Saving for your children’s education is easier than you think

New grads can agree on one thing, post secondary education is NOT cheap. Everything from tuition, books, rent, food, entertainment, booze and much more can add up quickly. When we graduated from university in 2007, Tolga calculated that we both spent around $60,000 on our education.  This number may not reflect your personal experience, but the main point is, post secondary education can really be expensive.

In 2015, Lindsey gave birth to our daughter, Emily.  Tolga, being the diligent financial person that he is, often had sleepless nights over how to save up for her education. If ten years ago, it cost us $60,000 to attend university, how much is it going to cost eighteen years from now?  We did the math and it didn’t help with the sleepiness nights:

University Savings #1 - updated

We know there are a lot more factors to consider than the simple math shown above. However, for argument sake, let’s say it is that easy. Instead of saving up for $60,000, we are looking at saving closer to $120,000. Looks like Badger is going to have to give up his fancy treats.

Well, thankfully there is one big upside to all the taxes we pay and that is the Universal Canada Child Benefit. What does this mean to you? It differs for every family but check out this website that allows you to quickly calculate what your payments could be based on your income.

How does the Universal Canada Child Benefit help you save for post secondary? Well, if you reinvest those funds into your child’s RESP, and by the time little one graduates from high school, it can significantly help pay for their post secondary education. We’ve run the numbers for four different income brackets on what it could look like 18 years from now:

University Savings #2 updated

What does this all mean? Well, to put it simply if you are a family of a net income of $70,000 or less, by reinvesting the Child Benefits you receive each month into your RESP, you will have have all or almost all the funds your child needs for school. AMAZING!

For those that are above that income bracket, well it just means that you need slightly add to your contributions. For example, if you made $90,000, all you would need to do is contribute an extra $70 a month.  For an extra $70 a month, you can save over $100,000 for your child’s education.

Now, this is a much easier pill to shallow and makes Tolga sleep easier at night. For those with kids, don’t wait to invest in your child’s future. Do it now and hopefully avoid some stress down the road.

Photo by Element5 Digital on Unsplash


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