How to save for your child’s education
If you’ve got school aged children, your wallet may be feeling a little lighter now that you’ve completed that expensive back- to -school shopping. However, as any parent will tell you, those school years absolutely fly by. One minute they are boarding the school bus for the first time, and the next one- they are headed off to post-secondary education- and then school supplies won’t be your only expense.
If you are intending to set some money aside to help fund your child’s post-secondary education, the time to start is now, when they are young.
Now vs. later
Even though you may have lots of time before your little one is done with high school, there are benefits to starting to save early. First, you set up the habit of saving. Second, your investment will benefit from growth over time. Generally speaking (depending on what you invest in) that means actually less money to come out of your pocket to achieve similar financial results (i.e. vs. if you scrambled at the last minute to find the cash).
You may already be familiar with RRSPs, but what do you know about RESPs (Registered Education Savings Plan)? Money put into an RESP for your child’s education is tax-sheltered (bonus). Also, the government will match a portion of your investment contributing up to$500 a year. You’re getting a return on that investment before it even starts to grow.
Canada Child Tax Benefit
If you are trying to find room in your budget to save for your child’s education, what about using the recently introduced Canada Child Tax Benefit? Here is the benefits calculator that will help you determine how much you are supposed to receive.
The bonus here is that in many cases this is “found money” (as in you weren’t expecting it). Especially if your kids are very young, this is a great tool to get your savings going, without having to find other room in your budget.