Yes, that’s right. I just said that you can fund your child’s entire retirement for only thirty dollars a month. Notice I did not say that you can fund their education for only thirty dollars a month, I said you can fund their retirement. You are doubting me already, I can feel it.
There is a miracle in this world called compound interest, and the only thing that miracle needs to work is time. If you have time, this miracle can do anything.
“But I don’t want to be paying into a retirement plan for my kid all his life, I love my children, but theirs a limit to what a parent can do!”
Did I say you would have to be paying into a plan for your child’s entire life? No I did not. In fact in order to fund your child’s retirement, you need only spend thirty dollars a month until his/hers nineteenth birthday. After that you don’t need to spend another cent, and neither do they.
“But seriously, how is that even possible?
I already told you. Compound interest is the key, and it’s not only possible, it’s easy!
“But I am already saving money every months for my child’s university education, I can’t really afford any more than that. Isn’t it more important for them to have a good education so they can get a good job. After that, retirement can take care of itself, right?”
Congratulations on planning ahead. And you bring up a valid point, but I am going to offer a radical counterpoint here: It may be better to let your child fund his or her own education, and instead fund their retirement plan. There are a couple of obvious and clichéd reasons why.
- They will appreciate it more if they have to work for it.
- They will have an opportunity to learn the value of a dollar.
Both of those reasons are valid from a parenting standpoint, but not from a financial standpoint.