How to Save For Your Kid’s College and Your Retirement Simultaneously

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3. Turn Debt into Savings

Once you stop paying back your car and student debts (yes, that day WILL come), you can turn your debt repayments into savings. You’ve already proved that you can live without this money in your day-to-day life. So, once the debt is paid keep paying. Just divert it into your savings instead.

The same goes for any other savings you’ve got, like for a down payment on a home or new car. Once, you’ve saved enough, start a brand-new savings fund. Send these funds to your retirement account or kid’s college fund – or a combo of the two.

4. Take Advantage of Changes in Income or Expenses

If you’ve decided to save for retirement and your child’s college tuition, it’s obvious that you’ll need to make some changes to your savings. One way that you can do this is by increasing the percentage of your savings every time you get a raise. For example, if you get a 3% raise, why not send that 3% straight to your savings?

Another way to save more is to increase your cash flow. You might want to consider getting a side-gig or other money-making opportunity. Let’s say you make an extra $200 per week. That’s an extra $10,400 every year for your savings that you didn’t have before.

5. Consider a Multitasking Account

Usually, when you’re saving for college and retirement you’d make use of a 529 college savings account and 401(k) retirement plans. But, both of these accounts have penalties for withdrawing money early so it might be a good idea to put all of your money into a Roth IRA instead.

Roth accounts contain after-tax contributions, so you can withdraw the money at any time as you’ve already paid tax on it. This means no penalties, and your money will be more accessible to you. For some people, it works to have all savings in one account, but others like to keep it separated. It’s up to personal preference, so figure out what works best for you.