As
someone who'd like her children to get the degree she and her husband
never got, I am painfully aware if the high price of college, even
when choosing to forgo the more expensive universities and opting for
cheaper state colleges. Even the cheaper tuition can eat up a big
chunk of a family's budget, let alone the more expensive,
prestigious, and higher quality schools.
Because
tuition is so expensive, most people cannot afford to pay it monthly
on top of all their other expenses, so they end up taking out big
loans with high interest, which increases the cost of education
tremendously, and then they or their children end up paying it off
for the next many years.
There
are, however, alternatives to going into debt to pay for education,
even without a sky high monthly salary.
How
is this? By saying up for the education costs even before they're
relevant, using
Registered Education Savings Plan, or an RESP. This allows you to set
aside money tax free, and even accrue interest, as the government
provides grants to help increase people's savings in an RESP.
When
is the best time to start saving for your children's education? Now.
With a few caveats. The younger your children are, the more time you
have to save up for their education, which allows you to put in less
each month and still save up a sizable sum in the long run.
If
you have debts you are currently paying off, it is wisest to use any
extra cash you have to first pay off the debts as quickly as
possible, and only then start adding to the savings account, as
you're likely to be paying more in interest in the debt than you'd be
making in interest in the savings account, hurting yourself
financially.
If
you want to build a savings account and have no spare change to
deposit into the account, see where you can cut back in your finances
to free up enough cash to be able to make deposits regularly.
Birthday gifts and other money that the kids earn can also be sources
of money for the account, though you must decide if you want your
children to be paying for their education, or if you feel it should
be entirely the parents' responsibility.
See my disclaimer.
See my disclaimer.