Raising a child is neither easy nor affordable, especially with rising living costs that make it difficult for many people to save money for any purpose. However, among the numerous problems parents encounter, paying for their children’s education is one of the most frightening. For instance, a staggering 62% of parents in Canada find it consistently overwhelming and challenging to set aside funds for this purpose.
Consequently, prioritizing strategies to cover their child’s educational expenses becomes paramount for parents. And the growing expense of higher education doesn’t help them at all. Though most parents cannot afford to cover the full tab, they will typically pay around one-third of college expenses. This task is even more difficult, given the possibility of having more than one child. But having the right plan will make saving for your child’s future education well within reach.
Set up an investment account.
Setting up an investment account as early as possible is the best way to save for your child’s education. This gives your investment time to grow, regardless of your contributions. Setting up an investment account for your child’s education often comes with tax benefits or other perks, as long as they use the funds for qualified education expenses. However, this depends on your location.
For instance, in Canada, you can open a Registered Education Savings Plan (RESP), an investment account allowing you to save for your child’s post-secondary education and future. In addition to the money you invest, the Canadian government provides grants to assist you in making future investments. If you are unsure how to start, find a reliable education savings and planning company and ask for help. Having professionals who know every tip and trick in the book will make things easier for you.
Invest in mutual funds
Regarding long-term investments, mutual funds are unquestionably an excellent choice. Investing in mutual funds to pool money for a specific purpose has become increasingly popular over the past decade. While they’re mostly popular for retirement planning, a small number of investors are also parents who want to save for their children’s future education.
Investing in mutual funds is viewed as a potentially high-return investment, but there is risk because the returns are market-dependent. Markets have been extremely volatile in recent years, but mutual funds should still account for a large component of an education fund due to the longer time horizon.
Invest in real estate
This is an amazing option for all parents attempting to save for their children’s future. Real estate investments are a smart way for parents to maintain a diverse portfolio with a 15-20-year time horizon.
But be careful because the real estate market constantly changes with many ups and downs. Issues to consider when deciding whether this is an investment choice for you include untrustworthy trades, potential legal entanglements, and a long wait period when selling. So, make smart choices and be careful when picking the right real estate investment.
Get your children on board with saving money
Getting your child engaged in saving for their education is an excellent method for creating financially responsible young adults. Older youngsters can work part-time or provide services, such as lawn mowing. Encourage them to save some of what they earn for their education. If your child is too young to work, try using money management apps. These apps allow your children to gain insights into the money they earn doing chores that you assigned them.
Not only will kids learn the value of money, but you will also save time by having them help you out with household tasks. You can make learning about finances, saving, and budgeting enjoyable and interesting. This is a terrific method to get children to contribute to their college fund. It is also an opportunity for students to get real-world experience to help them make career and study decisions.
Final thoughts
Saving for your children’s education is only scary if left off until later in your child’s life. Starting early helps you save small amounts more often for a longer period. Remember that even if you simply save a small amount each month for tuition, the money accumulates over time. You may soon discover that you have a sizable savings account that may be used to help your child further with their education.
