Every parent has to start thinking about their higher education from their toddler stage itself. So that they can save a huge amount of money for their university education. It this fast-moving world as a parent, you have to be extra cautious while choosing the plans for saving your hard earned money for your child. But you have to analyze various facts, before choosing a certain scheme. How much you can save? What is the proper way to invest your money?
Therefore, to ease your work here, we have analyzed a scheme which will be fruitful for you in the later stage. In addition, there is some helpful advice that will enable you to successfully save up over the years to pay for their education if they so wish to go this route. Remember, even though you are saving, it is their choice at the end of the day. Nevertheless, don’t let this put you off. There are always positives to saving money.
Without further ado, let’s jump in with some advice on the RESP.
What is an RESP
Let’s discuss RESP. It is truly a smart move to go for a Registered Education Saving Plan known as RESP for your budding child. This simple and useful method of saving you as well as your friends and relatives also can contribute their part in saving money for your child’s education. So you don’t have to think much in case you are running out of money at a certain stage. They can contribute money as birthday gifts.
A Registered Education Saving Plan brought to you by the Federal Government in the year 1972. And it included a special grant from the Government in the year 1998. The special grant plays a vital role in your child’s higher education. The initiation process of this RESP account is quite simple. The beneficiary has to be a Canadian citizen with a valid SIN number. In this scheme, your money multiplies and that is also tax-free. On the other hand, you also get a generous amount from the Government.
Different types of RESP
Mainly there are three types of RESPs. They are Individual plans, Family plans, and group plans. In this individual RESP plan, you can contribute your money and save for the higher-secondary education for one beneficiary only. And this is known as self-directed accounts. Whereas with a family RESP plan you can add more than one beneficiary at a time. So it is quite good to opt for a family RESP scheme you have multiple kids in your home. In terms of the RESP, a family plan is the best. In the Group RESPs which is also known as scholarship trusts, you have to contribute a higher amount of fees and it comes with pre-set contributions. So it is not a good choice in terms of child education saving plan.
How to initiate an RESP
To initiate an RESP account any parents, grandparents can opt for the scheme. They can open an RESP account for their child or any other family member, but the maximum age limit is 21. The maximum amount for a Registered Education Saving Plan is $50,000. After the completion of high school, your child is eligible to get the money to support his educational cost.
You can go for the RESPs through financial institutions and banks. All the RESPs have their own set of rules and regulations. So it is quite good to know the details of all that after good research, and then only open the account for the benefit of your child.
Alternative Ways to Save
Going down the route of an RESP is a great option with plenty of benefits to it. However, it isn’t the only option you have when it comes to saving up a nice pot for when your child is ready for their further education years. There are lots of other ways to put away more money. You could choose to do this alongside an RESP to ensure that you can go over $50,000. You may choose to do it instead. The choice is yours, but it pays to know what alternative ways there are to save and how you can make the most of the leading up years.
There are plenty of other savings accounts that offer anywhere up to 1.26 APY (annual percentage yield). Given that the average savings account will only be about 0.06 APY, this is something you should consider when looking for alternative savings accounts to set up.
Some of the top considerations include:
- TAB Bank
- Varo Money
- Fitness Bank
- Bask Bank
- CFG Bank
A top tip for saving money is to make sure you get it sent to your chosen account automatically. This way, you won’t be tempted to spend any of it or forget to add it. You may be surprised at how easy it is to do that.
How to save more
If you want to save more every month to ensure that your child has a larger amount by the time they are of university age, then there are several things you can do:
Increase your monthly income
The most obvious way you will be able to save more is by ensuring more income is coming in. There are several ways that you can go about this. You could start a side hustle – if you can make this a passive income, then all the better, as you can enjoy some extra money coming in that could go straight to your child’s bank account.
If a side hustle is not to your liking, then consider how you could earn more money at work. Could you work more hours? Or perhaps take on a second job? The other possibility of increasing your monthly salary from work is by getting promoted. Make it clear when you get promoted, though, that you want a salary increase to reflect all the extra responsibilities.
However, sometimes a promotion or change in salary is not possible without first gaining enough experience and knowledge. This is especially the case in careers like healthcare – to be able to administer care to a certain level, you need to be educated and fully trained in such a practice. The more educated you are in the healthcare field, the higher your salary is likely to be due to needing to reflect the years of education you completed. For instance, a Family Nurse Practitioner who will have completed vastly more years than a registered nurse will naturally earn more.
It is important to note that educating yourself isn’t going to guarantee you a job at the end of the day, but it does make you more in demand the more educated you are, which could make it easier for you to find a job at the end. You might start to build skills that very few possess or have qualities that make you stand out. Plus, you will be able to provide a better experience for your patients, which is something many businesses and hospitals will want. Just remember, the hard work you put in after graduation is just as vital as the work you put in when obtaining your degree– make sure to actively seek out work, apply to agencies or volunteer placements, and show that you are committed to earning a better role with a better salary. Show people why they should hire you and make them realize that they would be the ones missing out and not you.
Going this route doesn’t just potentially increase your salary. You get the added benefit that your children can see the importance of education. If you are studying around them long after you first graduated yourself, or you decide to take it upon yourself to change your career path for the better by getting educated, this is going to positively impact your children’s mindsets.
If you feel passionate about transforming your career, for instance, from a registered nurse position to a Family Nurse Practitioner to inspire your children and be in a potentially better-paid position than before, take the time to look over your degree options.
You can study online at home, meaning you don’t have to alter much to benefit from further education. Wilkes University’s post-graduate NP certificate program is one such option you could go for to gain the skills and education a Family Nurse Practitioner requires. You don’t have to worry about paying a huge fortune to get a quality education here. It is competitively priced, and they even predict that the role will grow through til 2029 at almost 50%.
Cut back on other costs
If you want to save further, but you can’t change your monthly income, or you just want to maximize the amount you can put away, then now is the time to start thinking about cutting back on other costs.
Look at your lifestyle
First, look at how you are spending your lifestyle. Is it mostly free activities that you do during your free time, or do you spend thousands of dollars each month on a lavish lifestyle? If you are in the latter category, break down each area of your life and determine its importance. While you may love getting a coffee on the way to work each morning, could you make it at home? You may love doing a bit of retail shopping every month; see if you can cut back on how often you go on big spending sprees. Changing a few stores that you shop at could help you make bigger savings.
Other great areas of your lifestyle to slightly amend include buying less expensive branded items, including household essentials, clothing, and beauty products. Always make food at home rather than buying lunch during the working week – you may think at the time that it is only $13 to get food sent to the office, but that is $13 that could have gone into savings. It can be helpful to start using coupons at this point and ask for discounts when you can, too.
Look at your monthly bills
Bills are inevitable, but there are ways you can cut back on these. For instance, you may have several bills that aren’t essential. This includes memberships, cell phone bills, cable bills, and streaming services. Many households will have multiple streaming services and cable, each of which costs a pretty penny. You won’t always be getting your money’s worth this way. Instead, look at where you can cut back on these – if they each cost you $79.99 a year and you got rid of two streaming services, that is an additional $159.98 every year going into savings. Remember, quite often, the price of these streaming services goes up with each passing year, so over time, every time it increases, make sure to increase how much you move to savings too.
For bills that are essential, e.g., energy, insurance, etc., while you can’t get rid of these entirely, you can lower them if you are careful. Simply by checking insurance rates throughout the years, you may be able to save a massive $700. Making some changes in your own home, like fitting LED lightbulbs and taking much shorter showers, can help lower your energy bills. Although it may not seem like much at the time, every little helps when looking to make some savings.
Remove any debt
One of the best ways to save more is to solve any debt problems you have. By making an effort to rid yourself of any debt, by the time you have paid it all off, you will be used to living off of your monthly allowance, meaning that any of the money that you were using to pay off your debt won’t be missed if you then start moving that money into a savings account. This is an easy way to put away a lot of money every month. Your lifestyle won’t be affected, nor will your ability to pay any of your bills. Use the snowball method to pay off your debts, working from smallest to largest amounts.
