Saving for an Education: What you need to know and where you need to start first

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IMG_00000160You have or are having a child – congratulations! Besides basic shelter, love and food, an education could be the most valuable thing you are able to give you child, and luck for you, you have 20 years forewarning to start saving for it. Anyone that makes excuses and can’t help out even a little for this very important part of your child’s life is fooling themselves into thinking it is harder than you think. Even starting small will lead to some gesture that allows your child to see how important it is to pursue some post-secondary education, and allow them to not be in as much debt as some of their peers. If you can help them so they don’t have to worry about debt at all, even better. However that’s another story, and we’re talking about STARTING a plan first.

First things first, your child needs a Social Insurance Number, or SIN. This will entitle any ‘extra’ bonus money from the government to be deposited into an education fund in your child’s name. These are things like the CANADA LEARNING BOND. This allows you to get 500.00 in your RESP account JUST FOR OPENING UP THE ACCOUNT! Yes, it is THAT EASY. And then every year until your child is 15, the government will put 100.00 extra in the account. The other common ‘bonus’ you receive when it comes to opening up an RESP is the CANADIAN EDUCATION SAVINGS GRANT. This is a bonus that entitlement is calculated based on how much is being contributed each year. This number is 20% of your annual contribution, to a maximum of 500.00 each ear. This means for this savings vehicle to be most efficient, it is best to aim to contribute 2500.00 each year, which would be about 210.00 each month, or 100.00 by weekly (You can do it!). If you can aim to have at least 50,000.00 to help out towards education costs, your child will already be ahead.

The other option for education saving is to set up a trust fund, and while there are no extra saving bonus’s from the government, it does allow you to save money in a child’s name, and at age 18, they have the funds available to use towards their education cost or whichever it might be.

Things to note: ANYONE (not just parents) can set up an education fund for anyone with a Social Insurance Number. And so, if you are not doing anything with your refund this year, perhaps consider channeling it towards someone’s education. Costs of education will only rise!

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