Steep education costs may become a nightmare for parents who are not prepared for the future. When you think of higher education costs, it is not just the college fee that comes into the picture. It is also, tuition, boarding, transportation, book, food and other activities-related expenses. It is estimated that higher education can come up to $80,000, and many students end up with an educational debt of more than $27,000 after their college. With proper and careful planning, higher education costs can be contained well within your budget. Here is how you can start saving so that you can support your child’s dreams better.
Starting a registered education savings plan or the RESP will be a good option. This easy-to-follow and the convenient plan allows you to deposit money in your child’s name. Out of the three RESPs, a family plan may serve you the best if you have more than one child. This plan will help you save for all the children in one account. Saving $200 every month would be a good starting point with RESP. You can maximise government benefits like the Canada Education Savings Grant (CESG) if you deposit up to $2,500 in RESP annually. Also, if you have an RESP, you are eligible for Canada Learning Bond that will add up another $2000 in the government funding.
There are other ways to invest in the future, apart from RESP. While RESP is a registered account, you can also open a non-registered account that is simple and easy-to-operate. Funds can be withdrawn at your convenience from this account. Other non-registered ways to save money are high-interest savings accounts, bonds and GICs. Note that non-registered plans do not have a contribution limit.
The next option to save for educational costs is setting up a Tax-Free Savings Account (TFSA). As the name suggests, the money deposited in this account grows tax-free and can be withdrawn anytime. Another option would be to set up a trust with clear guidelines. With trusts, transfer of funds becomes easy.
With so many different options to build up a good investment for your child’s education, let your worries be forgotten. Get in touch with Kapil Mathur to start saving for tomorrow and gift your child the best of education and prosperous life.