Thinking about funding your kids’ education can seem overwhelming.
With education costs rising at over twice the rate of inflation over the last 20 years, developing a strategy and initiating it when your kids are young, becomes critical when tackling the high price tag attached to post-secondary education.
Here are five tips to help you get ahead on the funding process.
1. Open your Registered Education Savings Plan (RESP) – as early as possible
Einstein called compound interest the 8th wonder of the world. Setting up an RESP when your child is very young, gives your investments maximum time to compound their earnings. What better way to celebrate that happy birthing moment than to open an RESP. Head online to www.startmyresp.ca/fsgv to open an RESP. All institutions participating in the SmartSAVER program charge no administration fee – leaving more money going to your child’s education.
2. Make it a family event
While talking finances may get you a puzzled look from your one year old, involving your child in the process at the age they start to use money can be a fantastic opportunity to educate them about how savings and earnings work. It can be particularly relevant when it comes to saving for their own future post-secondary education.
3. Apply for the free grants that are available for RESPs
As soon as your plan is set up you can potentially start accessing a variety of free grants offered by various levels of government to help you reach your education savings goals. The Canada Learning Bond (CLB) which is income based, and the BC Training and Education Savings Grant (BCTESG), which is age based, can be accessed without having to contribute any of your own money.
4. Start the scholarship search early
Parents should check on what scholarships and bursaries are offered within your own circles; these may include scholarships offered by employers or trade unions, religious or cultural organizations, service or sports clubs and other organizations to which you may be involved in, or have connection to. Find out what qualifications your kids will need to apply for these awards. Also check on other scholarships through free scholarship search engines Scholarships Canada and Yconic.
5. Let everyone know!
Once they are set up, RESPs can be contributed to by friends and family members. Rather than those psychedelic PJs from your great Aunt Matilda, a cash gift to their niece’s or nephew’s RESP would benefit them for years to come. Remember that the government matches 20% of RESP contributions (even more if your income is low) – so that $100 gift in effect becomes $120 gift once the government’s contribution is factored in.
Did you know that FSGV offers free and confidential financial coaching for low income individuals and families? Learn more
These tips were provided by Murray Baker, a Financial Facilitator and Coach with the Financial Empowerment program at Family Services of Greater Vancouver. Murray is also a speaker and the author of the bestseller The Debt Free Graduate; How to Survive College or University Without Going Broke, now in its 14th edition.