Don’t skip school! More than 1.4 million students took classes at Canadian universities in 2019. Between 2009 and 2019, 1.8 million jobs were created exclusively for college students.
If your child can go to college, they can receive high-paying jobs in little time. However, saving for college is trickier than it seems. You need to start saving for college sooner than you think, and you need to be aggressive.
What should you do to save money right now? How much does college cost, and can you reduce the expenses? What resources can you use to pay for tuition?
Answer these questions and you can master how to start saving for college in no time. Here is your comprehensive guide.
Start Saving for College Right Now
The more time and effort you put into saving for your child’s college, the more money you can save. Even if your child has not been born yet, you should start saving for college.
Take a look at your current budget and see how much money you need to spend. See if you can trim down on non-necessary expenses, especially your entertainment expenses. Even $50 can help with paying for your child’s books at school.
Your child’s college savings are just one category of savings you should have. You should save for retirement and a new house if you want one.
Balance your savings so you are hitting all of your goals. One account can receive more money than the rest, but you should contribute to each account every quarter.
Develop a Savings Strategy
You should strategize about how you are going to save money over the next two decades. To give yourself more money to save, you should pay off your debt. You can prioritize the largest debts or the debts with the highest income rates.
Make a budget every month so you can track your expenses. Be as precise as possible, calculating how much you pay for utilities and how much you want to contribute toward your other savings accounts. Any dollar you can spare should go into your savings.
Take steps to improve your financial health whenever possible. You can go on a spending break, declining to spend any money for a day or more.
You will regularly need to pay for groceries and utilities, but you can save money on both. Go to budget stores to shop and buy fruits and vegetables, which are cheaper than meat. Turn the lights off when you leave a room and unplug appliances like televisions that use electricity in their idle mode.
Try to find additional ways to make money. If you have a hobby, you can make products you can sell online or you can teach classes. Apply for promotions and look for positions in your line of work that increase your income.
Prioritize Low-Cost Colleges
Canadian undergraduate students paid an average of $6,693 in tuition for the 2021-2022 academic year. That was up 1.7% from the previous year.
The increase may not seem like a big number. But that’s an increase of more than $100 in just one year. As time goes on, the cost of college may continue to grow, which can hurt your savings.
Try to cut down on the cost of college however you can. The closer your child’s college is to your home, the less money you have to pay. If their college is in the same city as your home, they can stay at home, which means you won’t have to pay for a dorm room.
Your child can do two-year programs and receive job training instead of a four-year degree, which can save you tens of thousands of dollars. Your child should make their own decision about where to go to school. But remind them of low-cost options as they get older.
Create a Registered Education Savings Plan
The government has a few resources you can use for saving for college in Canada. A Registered Education Savings Plan (RESP) is a savings account that helps with paying for college.
You do not need a bank account in order to have an RESP. There is no annual contribution limit, but you can only contribute up to $50,000. This makes an RESP a good resource if you live paycheck to paycheck or aren’t sure about your job security.
You can select a few different kinds of plans. Some plans have minimum deposit requirements and others do not. Talk to a financial advisor and take a look at a few different plans before you pick one.
The money can grow in the RESP tax-free. However, you do not receive a tax deduction for your payments. You can apply for other tax deductions to compensate for this.
If your child opts not to continue their education after high school, you can keep money in the RESP in case they change their mind. You can also receive the money back, though you will need to pay taxes on it.
Apply for the Canada Education Savings Grant
The Canada Education Savings Grant (CESG) is a grant that helps families with RESPs pay for their children’s school expenses. Your child can receive up to $7,200.
Children from low-income homes can qualify for the CESG. The CESG can add up to $500 to the RESP every year until your child has $7,200.
Both you and your child need Social Insurance Numbers in order to qualify. You then need to file a form with the government and check the RESP to see if the money has been deposited.
You are not required to repay the CESG if your child does not continue their education after high school. But the money will go back to the government.
Apply for Provincial Help
Provincial governments also have their own resources for college. The British Columbia Training and Education Savings Grant helps families in British Columbia.
The provincial government can give $1,200 to your child if they qualify. They must have an RESP that a partner of the government runs, and you must fill out a form on their behalf. The money can grow in your child’s account tax-free.
Contact someone in your provincial government so you keep up to date with the latest grants, and apply for them as soon as possible.
Look Into Financial Aid
Every college has a financial aid program to help needy students cover their bills. As your child is looking at schools, you should examine their financial aid programs.
Talk to a financial aid officer to see what you have to do to apply for financial aid. In general, you need to give an officer your financial details and explain why you need the money.
Some schools have special programs for financial aid. Your child can get money in exchange for teaching classes or doing community service. Talk to your child about what they are willing to do.
Your child can also get student loans. As with financial aid programs, you and your child should do extensive research on loans. Each loan has its own terms, and some of them impose high interest fees.
Your child should create an account with the National Student Loans Service Centre (NSLSC). They can make their loan payments with the NSLSC, and they can sign forms to allow you or someone else to have power of attorney.
If you’re worried that your child cannot pay a loan, you can co-sign on it. You will agree to pay for the loan if your child cannot pay it back. You should only do this if you think you can afford the loan, as it can be thousands of dollars.
Your child can receive scholarships from many different institutions. Many colleges offer scholarships to award students for their work in high school and encourage them to attend classes. Your child may not have to apply for certain scholarships in order to receive them.
Other scholarships are application-based. Your child may need letters of recommendation and copies of their transcript to qualify. Help your child prepare these documents.
Your child may be able to get a scholarship from your company or another institution you are involved with. Ask around to see what opportunities are available.
Help Your Child Today
You should start saving for college today. Develop a savings strategy and open savings accounts you can put money into. Keep your eye on cheap colleges, but save as much money as you can.
You can apply for federal and provincial loans over the next few years. As your child prepares to apply for college, you should examine financial aid programs, student loans, and scholarships. Get creative and look at as many options as possible.
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