3 Ways To Save For Your Child's Post-Secondary Education

Kids are expensive.

That’s the understatement of the century.

From diapers and food, to gadgets and toys, to childcare and extracurriculars, to education—the list goes on as your bank account dwindles. Before having kids, things were much simpler. We could predict our expenses and budget accordingly. These days, there are unexpected expenses around every corner—not to mention we’re really bad at saying "No" when our kids ask for stuff. All of this adds up to an expensive life and some stress around finances.

But, one thing we’ve been fairly consistent with since having kids is saving for their future—short term, medium term, and long term. Thanks to my husband’s financial savvy, as soon as our first daughter was born we put a few regular practices in place to help not only save for her future, but also teach her about the importance of saving money.

1. Short Term: The Piggy Bank

While this is the most low-tech type of savings there is, there’s something to be said for teaching your child the value of a dollar by allowing her to physically put her money into a piggy bank and watch it accumulate. Both of my girls have retro Fisher Price piggy banks, which they use to save money they receive in the form of cash.

My big girl saved birthday gifts and other money from grandparents for over a year until she had enough to buy her first bike. It was exciting for her, at three-and-a-half, to walk into the store and pick out a bike and helmet and then pay for it herself.

Now she’s starting over again, saving for the next big thing—which might end up being a new bike, given how quickly she's growing!

2. Medium Term: The Savings Account

If you’re only choosing one savings vehicle, you might want to opt to skip this one and go straight to number 3. But, we’ve managed to do both. Each daughter got her own bank account when she was born. This is where we put gifts that come in the form of cheque, plus an extra $25 or $50 per paycheque when we feel like we can afford it. We tell our big kid that the money we're saving for her in the bank will be used toward a car someday. "But, I already have a car!" she told us. True! But I don't think that car will get you very far...

3. Long Term: The RESP

University was the best time of my life. I want my kids to have the same opportunities I had—to go to a school of their choice and experience independence, while studying a subject they're passionate about, and creating a foundation for the future. But all of this costs a lot of money!

As such, we've started early, putting money into a Registered Education Savings Plan (RESP) for both daughters.

Contributing to an RESP doesn't have to be complicated and you don't even have to deal with a bank or financial advisor. With giraffe & friends, Canada's only 100% guaranteed, no-fee RESP, you can do everything online while your baby naps. If, like me, you're not a numbers person, giraffe & friends makes things really simple.

Here are a few steps to get you started:

  Read! Do some reading to get a better sense of how the RESP works and what you're saving for. Visit giraffeandfriends.com for information that's easy to understand.

  Get a Social Insurance Number (SIN) for your child. While you can apply for an RESP without one, your savings won't start earning government grants or interest until you provide it. Also, if you want to set up your child with a bank account you'll need a SIN number for that too.

  Know that not all RESPs are created equal; return rates and fees will vary. To be sure your child will end up with the most money toward her education, watch out for excessive MER (Management Expense Ratio) charges and other fees.

  Choose a program that won't gamble your savings. With giraffe & friends, your investment won't be impacted by stock market dips or even a crash. You don't have to start reading the financial section of the newspaper to know that your money is safe and growing.

  Know what's available to you. Along with an RESP, your child may be eligible for other sources of financial support including scholarships and/or student loans. Although post-secondary scholarships aren't based on how well your kiddo does in preschool, so you won't have to worry about this one for a while!

  Know how to maximize government grants! This one is important. Federal government grants have a cap of $500 per year and a total contribution cap of $7,200 over the life of the RESP. Know how much you need to contribute to be eligible for these grants and then plan accordingly, based on what you can afford. There are also multiple provincial grants available dependent on your income and province. giraffe & friends will apply for all applicable grants for you!

  Set up automatic payments. Who has time to worry about transferring money every month? Not me! I'm lucky if I can remember to return my kids' library books on time. With giraffe & friends, you can set up automatic payments online so you'll never miss a payment and you can budget accordingly.

  But what if my child doesn't go to university? What if she would rather dance her way to stardom on the Broadway stage? An RESP can be applied to most post-secondary education that results in a degree, diploma, or occupational skill, even international schools. These days, everyone needs some sort of post-secondary education, so I'm positive my kids will use this money for something. Plus, the RESP can be used toward many things that your child needs while at school. As long as she's enrolled in an approved post-secondary education, the RESP can be applied to expenses including tuition, food, apprenticeship tools, or books.

So, while the thought of my babies graduating high school and leaving me behind makes my tummy ache, at least I know we'll have some money saved to make the transition easier on our wallets. Until then, I'm going to do my best to enjoy life in this moment, with one kid in daycare and the other in JK. There's enough to think about without having to worry about university!