Trust me, that's not a big number I threw up on the screen to get you to read. It's very realistic, and almost anyone reading this has the ability to build up $50K in the bank for their kiddo's education.
Living is expensive, parenting is expensive, adulting is expensive. I get it. Before you freak out and panic at the amount of money you think you will need to put aside each month, STOP! You do not need to be forking over $1,000 a month just to barely get by in order to fund your child's education. The earlier you start, the easier it will be.
And if you've got more than one kiddo, don't worry, this works for as many kids as you want.
So what's the big plan? How can you have $50,000 ready for your child's education? The answer is simple. And no, you don't have to be a financial genius, or even understand what a "dividend" is either. There are professionals out there who specialize in this field for you.
Recently, I spoke with my good friend and professional wealth management consultant, Kreesan Naidoo! We were talking about ways in which young parents could save money for their kid's future. He said that, believe it or not, building wealth and investing in your child’s future actually begins the day they are born.
It's done by setting up an RESP, which stands for Registered Education Savings Plan. From an early age, you'll have an opportunity to set up your children’s education savings plan to kick-start their financial independence and stability from an early age! Kreesan also mentioned that he just set up his one year old niece with an RESP the other week, so, it's NEVER too early to start.
But how much do you have to put away each month to have enough for your child's education?
According to the Royal Bank of Canada, a weekly investment as low as $25 will translate to $11,623 in 6 years, $29,308 in 12 years, and $50,911 in 18 years. That's HUGE!
Okay but what if I don't have $25 laying around every week? The answer: You actually do. Here are 3 ways to get that $25 a week.
1. Cut back on buying fancy coffees: the average price of a Starbucks drink can cost you almost $5. If you are getting 1 of these each work day, that's $25 a week (5 days x $5 ) or $100 a month! If you switch to home-brewed coffees and drinks, you're saving $100 a month.
2. Make a mason jar for change or cash: Place a mason jar in kitchen and each time the day is over, empty your wallet's remaining change into the jar. Any bills or cash you get, put it straight into the jar and don't touch it! It may not seem like much but, we tried this one ourselves and at the end of the year the jar had $1400. Thats over $115 a month in savings.
3. Change savings apps: Download an app like Acorns or Chime or Digit that all round up your purchases and save that money for you. It's essentially a virtual piggy bank. If you round up a total of $3.50 each day, thats over $108 a month.
4. Stop going out for lunch: How much does lunch cost you? maybe $7.00 for a sandwich, $3.00 for a coffee, and $4.75 for a yoghurt parfait. That's $14.75 each day for lunch alone, not to mention buying breakfast on the way to work as well. It may not seem like a lot but if you did this three times a week for the month, your monthly expenses for lunch would be $44.25 a week or $177 a month. Start by packing your own lunch, wake up 30 minutes earlier each morning to prep your food and save your bills.
All it takes is a little effort to set up an RESP to have your kid's education financially planned out. It's never too early to start, nor is it ever too late.
If you'd like some more information about wealth management or personal finances, you can contact Kreesan at firstname.lastname@example.org. Kreesan and his team delivers unparalleled focus in all six disciplines of financial planning. With over 100 years of experience and wisdom, him and his family team strive to create a personalized wealth plan to empower your lifelong financial independence. He was super keen on helping with this and giving back to the community.
Now, get saving so you can focus on your kids, not your money.