so you are saving regularly. If your job offers a 401k plan, that’s a no-brainer. You and your kids can always borrow to pay for college, but not for retirement. Besides, the last thing you want to have to do is start relying on your grown kids because your retirement savings ran out. (Read Keys to a great retirement for related advice.)
And then, as soon as you can, start saving for your children’s college educations. Learn more about ways to save for college, including a comparison of savings vehicles, in our parents’ guide to saving for college.
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