Save for retirement before you save for kids' college

Published: June 25, 2020

Dave Ramsey

Dear Dave,
What percentage of our income should we save for our kids' education? We know you recommend setting aside 15 percent for retirement, but do you have a similar rule that applies to paying for college?
Andrew

Dear Andrew,

I don’t really have a rule, or percentage, for how much you should save toward a college fund. If you’re following the Baby Steps, I recommend getting 15 percent of your income going toward retirement before saving for college. After you’ve got your retirement savings rolling, put what you can, based on your own unique situation, toward college funding.

If you’ve got teenagers in the house, you need to get serious about college funding soon—like right now. There’s no rush if they’re toddlers, but you might want to start looking at things like a 529 or an ESA (Education Savings Account).

The thing is, there are just too many variables, the main one being the ages of the kids, to set a strict percentage. You’ve also got to consider things like where you’re thinking about them going to school, how much you want to save, and other factors.

— Dave

Dave Ramsey has written seven best-selling books, including "The Total Money Makeover." The Dave Ramsey Show is heard by more than 16 million listeners each week on 600 radio stations and multiple digital platforms