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The term selfish is often used in a derogative fashion.

No one wants to be called selfish.

We try to teach our children not to be selfish and encourage sharing toys with others.

Being Selfless.

Becoming a parent was a true turning point for me.

What was once an Xrayvsn-centric philosophy of the world quickly shifted to one where my daughter was the center of it all.

This is even more impressive when you consider she weighed in at just over 7 lbs.

With my mass being over 25x hers, physics dictated that I should have had the stronger gravitational pull.

But with just a smile, my daughter was able turn the laws of physics upside down.

Sixteen years later my daughter still takes advantage of this superpower, always getting the last piece of sushi, or the odd piece remaining of something we both like.

A lot of my financial maneuverings are also selfless in that I am trying to create a portfolio that hopefully turns into a multi-generational vehicle for wealth.

By taking this approach I know I have worked far longer than I needed to if I only had my interests in mind.

My approach to create cashflow high enough to support me in retirement without touching principal was far more capital intensive than what would have been required if I just simply invested in the market and use the Trinity Study 4% SWR (Safe Withdrawal Rate) as a guideline.

If I am able to leave the principal untouched it can be passed on to my daughter where she too can use it as a financial springboard for future generational wealth creation.

Another example of being selfless is spending several thousands of dollars to create an estate plan and will.

This money spent will not benefit me directly but again, hopefully, will help set up future generations to succeed.

Money not lost in the process of probate can line my heir’s pockets rather than that of the legal team.

I have also been maxing my daughter’s 529 college plan every year since she came back from England when I won full custody of her in 2015 (I also had some contributions to her 529 up until she was 4 years old when she left to England).

This money is again not earmarked for my own benefit but rather my daughter’s.

I am keeping my fingers crossed that she can get through undergrad without having to incur any student debt and still have some left over to offset some of her graduate studies.

I am very fortunate that I am currently in a position where I can max out contributions to my daughter’s 529 plan, pay for her private school tuition, etc and still not shoot myself in the foot financially for my own journey.

Sure one could argue that the money that was used in these endeavors could have padded my coffers even more, but to be honest at this stage it would not have moved the needle at all emotionally or financially.

Since I am not preparing for war I really do not have to create a massive war chest.

I also much rather help my daughter out earlier, when anything given financially has a much larger impact on her life courtesy of compound interest,  rather than later in life.

Being selfish.

College savings vs retirement funds.

I am sure I am not the only one who loves his or her progeny.

We all feel like we would do anything we can in our power to help our children.

But the purpose of this post is to convey that it is also important to think about yourself as well.

If you find yourself in the position where you cannot contribute the maximum amount to your own retirement accounts, then by no means should you be contributing the maximum to your children’s education fund.

In fact I would go as far as to say that you should not be contributing to your children’s 529 plan at all until you have maxed out all avenues for retirement savings (unless you can derive more benefit financially via tax deductions regarding college savings).

The rationale for this line of thinking is that your child has the benefit of time compared to you.

If you find yourself at the end your work career and discover that your retirement plans are woefully underfunded, there is not much you can do.

The only option would be to severely restrict your expenses and rely on government programs in order to cover the basic necessities.

Trying to find another W2 job in the later stages of life may be impossible due to health reasons or bias against age.

Definitely does not sound like the “golden years of retirement” you envisioned.

On the other hand, say your child graduates high school and finds his or her college savings woefully underfunded, there are far more options available:

• Attend college and fund the difference with student loans.
• Attend college and commit service to the military.
• Apply for and hopefully receive scholarships/grants.
• Postpone entering college and use the intervening time to earn income to pay for tuition.
• Have free tuition for the first one or two years at a community college in participating states.

 

There is also the uncertainty that you child even chooses to go to college.

Imagine sacrificing your retirement savings for almost two decades, building a huge 529 balance at the expense of your 401k, only to find that your child decides that college is not for him or her.

Sure you can withdraw that 529 money for non-educational expenses but doing so will cause you to incur penalties.

Truly living your best life.

I mentioned above that ideally I would love to live out my golden years purely from positive cash flow from my investment portfolios.

However I will not chastise myself if this does not turn out to be the case.

I certainly will not curtail any experiences in retirement because I am worried about the impact it would have for my multi-generational wealth plans.

If I find I truly love traveling in luxury and visiting as many exotic locales as possible, I will not see any harm in dipping into principal as long as the traditional SWR of 4% serves as a backstop.

Given that there are statistics supporting that the majority of generational wealth is lost by the 3rd generation, it would seem foolish that I, the original earner of the money, should not benefit from it and then have it squandered by someone who it was just gifted to.

I have never traveled by first, or even business, class internationally and that certainly is on my bucket list.

After the years of sacrifice going through the gauntlet of training to become a doctor, plus the stress of being a medical practitioner, if anyone is entitled to over the top splurges it should be me.

In parting.

So should you tailor your life to set your children up financially or should you tailor it to benefit yourself?

Fortunately these choices are not either or.

Both options can be done and still achieve acceptable results.

Again moderation turns out to be the key to having a happy and fulfilling life.

However in the case where funds are limited to the point where you can only squirrel money away for your retirement OR fund a child’s 529 plan, I firmly believe being selfish is the way to go.

 

 

Note:

If you are in search of financial help, please consider enlisting the service of any of the sponsors of this blog who I feel are part of the “good guys and gals of finance.”

Even a steadfast DIY’er can sometimes gain benefit from the occasional professional input.

 

 

-Xrayvsn