An education fund should be part of your savings and investments goals, especially if you have a child and can afford to participate in the program.
So you are about to have a baby, or you’ve had a baby, and you want to open a tax-sheltered Registered Education Savings Plan (RESP) for your child. An RESP contribution is a great way to start saving for your child’s education while he/she is young so long as you can afford to budget the money in.
Education Savings Grant
The money grows and you don’t have to pay any taxes on the money while it is invested in the non-registered investment fund!
The best part is, the government will match up to 20% of more than $500 a year or $7200 over the lifetime of the RESP fund.
This government grant is called the Canadian Education Savings Grant and surely free money seems silly to toss out the window if you don’t have to!
If you want to learn how to budget as a couple, you must learn to work as a team before your baby arrives, because once your child has made his/her entrance your life will change for good. Getting ahead of the budgeting race is a smart move and one that you will be happy you made.
Just thinking about contributing for years on end to a fund can make any parent quiver, especially since most of us had to pay for school using Ontario Student Loans (OSAP), or working to save for tuition on our own.
I still think it’s important that children get a job when they are younger to learn to be responsible with their finances, so when they go off to school, creating a school budget will come easy to them. Not to mention, beneficial!
Cost of Education
If you think the cost of education is high today, imagine what it might cost when your child is applying to University or College!
Although everything seems relative in nature, not everyone gets a raise each year, and the cost of living is going up year by year.
It’s getting difficult for many families just to get by, but they also want to do what they can for their children’s future if they can.
There are many families out there that can’t afford to opt into the RESP savings because there just isn’t enough money in the budget to go around. When a mother is on maternity leave funds may be limited as her income will be a percentage of her earnings while she worked full-time, which may further affect a family budget.
Even if you stockpile baby items for when you start your maternity leave, you will still need cash to top them up once you use them.
How can you save for an RESP in the budget?
Well, there are no simple answers because either the money is available, or it’s not. You can set up an RESP easily through your bank or financial advisor and contribute up to $50,000 over the lifetime per beneficiary listed in your documents.
That might seem like a lot, but it might not be considering, like I mentioned above, what the cost of school might be when your kids are ready. Heck, there are already some students who surpass that amount of money easily to pull off a degree with success!
Tips to save for your child’s education
- Start budgeting now (5 Tips For Starting A Budget) or plan to budget before your baby arrives, it’s never too late to start!
- Stockpile as much as you can while on sale to free up some extra money
- Earn extra-money on the side or pick up more hours at work
- Learn to cut-back on items you can do without such as cable, cell-phone etc
- Save money by meal planning, using coupons, and smart shopping
- Start to put the money away before the baby is born into a projected expenses account so you get used to pulling the money from the budget (How To Save Money: 8 Simple Ways To Grow Your Savings)
- Talk to a professional advisor for help if needed
It’s not easy being a parent, but if you want the best for your child and to help them save some cash for their education, you must work hard for them when they need you the most, from now until forever!
How are you saving in order to put extra money aside in the budget for your child’s education? Comment below!
This is a Guest Post By: Mr.CBB is the voice behind Canadian Budget Binder who says that “It’s not about how much money you make it’s how you save it.” Mr.CBB shares budgeting tips, frugal lifestyle, relationships, recipes, parenting, personal finance and so much more for his over 4500 fans all around the world. After all “money is money, debt is debt” no matter where you live. You can find Mr.CBB on all social media such as Facebook , Twitter and Google+