Every November, we’re reminded about Black Friday, Cyber Monday and the number of days left for Christmas shopping. November seems to be chock full of enticements to spend our hard-earned money. Maybe that’s why the Government of Canada declared November as Financial Literacy Month, way back in 2011. Each year, this initiative educates us on different ways to achieve our short and long-term financial goals.
This year’s Financial Literacy theme is Make Change that Counts: Managing Money in a Changing World. With the cost of living and interest rates on the rise, managing savings and debt has become challenging. The program’s timely tips on how to find your financial balance, borrowing and managing debt wisely, and planning and saving for the future are right – pun fully intended – on the money.
Saving for a big expense like college or university can seem like an impossible mountain to climb – especially with the estimated cost of a four-year post-secondary education predicted to soar to a mind-boggling $165,000 by 2040. But by managing your debt wisely and saving through a Registered Education Savings Plan (RESP), saving for higher education may be easier than you think. Here’s how this year’s financial literacy tips can help you build that post-secondary nest egg.
Start by finding the right balance between paying down debt and your daily spending. Think about how much money you need for daily living and where you can reduce spending. Eliminate a few coffees out, carpool to save on gas, price compare groceries before going shopping and fill up on low gas price days. Use that “found” money for a short-term financial goal like paying down a debt, or a long-term financial goal like an RESP contribution. The CST Advantage Plan lets you contribute as little as $9.50 monthly.
Consolidating your higher-interest debts can help you get on top of what you owe. So does knowing the difference between good and bad debt. For example, borrowing to potentially increase your net worth through investments or real estate or starting your own business is considered good debt.
The sooner you start saving in an RESP, the more ahead you’ll be when your child graduates from high school. Why? Because the longer your money is in your plan, the more potential it has to grow. Starting early means you can start collecting government grants sooner, and the more money you have in the plan, the faster it potentially grows over time. The Canada Education Savings Grant (CESG) is a federal grant that matches 20% of your contributions, up to a maximum of $500 per year, and a lifetime maximum of $7,200 per child.
Figuring out how to save money can be challenging – especially in the face of rising expenses and interest rates. Luckily, initiatives like Canada’s Financial Literacy Month and products like RESPs all help pave the way. To find out more about how to boost the money in your child’s existing CST RESP plan or to start an RESP with CST for your child, click here.