Almost half of student expect their parents to pay for post-secondary school.
Do you have a savings plan?
Students are increasingly relying on their parents to manage their finances. A recent Ipsos survey conducted on behalf of RBC in 2023 revealed that 43% of students expect their parents to take care of their financial needs, up from 29% in 2013. Additionally, nearly seven in ten students turn to their parents to help develop their financial goals, with 69% doing so in 2023 and 68% in 2013.
What Does This Mean for Parents? A Saving Plan is Essential
Here are two ways to start your saving plan:
Life Insurance Policy. Did you know you can take out a life insurance policy for your children? It works much like a regular whole life insurance policy with a built-in savings component. There are many different payment options, such as 10 & 20 pay, which means the policy can be paid off within a specific timeline. After the policy term is complete, your child will still have life insurance coverage, and the cash value portion will continue to grow. This money isn't just for schooling; they can use it for their first car, wedding, business ventures, or to jump-start their savings in adulthood.
Registered Education Savings Plans (RESPs). Canada offers multiple investment accounts to encourage and help you save. An RESP is a great way to grow your investments with government grants. The government will match 20% of contributions up to $2,500 each year, for a lifetime total match of up to $7,200. For example, if you contribute $50 a month to an RESP from age 0, the total breakdown by age 18 would be:
Your contributions: $21,600
Government grants: $4,200
Interest generated: $7,556 Total: $33,356
As long as your child has a SIN number, you should start saving as soon as possible.
All in all, there are many ways to invest for your child's future.
Speak to a TLFG wealth management agent in order to go through the correct way to format your savings plan.
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