college funds & the future

kindergarten Sym
Kindergarten Symphony, circa 2006

Symphony picked up her final report card yesterday and is officially done with the ninth grade. She’ll be a high school sophomore in September and will be graduating in just three more years, which seems bonkers to me. Her grades were ok, tbh I’m still not 100% clear on how the International Baccalaureate Middle Years Program grading system works, but I think she did… alright? Mostly 4s and 5s, plus a 6 in yearbook and a 7 in Art (with another 8 in “Thinking Creatively”)(8 is the highest possible grade btw). Right now her plan for the future is to become a teacher and to get into university I think she needs higher marks, so I told her next year I wanna see more 5s and 6s. For her junior and senior years they have regular, comprehensible grades THANK GOODNESS.

Thinking about Sym’s future university plans sent me into a total tailspin wondering if I have saved enough for her post-secondary education. I am such a perpetual broke-ass that it might surprise you to learn that I have saved anything but I actually started an RESP (Registered Education Savings Plan) for her when she was just a few months old, and every month since I have dutifully (or rather, automatically) put $95 into it. There have been months where my contribution bounced and I had to pay double the next month, and there have been times when I was so broke that I wished I could just have that $95 myself BUT looking back I am SO glad I did it. When the RESP matures in 2019 my contributions, the interest, government education grants and the interest on those will total about $32,000. It won’t pay for a full four years at university but it’ll certainly help!

This summer my big goal is to start an RESP for Gwen (I have been even more of a broke-ass than usual since she’s been born, like last year my net income was $2,200 and no, that is not a typo/missing any zeroes) and then one for the baby once they are born this fall. I’m actually really excited about it, and brought up the topic in my parenting discussion group on facebook. Who was saving? How much do you contribute? How much do you hope to have saved by the time your child/ren are grown? I’m basically obsessed with the topic now and have annoyed the hell out of everyone by constantly bringing it up, but I’m like… proud? Really proud! Of what a good start I’ve made for Symphony’s future (…and a little ashamed I haven’t done the same for Gwen yet, but I’m going to!) and I want to share my experience with other parents who may feel overwhelmed about the whole thing.

PLEASE take this all with a grain of salt; I’m not a financial advisor, and my experience is not your experience. We may live in different countries with different regulations and I’m sure we are in different financial positions (although I’m probably not the only broke-ass out there). But I think some of these feelings may be pretty universal, and if I can help people feel better about it I will.

1. Don’t stress about what you CAN’T save, focus on what you CAN save. It’s daunting to look at what the projected costs of a college education will be when your little ones get big. For Sym, if she lives away from home it’s over $100,000. A friend in the US with a daughter Gwen’s age looked into it yesterday and she and her husband would need to start saving hundreds and hundreds of dollars a month to fully fund their daughter’s education- and they have two kids! In daycare! Which they are spending all their money on! IT’S A LOT. Not everyone is in a position financially to pay for their children’s whole schooling. But just think of it this way: any money you can contribute is money they won’t have to borrow. Imagine if your own student loan amounts were even just $10,000 less. How much less interest would you have to pay, how many fewer payments would you have to make, how much sooner could you free yourself from that burden? And it doesn’t take a lot to save $10,000, just $50 a month for 17 years, and that’s without even factoring in any interest your savings will earn or grants for which they are eligible!

2. Plan for multiple eventualities. What if Sym changes her mind in the next three years (she is only 14) and decides she doesn’t want to go to a traditional four-year university? What if she wants to go to art school (remember, she got an 8 in thinking creatively), or learn a trade? What happens to the money if it’s not all used up, like it’s in a special education specific account! Well, with her RESP I actually have multiple options for how to use the money if it doesn’t all go towards Symphony’s education:

• I can transfer it into an RESP for another child, ie Gwen or Baby #3
• I can transfer it into an RRSP (Registered Retirement Savings Plan) for myself or Taylor after Symphony turns 21
• I can just like… spend it? myself on whatever I want haha

With the last two options any funds from government education grants would be returned to the government, and with the third one I would have to pay tax on the interest (but NOT the principal). In the event that Sym doesn’t use the money for school I would be most likely to transfer it to my other kids but it’s nice to have other options. And speaking of those…

3. Consider all your savings options. It’s not just about how much money you save, but how you save it. There are so many different ways you can save for your kids! For me an education-specific account with regular, automatic monthly withdrawals was the best because it’s kind of a no-brainer and I’m such a broke-ass all the time (HAVE I MENTIONED I’M A BROKE-ASS YET???) it would have been too easy for me to just spend all my money and save nothing. But maybe this isn’t the best for you. Maybe you can trust yourself to regularly or even sporadically put money in. I know a few people who put any monetary gifts from family (for birthdays, holidays, etc) into their kid’s accounts, and that works for them. Maybe an RESP or 529 (the US version) isn’t practical for you for whatever reason, like you anticipate the contributions may exceed the limit (for RESPs while there is no annual limit for contributions, there is a lifetime contribution limit for any one student), or maybe you want something with a little more flexibility, like a tax-free savings account or a mutual fund that doesn’t have any education-specific restrictions on it. Symphony (aka the luckiest girl tbh) actually has a mutual fund as well, set up by a relative, which could be used to fund any education cost shortfalls left by the RESP, or it could be used for ???anything??? Travel, buying a home, a fancy wedding, saving forever like a Scrooge? THE SKY IS THE LIMIT. Symphony herself is very Scrooge-ly, often “forgetting” to bring her own money when we go shopping to try to trick me into buying her stuff, and has said she’s never having children who will require college funds. Instead she’s going to start saving for her own retirement the moment she can. Such practicality, I’m really not sure where she gets it from!

So just like… know that while the idea of saving for your children’s future education might seem overwhelming, it’s actually not. A little contribution can go a long way, no contribution is too small, and it’s never to late OR to early to start.

3 Replies to “college funds & the future”

  1. This was really inspiring! Fellow broke-ass here. We’re struggling with credit card debt (so stupid!) and student loan payments (slightly less stupid). Our focus right now is to get $1000 into savings (like, I said – brokeass, our savings got totally wiped with Ros) and then snowball our credit cards. To be honest I hadn’t even begun to think of saving for her education because everything else just feels so fucking heavy and suffocating. But you’re right, every little bit helps. I’m gonna start researching our options for where we are. Go you!

    1. That’s awesome! Even if you just start small with like $25-$50/month for now that money will add up and make a real difference for Ros when she’s grown. Like I never really thought about how much Sym’s plan would be worth and now I’m looking at it like… holy shit, I did it!

  2. The never to late to start bit rings true for me. I’ve been broke forever, but now I am broke day to day because I save and I have a really good lump sum now, which amazes me.
    I find it really addictive. I’m forever calculating and trying to get through the month on the smallest amout of money other than petrol for work, just for the fun of it. Saving nerd!
    You are right to be proud, putting money aside when you have children is something else! 🙂

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