Building Blocks is a special personal finance web series geared towards educating families on money-related topics. A collection of stories, videos and discussions, Building Blocks will run online until the end of December.
It's never too late to start saving for a child's education, and there's no better time than amid the annual holiday-spending spree.
With rising education costs, perhaps this year it's time to take more of a cue from tight-fisted Scrooge and less from present-obsessed Santa and put some dollars into that piggy bank for learning.
It can be hard for some parents to save for their child's education due to other financial commitments, but it's a worthwhile investment.
"The best thing to do is start early and build some education savings into your living-expense budget," says financial planner and chartered accountant Cynthia Kett. a principal at Stewart & Kett Financial Advisers Inc. "Do what you can."
Most sleep-deprived new parents find it hard to think beyond their baby's next feeding. But Darrin Eden and his wife Elaina Spring looked into their daughter's future early on.
When Ava was just a few weeks old, they opened an Registered Education Savings Plan (RESP). Along with gifts like baby shoes and toys, they also received contributions towards Ava's future education.
"It wasn't the go-to gift, but it was certainly nice to make that available to our friends and family," Mr. Eden says.
While it may be tempting to buy another colourful toy or adorable outfit for a baby, saving for your child's (or grandchild's) education is a boring, but wiser choice. University, after all, will have a much bigger impact on their life.
And suggesting grandparents cut back on presents at Christmas in favour of contributing to their daughter's education fund, appeals to Mr. Eden.
"That is a great idea," he says. "I will pass it on to my wife and I think we'll do it."
Here are some estimates that should wake up any exhausted mom or dad and get them saving for college. Ms. Kett, a principal at Stewart & Kett Financial Advisers Inc., figures it will cost around $102,000 for a child born today to attend university in 18 years. For most parents, that is one formidable financial target.
Fortunately there are tax breaks and government grants to help out parents. The secret is to get started as soon as possible, like baby Ava's parents, in order to reap the biggest rewards from these financial incentives.
Ava's dad, Mr. Eden, said the fact his tuition was paid for (his father worked at a university), really helped him. He saw his friends struggle to pay back student debt. So, each month, he and his wife make a contribution to Ava's RESP.
"I certainly want to be able to provide for Ava," he says.
It's pretty much a no-brainer. I'd be doing enough RESP to get the government's money. — Bruce Ball, a tax partner at BDO Dunwoody LLP
Many parents feel the same way. According to a recent report from Statistics Canada, 68 per cent of kids 17 and younger whose parents believed they would pursue post-secondary studies had education savings in 2008, a big jump from 43 per cent in 1999.
The most common way of saving for a child's education is through RESPs. The Statscan report points out that 69 per cent of those children with education savings had RESPs.
