How to Save Money for Your Child’s Education

Your chil­dren mean every­thing to you. They are your moti­va­tion, your joy, and your hope, and there is noth­ing you would­n’t do for them.

For this rea­son, you under­stand full well the impor­tance of a good edu­ca­tion in ensur­ing they live a long, pros­per­ous, and ful­fill­ing life. You also know that a strong edu­ca­tion can cost money.

In this arti­cle, we offer some prac­ti­cal and proven tips to help you save your hard-earned mon­ey so that you can direct it to what mat­ters most, edu­cat­ing your chil­dren for a bet­ter future!

College or University

Most par­ents set aside mon­ey to send their chil­dren to col­lege or uni­ver­si­ty. In many coun­tries, this is expen­sive. The world is more com­pet­i­tive, as is the job mar­ket, and very few insti­tu­tions offer free education.

Of course, after pay­ing for tuition, stu­dents also need to cov­er their liv­ing expens­es, and this is why it is nec­es­sary to think about sav­ing years before your chil­dren fin­ish high school.

Parents May Also Save For Other Educational Reasons

Many par­ents are uti­liz­ing the ser­vices of a pri­vate tutor as they have dis­cov­ered that indi­vid­ual or small-group instruc­tion can be enor­mous­ly help­ful to stu­dents. The most viable school­ing option for your child may be pri­vate school­ing, and this does not come cheap. Of course, there are many unan­tic­i­pat­ed costs asso­ci­at­ed with mod­ern edu­ca­tion, espe­cial­ly in the realm of technology.

Don’t for­get, too, that edu­ca­tion­al expe­ri­ences are also valu­able. Trav­el broad­ens the mind and can serve as an edu­ca­tion for young peo­ple. Trips you take with your chil­dren can be edu­ca­tion­al as well as enjoy­able. Through trav­el, your chil­dren may start to learn a new lan­guage and be moti­vat­ed to con­tin­ue that jour­ney at home. They may be exposed to his­tor­i­cal sites of inter­est and exam­ples of great archi­tec­ture or may even be treat­ed to one of Shakespeare’s plays at The Globe The­atre. Trav­el offers so much more than sou­venirs and self­ies, so hav­ing enough mon­ey set aside for a jour­ney is valu­able.

Hav­ing real­ized that high-qual­i­ty edu­ca­tion for your off­spring will involve some inevitable expense, how do you go about sav­ing the mon­ey?

Read on!

1- RESP

Cre­ate an RESP. An RESP is a Reg­is­tered Edu­ca­tion­al Sav­ings Plan. The RESP is an account set up specif­i­cal­ly for a child’s edu­ca­tion and relies on con­tri­bu­tions from par­ents every month. One rec­om­men­da­tion is to estab­lish the RESP as soon as pos­si­ble so that the month­ly con­tri­bu­tions can be small­er and more achievable.

This method is par­tic­u­lar­ly pop­u­lar for par­ents sav­ing mon­ey for a col­lege or uni­ver­si­ty edu­ca­tion, espe­cial­ly in places where ter­tiary edu­ca­tion is costly.

Remem­ber, an RESP can be fixed or flex­i­ble. It can demand a con­tri­bu­tion of the same val­ue every month, or it can con­tin­ue even if you are only able to put in a small­er amount some­times. Ask this ques­tion of the finan­cial insti­tu­tion when set­ting it up.

Var­i­ous web­sites con­tain an RESP cal­cu­la­tor, which can help you to esti­mate how much you will need to con­tribute each month to reach your long-term finan­cial target.

Automatic contributions

You can have funds deposit­ed auto­mat­i­cal­ly into the RESP. This can eas­i­ly be set up at the time of open­ing the account and oper­ates like a direct deb­it sys­tem that we use in so many aspects of our dai­ly lives. It helps you to make con­tri­bu­tions if you might oth­er­wise for­get, and guar­an­tees that the cor­rect amount of mon­ey is enter­ing the account each month.

2- Non-Registered Account

Anoth­er form of sav­ings account is a non-reg­is­tered account. This dif­fers in that it offers more flex­i­bil­i­ty than an RESP. You can with­draw funds at any time, which can be advan­ta­geous, but it can also pro­vide a temp­ta­tion to use the mon­ey for pur­pos­es oth­er than edu­ca­tion. Fur­ther­more, par­ents are taxed on all of the income and cap­i­tal gains.

3- TFSA

A Tax-Free Sav­ings Account allows sav­ings to grow tax-free, and an advan­tage of this option is that the mon­ey can be with­drawn, when need­ed, with­out hav­ing to pay taxes.

4- Establish a Trust

A trust is clas­si­fied as a legal agree­ment in which mon­ey is trans­ferred from one per­son to anoth­er accord­ing to spe­cif­ic terms. It is regard­ed as a sound method for con­trol­ling and pro­tect­ing funds because the mon­ey will be used for its intend­ed pur­pose — in this case, education.

This option offers peace of mind, but experts advise that it is vital to take time to prop­er­ly out­line the con­di­tions of the trust when it is first estab­lished. Read the fine print!

One poten­tial dis­ad­van­tage of the trust option is that the 18-year-old child can choose to spend the large sum of mon­ey on how they wish – will they spend it on education?

5- Payout Corporate Dividends

If you are incor­po­rat­ed, or your fam­i­ly busi­ness is incor­po­rat­ed, you could pay out accrued sav­ings as a cor­po­rate div­i­dend and direct this mon­ey to edu­ca­tion. To uti­lize this option, your child must own shares in the company.

One advan­tage of this method is that the child will pay the tax, and at the time the child receives the mon­ey, they are like­ly to have a low income and thus pay less tax.

6- Sell, sell, sell

Sell some of your unused per­son­al items. If you have clothes, toys, sports equip­ment, and oth­er house­hold items col­lect­ing dust, sell them for a lit­tle extra cash. You can use var­i­ous meth­ods, and if you’re not keen on a garage sale or yard sale. you can take advan­tage of the pletho­ra of online sales plat­forms that are nor­mal­ly free to use and allow you to sell items direct­ly to oth­er peo­ple in your neigh­bour­hood or region.

You might be pleas­ant­ly sur­prised by how much you can earn for an item, as many of them are still in good con­di­tion. It’s also a great way to de-clutter!

7- Reduce Expenses

How much did you spend on the last birth­day par­ty for your child? $100, $200? Did you need to spend that much?

If you spent $200, could you have thrown a per­fect­ly enjoy­able par­ty for half the price, and sent the remain­ing $100 to the RESP?

Bet­ter still, could you orga­nize a won­der­ful par­ty for a frac­tion of the price? Many par­ents cre­ate fun par­ties for their chil­dren on a very tight bud­get with a bit of hard work and creativity.

Plus, if some­thing does go awry, and the par­ty does­n’t turn out exact­ly as planned, does it real­ly mat­ter? Often the mis­takes, blun­ders, and bizarre birth­day moments cre­ate the best sto­ries for many years to come.

Also, think of oth­er ways to reduce expens­es. Ask whether chil­dren need expen­sive toys, or whether they can enter­tain them­selves with a few sim­ple toys and their imagination.

Con­sid­er how much time the chil­dren are glued to their video games and oth­er screens, and how much that form of tech­nol­o­gy costs you.

8- DIY

A proven method for reduc­ing expens­es and hav­ing more mon­ey to devote to your child’s edu­ca­tion is to do things yourself.

Sit down with your receipts and finan­cial state­ments and ask whether you could have tried to do some of the leg work for the home improve­ments. If you can cook at home more rather than eat­ing out or order­ing deliv­ery and if you can save mon­ey by fix­ing or reusing items instead of dis­card­ing them and buy­ing some­thing new.

9- Get Everyone On Board

Get your fam­i­ly and friends involved in the process of sav­ing mon­ey as well. One exam­ple of how you can do this is to pri­or­i­tize expe­ri­ences over expense. The next time your child has a birth­day or anoth­er spe­cial cel­e­bra­tion, encour­age rel­a­tives and friends to give them expe­ri­ences rather than more expen­sive toys.

Have an aunt or uncle take them hik­ing or fish­ing, encour­age grand­ma and grand­pa to teach them how to cook, sew, or do cal­lig­ra­phy – or anoth­er spe­cial skill that they pos­sess. Lat­er in life, your chil­dren will remem­ber expe­ri­ences more than they remem­ber expen­sive items.

Take this prin­ci­ple fur­ther and invite friends and rel­a­tives to forego a toy and instead con­tribute some mon­ey direct­ly to the RESP.

Last but not least

Fund­ing your child’s edu­ca­tion is chal­leng­ing but pos­si­ble. Exam­ine var­i­ous sav­ings accounts such as RESP or trust funds and deter­mine which suits your needs. Also, con­sid­er cut­ting down on reg­u­lar expens­es and encour­age friends and fam­i­ly to sup­port your efforts by con­tribut­ing direct­ly to your child’s future education.

Try DIY and use hard work and cre­ativ­i­ty to avoid over­spend­ing, and before you know it, you will have put away enough mon­ey to fund qual­i­ty edu­ca­tion for your beloved children.