Saving for school
Filed Under Tips & Tricks | August 20, 2008
Much as we wish it wasn’t so, it’s almost time for school to start. And whether or not your little one is going to kindergarten, preschool or no school at all, some sort of higher education may well be in their future which is why in Mums ‘n Money this month Sheila Walkington, the money coach for Money Matters and co-founder of the Women’s Financial Learning Centre, tackles the loaded topic of RESPs:
We wanted to demystify RESPs this month by answering some of the most frequent questions we get from parents about them:
Where should I get an RESP?
You can purchase RESPs through your bank, your investment advisor, or through group plans such as the Canadian Scholarship Trust Foundation or the Heritage Education Foundation.
We think it’s easiest to go to your investment advisor. They know you, they know your investment goals, they’ll tell you if your investment is doing well or not at your annual review meeting and if you decide to make changes, you know who to call. It’s easy.
Our second pick would be your bank. Banks often offer great benefits, and flexible easy-to-understand investment options.
While group plans may offer similar benefits, they tend to be complicated, and less flexible. If you’re in contact with a group plan agent, get their material to look at and then compare it against what your advisor or bank can give you.
How much does a Post Secondary Education Cost?
Average annual tuition costs in Canada are $4,500 per year. If you child chooses to go away to school (or to live in residence) the average cost is closer to $12,000 per year. So a four year undergraduate program could cost anywhere from $18,000 – $48,000 or more in today’s dollars.
How much should I save?
Start by asking yourself these three questions:
- How much do I want to contribute to my child’s education?
- How much can I afford to set aside now?
- How much time do I have to save?
Your financial advisor can help you run through options, or you can plug your answers into an online investment calculator to see what you come up with.
If your child is still quite young, we usually advise people to save $100 – $200 a month, with interest and government contributions that can total $50,000 to $100,000 over 18 years.
Want to know more? On the Women’s Financial Learning Centre site they’ve got a handy info sheet on RESPs and setting them up.
Sheila Walkington is the money coach for Money Matters and co-founder of the Women’s Financial Learning Centre: www.womensfinanciallearning.ca. To learn more about making the right investments for your goals check out their Financial Empowerment Quarterly Newsletter.
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