As the cost of living rises, Canadian parents find it increasingly difficult to save for their children’s future, especially post-secondary education. According to recent data, 76% of parents reported that escalating prices and living expenses have made saving for their child’s future harder. 

More than half of these parents dread the financial burden of paying for their child’s higher education. The majority of parents (64%) even feel they would be perceived as failures if their children had to incur significant debt to pursue their studies. 

The financial and emotional pressure on parents is immense. Many parents worry about the debt their children will incur from education, and many would feel like failures if this were to happen. The general rise in living costs has made saving for the future even more challenging, with 87% of survey respondents stating that increased expenses have impeded their ability to save. Many parents are compromising their financial health to support their children, with more than half of respondents prioritizing their children’s needs over their own financial stability. So, what can parents do to reduce this stress and better prepare for their child’s future?

Start Early with a Registered Education Savings Plan (RESP) 

Opening a Registered Education Savings Plan (RESP) as early as possible allows parents to leverage the benefits of compound interest over a more extended period. The RESP also qualifies for government grants like the Canada Education Savings Grant (CESG), which matches 20% of annual contributions up to $500 annually. 

By starting early, parents can maximize these contributions and the growth potential of the investments within the RESP. Regular contributions, even in small amounts, can accumulate significantly over time, easing the financial burden when it’s time for their child to attend post-secondary education. 

Automate Your Savings 

Setting up automatic transfers to your savings or RESP account is a powerful way to ensure consistent contributions. By automating the process, parents can avoid spending the money elsewhere. They can steadily build their education fund without remembering to make manual transfers each month. 

This disciplined approach helps maintain the fund’s steady growth and can be adjusted as income changes or expenses fluctuate. Automation also allows parents to take advantage of dollar-cost averaging, which can help mitigate the effects of market volatility on investments over time. 

Budgeting and Cutting Costs

A thorough review of the household budget can uncover areas where expenses can be trimmed, freeing up more money for education savings. Simple lifestyle changes, such as reducing dining out, cancelling unused subscriptions, or opting for more cost-effective entertainment options, can significantly impact savings. Redirecting these savings into an RESP or a dedicated education savings account can accelerate the fund’s growth. 

Parents can look into refinancing debt to lower interest rates or consolidating bills to reduce monthly payments, further optimizing their budget for savings. 

Financial Literacy Education 

Educating your children about financial responsibility from a young age is crucial for their long-term success. Teaching them the basics of budgeting, saving, and managing debt can empower them to make informed financial decisions. This knowledge can help them understand the value of money, the importance of living within their means, and the benefits of saving for the future. 

Parents can demonstrate practical financial management skills and foster a proactive attitude toward financial health by involving them in the family’s financial planning process. 

Encourage Part-Time Work and Scholarships 

Encouraging your child to seek part-time work or internships during high school and college can help them contribute to their education costs while gaining valuable work experience. This not only eases the financial burden on parents but also instills a sense of responsibility and financial independence in the child. 

Researching and applying for scholarships and grants can provide substantial financial relief. Many organizations, institutions, and government bodies offer scholarships based on academic performance, extracurricular involvement, and financial need. Taking advantage of these opportunities can significantly reduce the overall cost of post-secondary education. 

Consider Taking an Online Personal Loan

When immediate funds are required for education-related expenses, parents can consider taking an online personal loan from FlexMoney for relief. FlexMoney offers quick and convenient access to personal loans with a straightforward application process. These loans can help bridge the gap when savings fall short or unexpected expenses arise. 

These loans can be a viable option for managing education costs without resorting to high-interest credit cards or other less favourable borrowing methods. However, to avoid additional financial strain, it’s essential to carefully assess your ability to repay the loan and ensure it aligns with your overall financial strategy.