5 Ways to Save for Your Child’s Education

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**This is a sponsored post written by me on behalf of Kijiji. All opinions are my own.

As soon as Scarlett was born, I took immediate steps to set up her Registered Education Savings Account (RESP). I knew that this was the best way to save for her post-secondary education since the Canadian Education Savings Grant (CESG) would match my contributions by 20% up to a maximum of $500 a year. There’s honestly no better guaranteed return out there since it’s literally free money.

To maximize the grant, my wife and I would have to contribute $2,500 a year to Scarlett’s RESP. That’s a lot of money and for many people, putting that much money aside for something that will take place many years away can be difficult.

Parents are constantly juggling the finances that affect them now, so how do you prioritize your child’s education? I’ve got a few tips that will put you and your child on track.

how to save for your childs education

Watch your spending

Personal finance writer David Bach coined the term “latte factor” almost two decades ago when a cup of the drink was only $2-3. These days, a latte at a fancy coffee chain or independent shop is closer to $5-7. If you purchased one of those drinks or an equivalent amount of snacks every day during the work week, you would be spending $1,300-$1,820 a year. That’s insane when you think about it. The amount you spend on coffee alone could cover more than half of your RESP for a single child every year! I’m not even counting additional spending you could cut such as eating out, magazine subscriptions, excessive amounts of makeup, etc. I’m not suggesting you need to cut out all the fun, but think about your priorities.

Buy and sell your stuff via the second-hand economy

For many people, buying new is the natural thing to do, but according to Kijiji’s 2018  Second-Hand Economy Index, you could save an average of $825 per year when buying second-hand. When you add in the fact that a person can earn an average of $1,134 per year by selling items in the second-hand economy, that’s nearly $2,000 back in your pocket. I personally have sold many items online on Kijiji since it’s the #1 channel for buying and selling second-hand goods. I’ve bought and sold some of the top categories in the second-hand economy, like baby accessories, furniture, and entertainment items. What I try to do is buy gently used items for Scarlett and then when she’s done with them, I put them back up for sale on Kijiji where I can recuperate much of my costs – so far, I’ve earned about $650 from selling this year. With an average of two new ads posted on Kijiji every second, I haven’t had much trouble sourcing items that I need. The key thing is to take that money you’re saving and invest it in your child’s RESP.

Make your savings automatic

For some people finding $2,500 a year isn’t a huge issue, but coming up with it all at once may be a problem. If this applies to you, then set up automatic monthly deposits instead. Regardless of who you set up your child’s RESP with, they’ll be able to automatically withdraw money from your account so you don’t even need to think about it. To maximize the grant, you need to set aside about $210 (or $105 per person in dual-income households) a month which is a reasonable amount to handle. One trick I like to use is to set my automatic payments to take place the day after I get paid. This way, the money is gone before I even notice it so I’m never tempted to spend it.

Don’t be afraid to get others involved

As soon as Scarlett was born, I made it quite clear to friends and family that we much preferred cash gifts that would be used for her education instead of toys if they planned on gifting her anything. Don’t get me wrong, any gift was greatly appreciated, but I knew that funding her education was more important than any physical gift and most people agreed. This may seem tasteless to some, but I believe that my friends and family felt comfortable with this request since they knew the money wouldn’t be wasted on other things. It can be difficult to make a cash request, but I do think talking to those close to you and explaining how that money will be used will go a long way. It also likely helps that I have no problem giving cash gifts to my friend’s children.

Have a goal in mind

The cost of college and university seems to increase every year so it’s important to have a goal in mind when you’re saving for your child’s education. Roughly estimate how much it’ll cost to fund their post-secondary education and then talk to your financial advisor so you know how much you need to set aside to reach that goal. For some people, putting aside that much money may not be possible, but that’s okay. Come up with a number that works for you and save accordingly; your child will be thankful regardless of how much you saved for them.

Final thoughts

Saving for your child’s RESP can be difficult but it can be done with some small sacrifices and adjustments to your budget. Don’t forget, the money that you put into your child’s RESP gets invested so it could potentially be worth a lot more than what you initially deposited by the time they’re ready to start college or university.

About Barry Choi

Barry Choi is a Toronto-based personal finance and travel expert who frequently makes media appearances. His blog Money We Have is one of Canada’s most trusted sources when it comes to money and travel. You can find him on Twitter:@barrychoi

1 Comment

  1. Laura on September 17, 2018 at 4:40 PM

    Setting up automatic withdrawls the day after pay day is the best way I have come accross to save money! When kids get older I suggest they contribute to it as well. Investing in yourself and your education should be a life long habit

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