It never seems the right time to invest in your future. As much as you try money always seems to go out as fast as it comes in. So is it really the right time to put money away for a Child Education Fund or RESP (Registered Education Saving Plan)? My opinion yes, 100 times yes! Start as soon as they are born. My drooling, footy PJ wearing, vacuum fearing baby has an RESP right now. I also think its a good idea to invest in your own future as well.
1.Investing a Little Over a Long Time Pays
That little bit every month may not seem like much and I’m sure you could use it for groceries or other bills but projected school costs for my little one to go to 4 years of university is estimated at $64,000. YIKES! Do you really want to deal with that in 17 years? Or leave them to deal with their education? Putting just a little each pay cheque, can gain interest and snowball into nice lump sum.
2. Longer Term Investments can Ride out the Ups and Downs of the Market
Another advantage to start investing early is riding out the ups and downs of investments. The markets are constantly changing and some years they are down. Investing money long term allows you to invest in higher risk, higher return investments because you have the time to let the marketing bounce back. You don’t have to invest in high risk accounts if you don’t want to. you simply inform your financial adviser what types of investments you are comfortable with and they will show you profiles that are Low, Medium, Moderate or high risk.
3.Make It Automatic and You Won’t Even Miss It
If you have the money come out automatically on your pay day, after a few times you don’t even miss the money. Anyone looking to invest in their families future but don’t know where to start; I highly recommend this easy to read book called The Automatic Millionaire. I crushed it in a few short days and I felt better informed from reading it. It is what inspired me to invest in RRSPs when I was young and I am so happy I read it. Its educates and offers easy ways to invest without breaking the bank.
4.Reduce Stress on your Children
I have countless friends who struggled with their fiances for school and ended up dropping out because it was too much. Others I watched them stress and struggle during and after their completion of University or College because their debt was so huge. I was fortunate to have my education covered and only needed to fund getting to and from school, a.k.a. my totally awesome and money pit of a car. I got in a bit of debt, but got out of it before I was 30. Even now, I am watching young family members who need to scale back their education in order to pay for it.
5.Government Gives you Cash for RESP!
You heard me, in an effort to encourage parents and grandparents to save for their future generation’s education the government offers additional funds depending on your income and annual contribution. In our situation for every $200/month invested the government gives another $40/month.
6. Roll it Back into RRSPs
Any money not used for your children’s school gets kicked back to you for RRSP. So if your kid decides school is not for them you get to put the RESP towards your retirement (sans Government top-up for RESP).
If you saved for 4 years of university but your child only does 2 years of college you again gain any extra back form the RESP to roll into RRSPs. Yes, I am excited about this.
BONUS: 7. Reduce YOUR Stress
You have enough to worry about. I just finished a meeting setting up my daughter’s RESP and working out my husbands and my RRSPs and I swear to God I feel high from excitement. I feel like I won the lottery. I know that if continued to contribute to our RESP and RRSPs as we are, there is no worries for retirement even, with the projected cost of living. This is an amazing feeling. RESP, RRSPs were fears in the back of my mind and now its something I want to share and encourage everyone to do.
So I recommend to you, find a highly recommended financial adviser or go to your bank and start an RESP for your child and a RRSP for yourself. If you have one already see how its doing and if there is any changes you should be making.
What are your thoughts on paying for your child’s education? Some say its not teaching them responsibility in life, what are your thoughts?