How to Financially Support Your Child’s Future? Preeti Baid April 26, 2022 Money, Parenting 333 The sky-high cost of education and residence in Canada is an indicator for the parents to prepare for their children’s post-secondary education days. Besides, any parent would not want their kids to struggle financially for quality education and trouble-free life. The parents must save money for their youngling’s future so that they are not deprived of any opportunity to excel in life. However, parents, especially new ones, can often scrunch their heads since many do not know how to support their child’s future financially. Nonetheless, this article is intended to help such parents and assist them in exploring some of the outstanding options to support their children’s future. So, make sure you scroll down to the end. Moreover, you can cut yourself some slack and check here for one of your child’s most financially viable plans. What can you do to support your child’s future financially? Everyone can agree that young adults are not well equipped with the needed skills, nor do they possess excellent financial comprehensiveness. Moreover, the education expenses and tuition fees are increasing even faster than the current inflation rates. As a parent, you want to do everything to ensure that your kid faces no trouble. Sadly, the truth is that you cannot always be around your child to help them move past every obstacle in life. However, the financially smart decisions you make today can be extremely helpful for your child in the future, whether or not you are around. Thus, here’s how you can financially support your child’s future- 1. Plan for their post-secondary education The average fee for an undergraduate course in Canada in 2008-09 used to be around $4700 per academic year. Whereas, after about 15 years, today, the average cost for a four-year graduation course runs between $75000 and $100000, between $18750 and $25000 per year! It is evident from the above that by the time your kid reaches the age of going out for post-secondary education, the costs for education will be absurdly higher than ever. However, you can help your child cope with these expenses by starting a university fund as early as possible. Although a university education seems like a distant thing in the future, you can never know the costs for the same. Investing in funds will attract compounded interest, which means the amount you save up will grow and help you cover the expenses of sending your child to a university. 2. Consider opting for reliable savings vehicles Canadian parents can also open in-trust or informal trust accounts on behalf of their children and save money through contributions. The designated trustee looks after contributions on behalf of the beneficiary (the child) until the day beneficiary reaches the age of majority. The good thing about an in-trust account is that one can divert the contributions to investment channels. Moreover, there is no limit on how much amount one can invest. It is, however, pertinent to mention here that the contributor does not have a say in how the child can use the money when they reach the age of majority. The child can use the funds for purposes other than studies as well. 3. Open an RESP If the sole intention behind your savings is to accommodate your child’s post-secondary education financially, then you should go for an RESP (Registered Education Savings Plan). An RESP is a savings vehicle dedicated for the guardians (including parents, grandparents, relatives, friends, etc.) to make contributions to support their children’s higher education expenses in the future. You can open an RESP and contribute a maximum of $2500 to it each year. If the contribution exceeds the limit of $2500, the beneficiary (i.e., the child) shall have to be deprived of grants offered through provincial or national programs. An RESP assures Educational Assistance Payments (EAPs) for the beneficiary, which can help them bear the education expenses. 4. A whole life insurance plan Whole life insurance offers a guaranteed and lifelong death benefit to the insured. Whole life insurances also bear a savings element, which can help you gather monetary funds and offer a death benefit. The accumulated fund is tax-deferred, and it also attracts compound interest at a set rate. Therefore, buying your child whole life insurance as soon as possible also accumulates funds that they can use for different purposes, including studies, business, asset purchase, etc. Some whole life insurance plans like the Child Plan also offer an annual dividend to the beneficiary, which does not attract any tax. Is a Child Plan capable of supporting your child’s future financially? To answer in short, yes! The Child Plan is specifically designed to help parents and grandparents save money for the future needs of children/ grandchildren. Moreover, the Child Plan also happens to be tax efficient. Another great thing about the Child Plan is that you can continue to make contributions even if the child has reached the age of majority. There are several other benefits of the Child plan, of which some are listed hereunder: Your child will be insured permanently since Child Plan is a Whole Life insurance plan. The cash value can be used to pay the fee of any university or vocational program globally, unlike RESP, where you have to stick to the RESP Designated Educational Institution list. After 20 years, the Child Plan is fully financed. There will never be a need to make another deposit after the said period. Your kid can use the cash values in their Child Plan for any financial need they may have. You may register your kid in a Child Plan “Participating” Whole Life insurance plan as soon as 14 days after birth. Endnote It won’t be an overstatement to say that post-secondary education expenses will soon become almost unaffordable for middle-class Canadians. Therefore, the parents need to be highly aware, cautious, and intelligent to support their children’s future financially. While many options are available, ones like the Child Plan can bring parents a great sigh of relief and peace of mind with multiple benefits. SHARE THIS POST