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Before you save for college

Think you are financially ready to start saving for college? Only after you mark these off the "to-do" list:

*Get rid of "dumb debt," such as credit card debt or an unreasonable car loan, says certified financial planner Laura Seymour of Torchlight Advisors in Bloomington, Minn. Why save for future purchases if you are financing the present or still paying off the past?

*Prepare for the unexpected. Most families don't have enough money saved in a liquid account for a prolonged job loss or major home repair. Young families are notoriously underinsured, lacking adequate life insurance and disability insurance.

The insurance piece is critical, said Ted Contag, a wealth adviser with Thrivent Financial for Lutherans, because most families pay for a portion of college costs from their monthly cash flow.

"If you're dead, there is no cash flow. Making sure that you have some insurance is fundamental to being able to help with college," he said.

*Save for retirement. Take advantage of your workplace retirement plan first, saving at least enough to receive matching retirement money from your employer. That's typically around 3 percent of your salary, not even close to what you will need for a secure retirement.

The rule of thumb to save at least 10 percent of your salary toward retirement has crept skyward over the past decade. It's frequently suggested to save 15 percent of your salary for your golden years. Ask your financial adviser or use a retirement calculator from your 401(k) provider to estimate your financial needs in retirement.

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