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 and Christine:
Chart is for
illustrative purposes only*.
*
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.
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*.
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.
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 contributions in your child’s later years can still make a significant difference in funding their college and university education.
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