Step 9: Saving for College
I know this is where I'm expected to explain the best saving options for your children's college education, but I have something far more important to discuss with you.

I don't want you to think about financing college if:

• You're drowning in credit card debt.
• You have hefty car loans.
• You have tapped into a home equity loan just to keep up with your living costs.
• You don't have an emergency cash fund to cover eight months of living expenses.
• You don't have life insurance.
• Your retirement account isn't built up.

It may sound blasphemous, but you must take care of yourself before the kids. This is a very important lesson for them. If you're financially responsible, your children have a much better chance to grow up financially responsible. You owe it to them to be a role model. But you can't hide any of this—your kids deserve to know what financial choices you are making and why. The sooner you sit down and tell them, the better they'll be able to help themselves. If you wait until your children are high school seniors to spring it on them that there's not a whole lot of money for school, they won't have too many options. But if you involve them by junior high, you can help them see their own power to help themselves: Good grades can lead to scholarships, grants or financial aid. Your kids can get a job now. Most important, they can have realistic expectations. That's a tremendous lesson for parents to impart to their children.

If you do have your personal finances in order and can indeed set aside some money for your kids' education, there are options such as 529 savings plans and Coverdell Education savings accounts, which offer tax breaks for education investments. I recommend heading over to savingforcollege.com; my friend Joseph Hurley, CEO and founder of the website, has a ton of information on all your financing options, and lots of easy-to-follow advice.