If you’re like many working mothers, it’s not just saving for retirement that’s on your mind. You also want to ensure your children embark on the right career path — and that starts with a post-secondary education.
Are you putting enough aside to get them there? Moreover, are you using all the financial tools at your disposal to grow your children’s post-secondary funds to the level that will meet their future educational needs?
Choosing the wrong savings vehicle could cost you in avoidable taxes – and a missed opportunity to make the nest egg grow much larger.
A good example is the Canadian federal government’s Registered Education Savings Plan (RESP), a special plan for parents who want to save for their child’s post-secondary education. Offered by providers like Children’s Education Funds Inc. (CEFI), an RESP is in an investment vehicle that allows one’s education savings to grows tax-free until you are ready to
withdraw the money for post-secondary education. RESPs also provide access to a grant program called the Canada Education Savings Grant (CESG).
No matter what your family income is, the federal government pays the CESG amount of 20% of annual contributions you make to eligible RESPs for a qualifying beneficiary to a maximum of $500 for each beneficiary, and a lifetime limit of $7,200. RESP providers like Children’s Education Funds Inc. manage the RESP for you, helping to ensure you are taking advantage of all RESP-related savings opportunities.
Besides choosing the right savings vehicle, you need to develop the right savings habits. When many young working professionals are still paying off their own university education costs and not necessarily ready to address their young children’s needs in the future, starting early is the way to go.
An RESP isn’t the only way to save for your child’s post-secondary education. You could open a tax-free savings account or a high-interest savings account. You can also encourage your child to get a part-time job during high school to contribute to the cost of higher education.
Find more ways to save by taking a close look at what you spend to see what you can carve out. That will really add up over time. For instance, automatic deposits of a portion of your paycheck into a university savings fund makes saving for post-secondary education far more effective.
Whatever you do, don’t let yourself get discouraged and put off your savings program too long. Keep your goals simple and straightforward and be smart as you put your savings strategy in place. Remember, every little bit counts.
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