The cost of education is rising. A four-year college or university program now costs anywhere from $20,000 to $50,000. By 2019, that number may rise to between $45,000 and $74,000. That's why it's good to estimate what your Registered Education Savings Plan (RESP) will pay out, based on how much you plan to save.
Tip: What if you're falling short of your goal? It's better to find out as soon as you can. You may want to add to your savings to make up the gap. There are other options as well. For example, your child may decide to work, or apply for student loans.
Getting ready to calculate
It is never too early to start saving and planning for your child(ren)'s education. For most families, the easiest way to save is by making regular RESP contributions. Try our to help you estimate how much money you need to put into an RESP account each year to cover those education costs.
Remember: This is an estimate only.
You won't know for sure how much your RESP will make unless you are earning interest at a fixed rate. Most investments vary in return from year to year. So set a realistic goal, and check how you are doing each year. If you are choosing someone to manage your plan, make sure they are realistic too. Some RESP plans may tell you they have made a lot in the past, but don?t count on that. Many plans have good years and bad years. If you set too high a goal, you may find you have gaps to fill later.
Content in this section is provided in partnership with the Investor Education Fund, a non-profit organization promoting financial literacy to Canadians. To find out more go to GetSmarterAboutMoney.ca.