Education Planning and Saving: Top Tips to Save for Your Childrens’ Future

Saving money and deciding on the best investment for your children is important, yet most people need help learning ways to save for their kids. The cost of a university degree in Canada is getting more expensive, with tuition and other compulsory fees expected to have about tripled from 1990 to 2017. According to the Canadian Centre for Policy Alternatives, Canada has the fifth-highest tertiary tuition in the OECD behind Chile, the United States, Korea and Japan. Even if your children are young (we all know how time flies!) it’s best to start saving now and learn about the different options. Here are 5 tips to help save for your children’s future.

1. Contribute to a Registered Education Savings Plan (RESP).

This is a special plan created by the Government of Canada to help save for post-secondary education by allowing tax-free growth inside the plan. RESP’s also help by providing extra grants- the Canada Education Savings Grant (CESG) which is for everyone, as well as the Canada Learning Bond for lower income families. Learn more about how a RESP works.

2. Take advantage of the Canada Education Savings Grant.

No matter what your family income is, Employment and Social Development Canada (ESDC) pays a basic CESG of 20% of annual contributions you make to all eligible RESPs for a qualifying beneficiary to a maximum CESG of $500 in respect of each beneficiary ($1,000 in CESG if there is unused grant room from a previous year), and a lifetime limit of $7,200. If your child is a Canadian resident 17 or younger in the year, then the first $2,500 of RESP contributions will be eligible for $500 of CESG. The CESG is paid into your child’s RESP and grows with your contributions on a tax-deferred basis until your child begins post-secondary education.

3. Contribute additional savings to your Tax Free Savings Account.

Your investments will grow tax-free and withdrawals are also tax-free, making TFSA’s a flexible savings plan. If your child is 18 or older, they can contribute to their own TFSA.

4. Benefit from the Canada Learning Bond.

The Canada Learning Bond is available to children who were born after December 31, 2003 and whose families receive the National Child Benefit Supplement. The Supplement is over and above the Canada Child Tax Benefit and is usually received by lower-income families. If you do not qualify for the Canada Learning Bond, you can receive the Canada Education Savings Grant.

5. Explore Bursaries and Scholarships Available to Your Children.

Different schools and programs will sometimes offer scholarships and bursaries which you can take advantage of and most scholarships are now received tax-free. Some community organizations will even offer bursaries to students.

It’s never too early to start saving for your child’s education. Consider these tips when your children are young and save more for their future. The sooner you start planning and saving, the better off you’ll be in the long run.