Know how they tell you in the airplane that, if there’s an emergency, you should put on your own oxygen mask first before helping others?
The same principle applies to personal finance.
There’s a definite hierarchy you should follow when you strategize on how to reach your – and your family’s – financial goals.
As much as we all want to help our kids pay their way through college (or throw them a nice wedding, or help them buy their first house) these are all items that need to wait until we have gotten our own house in order.
I know. It’s tempting to skip ahead, but there’s a reason that doesn’t work. Just like the parent in the airplane, you need to help yourself first before you can do your job, which is to help and protect those depending on you. If your financial life is a mess, how on earth can you help your family? And don’t ever forget; your most important financial legacy is the example you set for your kids on how to handle money.
Financial columnist Jill Schlesinger had great advice on this subject over the weekend:
“Before thinking about putting money toward your kid’s education, you need to make sure that you have covered “The Big Three”: (1) Paying down consumer debt (2) Establishing an emergency reserve fund (3) Funding retirement. If any one of these items is outstanding, you need to put education funding on the back burner.”
Don’t get me wrong. A college education is the best ticket for most kids to get ahead. And as parents, you provide valuable guidance and support to your children. But to really put your kids on a firm footing for the rest of their lives, take a deep breath, and get your own financial life in order first.