Education is an especially important aspect of a child’s life. As parents, we have different financial obligations that require equal financial attention – all geared to providing your children with a bright and comfortable future. It is easy to think that taking loans or credit is the least you can do to fund the education of your children, or grandchildren, especially if you cannot afford it at the moment. With other financial obligations like bank loans, mortgage, retirement savings, it is not advisable to add debts from your child’s education to the list. It might weigh on you more than you think and can leave you frustrated in the end. Fortunately, there are ways to secure enough funding for your child’s education without overburdening yourself with debts.
Five Ways Of Securing Funds For Your Child’s Education
- Begin early – One advantage to earn for yourself is to start saving early. From the moment you discover you’re pregnant, you can start saving for the education and welfare of your child. There are different savings and investment plans you can subscribe to for your child’s future that won’t put you into more debt. You can also open a non-registered account for this purpose.
- Subscribe to RESPs – The Registered Education Savings Plan is an investment savings plan that grows tax-free and the government also adds a 20% grant on your annual contributions to the savings. If you subscribe to this early, funds for your child’s education will not be a problem.
- Create a trust – You can set up an education trust for your child. This will ensure that the money is used for its original purpose at the appropriate time.
- Open a Tax Free Savings Account – Tax free savings account are used for savings and the interests accrued are tax-free. You can take money from this savings account to fund your child’s education.
- Corporate dividend payments – If you are opportune to own a family business that is incorporated, you could allot your child’s shares in the company to make him or her eligible for dividend payments. With this method, you can make savings in the corporate account and then pay them out as dividends at a later date to fund your child’s education. Note: This only applies to your child if they are 25 or older or if they are actively involved in the business.
There are more options than you may realize in most financial decisions. Please reach out to me directly if you have any further questions regarding this or any other topics.