If you are planning on trying to help your kids out with their University costs (or other post-secondary ideas), an RESP is a must (just for the free money), however, that is not the only way to ensure you can easily help out your kids reach their educational dreams (or your dreams for their eduction).
I have learned after 8 years of paying for children’s expenses for school, that the most debilitating university costs are not tuition, it is the cost of accommodation. At one point in the 8 years I was
- Paying the mortgage on my house
- Paying rent of 3 separate apartments across Canada
When did I become so rich that I could afford this (you might ask)? (sarcasm alert) I most assuredly did not, the RESP money helped somewhat, but these kind of costs can almost double your family living expenses. Living expenses for your kids at school really do add up.
There are remedies for this kind of expense (luckily):
- Do not allow your child to move away from home while they are going to University. Whether you really want to inflict this on yourself, is a question you must ask, but that will eliminate many of the living expenses. I know at least one set of parents that said, “I will pay for your tuition, and give you a car to use, if you stay at home. If not, it is all on you.”
- Pay off your house before your kids get to University, that way you are rich enough to be able to pay for the rent on “N†different apartments (or residence rooms) (where N is greater than 1).
- Make your kids pay for their living costs.
- Make your kids pay the whole shot. They want an eduction, time to learn about money at the same time.
Option (2) on the list is a very good target to try to hit, but kind of hard if you are maxing out your RESP, TFSA, and RRSP savings targets as well, but still something to keep in mind!
Options (3) & (4) sound heartless, but I know plenty of folks who paid for their entire University career, because their parents couldn’t help out, and they seem to have survived.
Keep in mind, University costs are not just tuition costs.
My parents had a simple approach: they told me they’d help me with tuition, but if I moved out, all added expenses were on me. By living at home and going the COOP route, I was able to have a financial cushion that got me through my masters and allowed me to get a good start in life, without ever having debt be an issue.
And that seems to be fair balance, putting the bulk of the work on you, but not leaving you to build up a massive debt either.
Having your kids pay a substantial part of their post secondary education costs is an important part of their education I think. Savings from high school and summer jobs can easily pay for half, many co-op students make enough money to pay for most of their away-from home post-secondary education.
On the other hand, I know many families who sprung for their kids to live in residence at the local university. Almost seemed normal in my circle of friends, but not to me!
I think there are valid arguments on both sides, whatever works for your family is always the best one to choose.