Getting the most
out of your children’s Education Savings Plans
If you’re not maximizing your contributions
to your children’s Education Savings Plans, you’re
not alone. With all the costs related to raising newborns
and young children, many parents find it challenging to
save for something that is years away.
Saving early is still one of the best ways
to take advantage of compounded growth. But, adding more
money to your child’s Education Savings Plan when
they are older can still make a difference. Let’s
take a look at some Education Savings Plans for May, Daniel
May’s Plan – Saving
$25 a month
Lisa and Alex started saving for May’s
education when she was six years old. Every month, they
deposited $25 into their daughter’s Education Savings
Plan. By the time May turned 17-years old, her Plan received
a total of $720 in grant money and was worth about $5,263*.
Daniel’s Plan – Adding
an extra $59 a month
During the same time, Barbara contributed $25
each month into Daniel’s, Education Savings Plan
that she started when her son was six years old. When
Daniel turned 11, Barbara increased her deposits to $84
a month—an extra $59.When Daniel turned 17 years
old, his Plan received a total of $1,711 in grant money
and was worth about $12,825*—more than double the
amount in May’s Plan.
Christine’s Plan – Adding
an extra $142 a month –Maximizing the remaining
Canada Education Savings Grant (CESG)
Meanwhile, Mary and Mark also started saving
for their daughter’s education when she was six
years old. They too contributed $25 each month into Christine’s
Education Savings Plan.
When Christine turned 11, her parents started
contributing $167 a month—an extra $142 which also
maximized her remaining annual CESG. By the time Christine
turned 17 years old, her Plan received a total of $3,106
in grant money and was worth about $23,462*—over
four times more the amount in May’s Plan.
As you can see in the Plans for May, Daniel
and Christine, increasing your contributions in your child’s
later years can still make a significant difference in
funding their college and university education.
If you have questions about contributing
more into your child’s Education Savings Plan, contact
a financial professional today.
* Assuming an annual 5% gross rate of return;
contributions started January 1 of each year and were
fully invested until December 31; the Plan was CESG eligible.
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