Set your Child up for Success with an RESP
For over 50 years, Knowledge First Financial has been proudly helping Canadian families make the dream of post-secondary education a reality for their children. As a parent, you want to do everything in your power to ensure your children have a bright and prosperous future, and one of the greatest ways of ensuring this is to make sure the costs of obtaining a diploma or degree don’t get in the way of their education.
Going to college and university is a lot more expensive than it used to be. According to MoneySense magazine, a student living at home can be expected to spend an average of $9,300 per year on their education. For students living away from home, it’s a lot more costly: an average of almost $20,000 a year.
The high price tag of post-secondary education be can intimidating for parents (especially if you’re a parent of three post-secondary-bound children like me). It can be tough to find extra money to put towards your children’s education when you have a mortgage and car payments to make and retirement to save towards. I know your financial pain all too well. But sometimes, just the act of opening a Registered Education Savings Plan (RESP) is enough to encourage your child to attend post-secondary school.
When a parent opens a savings plan earmarked for their child’s education, they steward their child towards that goal, even if the savings plan has very little in it. And the best way to save for your child’s education is with an RESP. In honour of National Education Savings Week, we wanted to take this time to remind parents about how they can not only help their children save for their education, but encourage them to actually attend college or university.
It may be years until your children go off to college or university, but that time will come one day sooner rather than later. By getting in the regular habit of saving towards your son or daughter’s education with an RESP, that money will grow over time.
To collect the full Canada Education Savings Grant (CESG), you’ll need to contribute $2,500 each year into your child’s RESP. But that’s a tall order, especially if you have several university-bound children like me. Some parents see this figure and balk, saying that they simply don’t have any extra money.
Rather than focusing on how much you need to save, a much better approach is to put aside whatever money you can afford. Could you come up with an extra $50 a month if it meant a brighter future for your children? I’m willing to guess that you could. By being more frugal and skipping that extra latte, you’ll be able to come up with that extra money to help your child out. That $2 or $3 a day, will add up to a small nest egg over time.
Raising a child can be costly, especially in the early years. Diapers, clothing your child seems to grow out of in a few weeks and daycare all quickly add up. If you can only afford to contribute $50 or even $25 a month at the beginning, that’s ok. Even saving just $50 a month from birth to age 17 will add up to over $12K (including grant). If that’s not a reason to save (not to mention your child will be more likely to go to college or university), I don’t know what is!
You want your children to have a bright future like I want mine to. There’s no better time than the present. Education Savings Week is the perfect time to put a savings plan in place – $50 or even $25 a month – and start your children’s journey towards a brighter future today.