Published on July 2, 2019
Paying for college is not a walk in the park. With tuition fees of both public and private institutions continually on the rise, many families are scrambling to get by amid mounting debts.
With a greater number of investment avenues mushrooming for child financing, it’s harder to sort the good from bad options. Some student loan interest rates, for instance, can be ridiculously high and can backfire on your financial well-being. Planning early, and planning smart steers you clear of financial roadblocks—to save for your child’s post-secondary education becomes a realistic dream.
Heritage RESP reviews online hint at five highly effective ways guaranteed to make saving for college or university much easier.
Arguably the best savings plan for university education, it provides an opportunity for parents to grow their savings on a tax-deferred basis as well as receive government grants to add to what they invest. An RESP, Registered Education Savings Plan, is all that is required to save for post-secondary education and to benefit from these incentives. For every dollar you set aside for your child’s future, the CESG (Canadian Education Savings Grant) matches it with 20 cents. This goes on until the government spends $500 for a $2,500 savings amount, which is the cap it has set for savings deposited in the RESP for any given year.
It is suggested to maximize government grants for post-secondary education by saving through RESPs.
Saving for college becomes even easier when you start taking advantage of government grants, e.g., the Canadian Education Savings Grant, for your child from an early age. These programs allow parents to save small amounts, as little as $50 a month or less, and watch it grow as the government matches each dollar deposited with 20 cents. Assuming a parent saves only $50 a month from a child’s birth, the total amount in an RESP can be estimated to be over $20,000 by the time the child is ready for college or university. This amount is inclusive of the Canadian Education Savings Grant (CESG) and a 7% interest rate on all funds deposited.
A brokerage account can be considered to be a glorified savings account only with greater perks that make saving money easier. What’s unique about a brokerage account is that a person opens this account with a brokerage firm and can deposit money for use to acquire different types of investments e.g. stocks, mutual funds, bonds, currency, through the brokerage firm. The firm executes the buying and selling orders in return for a commission. Linking your paycheck to a brokerage account and investing a specific amount every month to this account will earn you superior interest-based income and multiply your education savings.
As your child turns 14, you can involve them to co-save for their post-secondary education. Getting your children to contribute builds their financial footing and makes them accountable to financial goals they will field as they grow into adults.
An ideal approach would be to have your child enrolled in a college work-study program i.e., a federal financial aid program, usually for undergraduates, which allows them to earn money for tuition by working for the institution part-time.
When it comes to paying for your child’s college fees, as a parent, you don’t have to do it all by yourself. Sure, to some, asking for money from friends and relatives may seem tacky but if done properly, it can yield game-changing results. It is suggested to offer friends and family a choice between money and material gifts during birthdays, graduations and other commemorative occasions for your child. State clearly the intended use of the money but do not over-stress to avoid the awkwardness that comes from asking for money. Most people are already too familiar with the current high cost of higher learning and will respond positively to your requests. You just need to be brave enough to ask.
Published on July 2, 2019