How to save for your child’s education
Education is a crucial part of a child’s development, but in today’s economic situation, many parents find it difficult to afford post-secondary schooling for their kids.
In fact, according to ECA International, fees for post-secondary schooling rose by 4% in 2017 and 2018. Adding to this is the COVID-19 pandemic, which could push education spending higher as schools and colleges promote distance learning for vulnerable sectors.
In short, paying for higher education is becoming a significant challenge for parents who also need to make ends meet. However, this is not an insurmountable problem – it’s only a matter of knowing how to adapt to the changing economic landscape.
Saving money may seem like a long shot at this point, but it’s still possible to secure the best quality education for your child. Here are some tips to help you save.
1) Create and manage a budget
Whether you are saving up for private school or college, you need to understand how important it is to secure the resources you need. Aside from tuition fees, there are also miscellaneous fees to worry about, and that’s also on top of the rent or dormitory charges you will need to pay if you are sending your child to a remote school.
Preparing a budget earlier on should help keep you on track in saving for your child’s schooling. For this, you may have to scale down on your grocery or restaurant spending each week. You may also need to get rid of unnecessary expenses, especially on recreation and leisure. It also helps to keep your car in good condition to save on repair and maintenance costs.
These are just some of the most obvious means to save money, but the secret to proper budget management is using apps that are designed to help keep track of your income, expenses, and savings.
Apps such as YNAB (You Need a Budget) can come in handy when it comes to setting aside cash for specific goals. While you are required to pay a $7 monthly fee to use the app, the benefits make it a worthwhile investment.
Using technology to your advantage offers a hassle-free way to put you on top of your finances. Along with more practical budget-saving techniques, it’s easy to secure the amount of cash you need for your child’s future.
2) Consider a special savings account
Saving for your child’s education does not stop with using apps and pursuing a more frugal lifestyle. You may have to set up a separate savings account for your child’s education.
An education savings account comes in different forms, depending on where you are. For one, Canada offers one of the most progressive educational savings options in the world, offering valuable incentives.
The Canadian government provides families a way to save for the post-secondary education of a beneficiary. Through the Canadian Education Savings Grant (CESG), the federal government matches 20% of your RESP contributions to $500 in a year, up to a lifetime maximum of $7200.
Using a Registered Education Savings Plan (RESP), Canadian families can put money aside for the educational needs of a child. But possibly the best benefits an RESP offers are the incentives it pays out through federal and local government grants.
On the other hand, it’s also important to understand how you’re able to withdraw money out of the account ahead of schedule.
More importantly, you may have to look for a provider that has a refined investment strategy and an RESP plan that’s suitable to your needs. CST RESPs, for one, provide a range of added benefits to help you save for the future of your child.
3) Pay your debts diligently
While an education savings account can help you put your child on the right path, it’s still important to stay financially responsible with the debts that you will need to pay. After all, being wise with your finances helps you steer clear of future obstacles, some of which can get in the way of your child’s future.
Your credit score is critical to your child’s future, if not your financial future. Making late payments can lead to hefty penalties that can affect your ability to meet your financial goals.
Worse, having a credit card delinquency report to your name can put your finances along dire straits. You may not be able to take out mortgages or loans at a lower interest rate. If you have other plans like buying a house, you may have to adjust your budget accordingly.
Regardless of how education rates fluctuate each year, it pays to use the right approaches when it comes to securing your child’s educational future.
After all, amidst all this uncertainty, tomorrow remains bright so long as you make the right decisions.
Photo by allison griffith
