It's been a long haul. You've spent a great deal of time planning for the day your son or daughter would go off to post-secondary education – and that time is approaching rapidly. Now that all your preparation is almost over, what should you do next? Below are six things to consider as your children begin life after high school.
1. Keep on saving
Regardless of how much money you've been able to set aside for post-secondary education, you can continue saving after your children are enrolled in classes. This is a good time to talk with your financial advisor about your children (who're 18 years of age and older) establishing Tax-Free Savings Accounts (TFSAs).
2. Keep up with taxes
When funds are withdrawn from an Retirement Education Savings Plan (RESP), the contributions come out tax-free. As long as the beneficiary attends a qualifying post-secondary institution, the income and government amounts will be included in his or her income for the year. If you're paying post-secondary costs using your non-registered investment portfolio, however, all earnings are taxed in your hands at the usual rate. Talk with your financial advisor and tax professional about what will work best for your family.
3. Explore financial aid
It never hurts to investigate what kind of aid is available from federal, provincial, local and private funding sources. A good place to start is the Canadian government's Federal Student Aid which provides information and links about student financial assistance. You also can estimate how much financial aid your child might qualify to receive.
4. Consider how to pay the school
Depending on the institution, payments can be handled in different ways, so the earlier you become familiar with the policy at your child's chosen institution, the better. Are you able to transfer money electronically from your account to the school, or will you have to request a cheque payable to you, the student or his or her university? Are payment plans offered at the college or university, or will you be required to pay expenses by the semester? The bursar's office should be able to shed light on these and other financial considerations prior to your child's enrollment.
5. Work on developing a budget
Now that your son or daughter is almost ready for the post-secondary experience, it may be time to discuss putting a budget in place. First, you should go over spending expectations and how much you will be providing for his or her expenses. Are you paying for everything, or just tuition? Is your child planning to live in campus housing, or will he or she choose an off-campus location – or continue living at home? Depending on how much money is available and what you agree to do, the student might need a part-time job to help with bills.
6. Don't forget your retirement goals
Now that your child is heading off to school, you're likely to spend less on items such as groceries and utilities. You might even want to downsize your home. If any of that is the case, it might be possible for you to begin depositing more money into your TFSA or RRSP. Talk with your Edward Jones financial advisor to see what you can do to maximize your retirement savings now that your children are spreading their wings.