4 Budgeting Hacks for Parents to Afford RESPs
You’re maxed, right? Between mortgage payments, groceries, gas, haircuts and sports registration fees, it seems next to impossible to scrounge up money for your child’s Registered Education Savings Plan (RESP).
A recent survey from Ipsos and Knowledge First Financial revealed that four out of five parents insist saving for their children’s education is a priority, but one in three haven’t even started!
But, can you seriously afford not to?
By the time your newborn (birth year 2017) is ready to go to college or university, a four-year educational program could cost close to $125,000. What will you do then? Cash in your retirement savings or sell your house? No way!
Saving now will ensure you benefit from free government grants that are worth thousands of dollars. When those dollars are combined with yours, and compounded with returns (because you’re not going to keep this money in a savings account, you’re going to grow the living daylights out of it), you’ll definitely have enough to put your kid through school.
So, let’s make some room in your budget.
1) Trade in brand names.
Go off-brand and start saving 25 – 40 percent. There are plenty of lower-cost “generic” brands for groceries, cleaning supplies, diapers, clothing, shoes, pharmaceuticals and electronics. You’ll have to check out some blogs that compare brands and prices against the product’s performance. But, hands-down, this is one of the easiest ways to drop your monthly costs by hundreds of dollars.
Not into “generic” brands? Maybe it’s an ego thing or you simply think that the brand names are better. Whatever the reason, you can coupon your heart out and try to time your purchases with whatever is on sale.
2) Consolidate expensive balances.
Canadian families carry approximately $4,000 in expensive credit card balances and that means over $450 per year is going towards interest charges. Simply switching that balance to a low rate line of credit or consolidation loan will save more than half that amount. Voila, you could put that money towards your child’s RESP instead!
The key with consolidation, however, is not to wrack-up more debt while you’re paying off the existing balance. That’s just a dreadful hamster wheel.
3) Register your child in public programs.
Parents are always forking over money for hockey camps, dance lessons, tutors, swimming lessons and more. Temper registrations by asking your child to pick just one or two extracurricular activities versus three or four. Then, source public programs run by the city, community associations, libraries, churches or schools. These programs are MANY hundreds of dollars cheaper than private programs and your children will have an equally great experience.
4) Make saving a family affair.
There are only so many toys and trips to Disneyland that your kid needs and appreciates. You know it because you’ve seen the silliness that happens at your toddler’s birthday. They receive 20 gifts valued at $20 each (that’s $400). After they’ve opened the first five presents, they’re so overwhelmed with their latest My Little Pony or Lego set, that they’re not even interested in the remaining presents.
Dial back the gifts and ask your family to make a contribution to your child’s RESP instead.