The Elephant in the Room
Graduation Day – Are you prepared?
Every parent wants their children to have the benefit of a college or university education.
There is no shortage of projections, speculation and reports that suggest in another 10 to 15 years, the total cost of post-secondary education including tuition, books, room and board, meals etc could easily hit $100,000
I have no desire to speculate on the what the cost will be 10 to 15 or even 20 years from now, nor do I intend to participate in fear mongering. The truth is, nobody knows for sure what the cost will be.
What I do know (as I am sure everyone reading this also knows) is that the actions you take today will determine if your child or children will be able to attend college or university when they leave high school, and graduate with minimal or no debt.
The question therefore is, ” Are you prepared to commit to a plan today, to save for your children’s education tomorrow?”
If you have made the decision to commit to your children’s graduation, here are some useful tools that can help you put your commitment into action:
Take out a Universal Life Insurance Policy for your child – You can deposit money into the policy and the cash values grow tax deferred. Recently one of my clients in his 30’s told me that he withdrew the deposit for his home from a policy that his parents purchased for him when he was a baby.
Contribute to a Registered Education Plan (RESP) – Canadian resident children under aged 17 or younger are eligible for the Canadian Education Savings Grant (CESG). The first $2,500 or your annual RESP contribution qualifies for CESG of $500 which the Canadian government pays into the plan, and this money grows tax deferred along with what you put into the plan. It’s free money from the government – take it!
Your child may qualify for the Canada Learning Bond – If your child was born after 2004, you currently earn $37,885 or less, and you are receiving the National Child Benefit Supplement to the Canada Child Tax Benefit, then your child may qualify for the CLB, which will pay $500 for the first year of eligibility into the RESP and $100 per year to a maximum of 15 years. That’s a potential $2,000 into your child’s RESP courtesy of the government. If you qualify, take it!
Take advantage of scholarships– Look into the various scholarships that are offered by various schools and organizations. One of the insurance companies with which I do business, offers scholarships every single year in Canada and every single policyholder’s children are eligible to apply
Look at savings as a bill you must pay – Instead of using your entire tax refund to go on a vacation, save some of that money for your children’s education. One of my clients paid off his car loan of $380 per month over 10 years ago and he continued to view the extra $380 per month as a must pay bill and the result was he had over $45,000 to deposit on his condo.
I am not suggesting that you stop enjoying life. I am suggesting that you deflate the elephant in the room – Failing to commit to a plan that will benefit you and your family in the future.
Start making savings a top priority; I can help you put all of the above strategies in place to make sure that you are beaming with pride on graduation day.
About the Author
Karl Marshall is President of Marmac Financial Services Limited, an independent insurance and investment brokerage. He lives in the Durham Region and on Saturday nights he hosts The Party Mix on G98.7 FM in Toronto. You may contact him via email firstname.lastname@example.org @marmacinsurance on Twitter or on Facebook.