Our best friends recently moved away from San Francisco to LA. We miss our impromptu get togethers with them, but we’re doing surprisingly well keeping in touch from afar. When we do see them, it’s like nothing has changed.

Our friend Patrick is a financial advisor who runs the firm Impact Fiduciary, and my husband is also in finance, so the conversation often turns to money. Sometimes my girlfriend Erin and I are already huddled together in our own exchange by the time they start talking high yield bond funds (see, guys, I do pay attention), but a lot of times it’s a group conversation. Erin and I need to be financially literate about our families’ finances, too.

I think I’ve got the home finance basics down pretty well (thank you, David Bach and Smart Women Finish Rich), but Pat sometimes surprises me with insights I haven’t considered. Here’s a big one: it’s not always prudent to save for your kids’ college.

Since he’s the expert and I’m not, I asked him to explain what he means. 

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Kids are expensive. I don’t really know how people do it anymore. Erin and I did the math and we pay the equivalent of two University of California educations right now, raising a three year old and six month old. No wonder the US birth rate just hit a record low.

I work with a lot of young families who are in a similar situation. Usually one of the top objectives is to save for their children’s education. This is admirable, but it doesn’t always make sense.

My advice is to take care of yourself first!

Here is a quick litmus test. If you don’t check off these boxes, you probably shouldn’t save for your kids’ college, at least not yet.

ロ No major student loans or debt other than a mortgage

Have student loans? Don’t even think about saving for your kids’ college until you are at least in a financial position to pay them off in full. (It may make sense to hold onto lower interest loans, such as anything below 5%, but you still want to have the ability to pay them off.) The kids can always take out loans for college, but unfortunately you can’t take out loans for retirement.

ロ Emergency fund in place (3 – 6 months of living expenses in a bank account)

ロ Maxing out your contributions to an employer 401k

You can contribute up to $18,500 in 2018 in an employer 401k, which doesn’t include employer matches. This is one of the fastest ways to grow your liquid net worth, so take advantage of it! Once you and your spouse have checked the retirement savings box, then it may make sense to save for your kids’ college.

Gift of Education

If you’re not ready to start saving, but don’t want to wait, consider having grandparents, aunts, uncles, and friends help fund a 529 college savings plan in lieu of birthday presents and holiday gifts. Certain plans, like The Vanguard 529 plan, offer an easy option of allowing people to gift money. If your family is like mine, then your kids probably don’t need any more plastic toys that they’ll be interested in for five minutes before moving on to the next one. Have your friends and family give them the gift of education, instead.

Everyone’s Different

Don’t worry about how much your friends are saving for their kids’ college. You’ve already given your kid the gift of life and they get to grow up in one of coolest (and most expensive) parts of the country.

Take care of yourself first! Don’t forgo your retirement or other goals just to pay for your kids’ education. Invest in yourself, then, if you have money left over, feel free to set up an education fund. It really should be on the lower end of your financial objectives.

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If you’ve checked all the boxes above and are ready to start saving check out Pat’s advice on how to open 529 college savings plans, how much to save, and alternative savings options.

Of course, you should always do your own research on money matters. Reach out to your friends and family for their recommendations on where to get financial guidance, pick up a David Bach book like I did, or give my friend Pat a call. Even if you’re not saving for your kids’ college funds, having your financial lives organized will be a huge help to them in the long run.