By Amiee Morse – Planning for your child’s education is one of your most important tasks as a parent. However, it’s also true that education can be extremely costly, which is in itself is a huge barrier to entry for many families.
Our previous post on New Pathways to Success highlights that youth all across the world are having trouble transitioning from school to work, which can hinder their professional development. Proper schooling is still the basis for instilling the value of lifelong learning in our children; as such, it’s crucial that parents try to do what they can to set their kids up for success.
With that in mind, below are some actionable points on planning for your child’s education in the long term.
Cut back on social expenses
Of course, the golden rule of saving is that you should start sooner rather than later. If you’re sure that you want kids down the line, you should start saving as early as now. Depending on your lifestyle, this may involve reducing your budget for social expenses or frivolous purchases. Those who are still in the family planning stage can open up a non-registered account to begin investing for their child’s future. Even the smallest savings add up over time, and these can be used towards all the other costs that go into post-secondary education such as student housing and tuition fees.
Consider investment plans
Investments are a great way to build up your savings over time, especially if you aren’t starting out with a lot of funds. To that end, a Registered Education Savings Plan (RESP) is an investment account specifically for your child’s post-secondary education. These accounts can be opened as long as both the opener and the beneficiary are Canadian, and the money within the account won’t be subjected to any income or capital tax gains. The student may incur some taxes once the money is withdrawn to use on things like books and tuition, but these taxes are generally very low or non-existent as the student income itself isn’t very high. You can opt to make direct deposits to your RESP account, which lessens the burden on your end.
Explore alternative education paths
The traditional university path isn’t for everyone, and it shouldn’t be seen as the only path to post-secondary success. The Canada Education Savings Grant covers part- or full-time studies in colleges, trade schools, and apprenticeship programs — they are all viable paths that your child can take, and parents should instill this mindset early on. Buying into the idea that university is the only path towards success can set up unrealistic expectations for your child while also neglecting the fact that there are those whose interests actually align better with a more specialized trade school or apprenticeship course.
While Insider notes that universities in Canada are generally cheaper than their US counterparts, that doesn’t necessarily mean that it’s automatically affordable. Planning for your child’s education will undoubtedly take a while, but what’s important is that you understand all the options that are available to you.