These days, a post-secondary education is practically mandatory if you want your children to have a good job and a satisfying career. But universities and colleges are also very expensive. However, there are ways you can help your child save for post-secondary education. Here are six suggestions:
- Open a registered education savings plan (RESP). An RESP is a specialized investment vehicle designed to help you save money for you child’s post-secondary education. Similar to an RRSP, a RESP is a savings plan where contributed funds grow tax free inside a registered account. You can open a RESP through a bank, credit union, or group plan dealer, such as Children’s Education Funds Inc. (CEFI).
- Start saving early. According to a blog on the Simple Dollar website, saving $50 per month from the day a child is born could give you $20,000 by the time he or she turns 17, assuming a 7% return on investment. However old your children are, if you want to help fund their college education, start saving. It is never too early, or too late, to start saving for your child’s education.
- Find more ways to save. Create a budget and analyze your savings to see if there’s anything you can reduce to increase your savings. Over time, this can make a substantial difference to your savings.
- Automate your savings. Many banks – especially online offerings such as Tangerine – allow you to open an account and easily put away a specific amount every month. Even $20 a month would make a difference over 16 or 17 years.
- Encourage your children to work through high school. As soon as they are eligible to work, encourage them to do so. The minimum wage in many provinces is now significantly higher than it was just a few years ago, so a student working as little as 12 hours a week can save a substantial amount through their high school years. Have a discussion about what percentage of each pay cheque should be put toward college or university.
- Teach your children about student loans. High schools and their guidance departments can help with this, but these days surfing the internet for information and scholarships, student loans and financial aid is just as efficient. Find out what your children are eligible for and encourage them to pursue this path, which can save you plenty of money in the long run.
These savings plans can be complicated, especially RESPs, so it might be a good idea to have an independent financial planner look over your finances before you make any commitments. According to NerdWallet, it’s important that you don’t let saving for college or university derail your other financial goals — especially retirement plans.