5 Smart Ways to Save for Your Child’s Future
As a parent, you would naturally want to do the best for your child. But that can be quite expensive. Clothes, food, toys, education, books, sports – it all adds up!
In fact, many parents are compelled to borrow or know someone who has borrowed to pay for their child’s co-curricular or extracurricular activities.
With such humungous expenses, it becomes real hard to save for the child’s future – but at the same time, it is essential. The cost of higher education is always increasing. Housing prices are also on the rise in different parts of the country. And you should also remember that a significant percentage of first-time homebuyers’ down payments come from loans or gifts from their parents.
So, how can save smartly for your child’s future. The following steps may be worth your consideration.
- Start today
When it comes to investments and savings, there is no tomorrow. Start today.
Starting today gives your money more time to grow. The best advice would be to start saving small amounts every week or month until you see it grow exponentially well beyond your expectation.
The younger you are, the better it is because you will have more time to save and ride the ups and downs of the market.
- Save the amount that you can afford
Your savings should:
- Be sufficient enough to meet the requirements of your child.
- Fit comfortably within the budget of your family.
- Also give you enough room to save for your own future.
The best advice would be to consult an experienced financial advisor who can help you calculate the right monthly/yearly savings amount for your children’s future keeping room for everything mentioned above. The consultation is free and without any obligation – so go for it.
- Get a significant boost by saving your money in RESP or TFSA
Put your savings inside a RESP (Registered Education Savings Plan) and watch your money grow fast.
Also consider the TFSA (Tax-free Savings Account) for a tax-free growth.
- Explore flexible options
Have a backup plan in place in case your child decides to skip university or college.
- Complement your RESP savings (A RESP must be used to pay for education programs) with a TFSA (money can be withdrawn from TFSA tax-free for any purpose).
- Build cash value with a permanent life insurance policy, thus meeting two needs at a time.
A financial advisor can again guide you to take the best possible decision thus, diversifying your savings portfolio.
- Have a plan in place for challenges
It may be hard to think of your child getting seriously ill – but it can happen. Stay financially prepared for it.
- You can choose to add a low-cost protection for your child on your very own critical illness policy.
- Take the right steps now to make sure your child stays eligible for his/her individual life insurance policy, no matter what health issues lie ahead.
That’s basically it. Taking the steps mentioned above are more than capable of giving your child more choices in life, this, setting them up to achieve more financial freedom. Good luck!