A penny a day keeps the debt away

November 3, 2011
This article was published more than 2 years ago.
Est. Reading Time: 3 minutes

Sonya Khanna

Business Editor

Money is a constant source of frustration for the vast majority of post-secondary students. According to a study by the Bank of Montreal, more than two thirds of Canadians are worried about the affordability of post-secondary education.

With tuition hikes clobbering away at student funds it’s no wonder why many students struggle to find peace when dealing with finances.

Acquiring a degree comes at a hefty cost and students are well aware of the financial aches and pains associated with education. Four-year university degrees in Canada currently cost a upwards of $60,000, and according to the Bank of Montreal, tuition for a child born in 2011 may encounter costs estimated at a whopping $140,000 when they enter university.

You may have thought the boogey man was scary as a child, but these figures are horrifying enough to make even the most seemingly horrifying of childhood tormentors curled up in a ball spewing out tears of anguish.

According to the study, only 56 per cent of Canadians with young children have a Registered Education Savings Plan (RESP) in place. The remaining 44 per cent cite lack of finances as the primary reason for not setting one up.

“The great thing about RESPs is that a little really does go a long way,” said Mark Stewart, Director of Product Development & Management with BMO Investments Inc. “When you take into account the added benefit of the Canada Education Savings Grant, along with compounded interest over time, even small amounts have an opportunity to grow into significant savings.”

The same study indicates that a mere 10 per cent of parents whose children received money as a gift have put the money towards an RESP account.

Only one-in-four relatives contribute to an RESP plan as opposed to traditional gifts. Mr. Stewart stresses the importance of finding alternate means of funding to contribute towards an RESP.

“In order to prepare yourself for the costs ahead, it is essential to plan early for your canadian cialis child’s education,” said Mr. Stewart. “For example, if you contribute $500 per year, from the time your child is born, total savings- including the Canada Education Savings Grant as well as earnings- could exceed $20,000 by the time your child enters a post-secondary institution.”

Rather than frivolously spending birthday money from grandparents on the more desirable video game or clothing purchases, put the money towards a long run cause.

Current students can implement similar savings habits to add to the pool of funds contributing to post-secondary education. Allocate a portion of cash gifts to tuition funds for the future or textbook money for the semester.

Next time you plan on filling up on lunch on campus or splurging on that cup of coffee think about the money you could be saving by packing a lunch ahead of time. Although $1.50 seems like a small price to pay to get your daily dose of caffeine induced energy, in the broader scheme of things this amount, accumulated over a month, may amount to the equivalent of a textbook.

Although saving money is easier said than done, students can take cost-effective measures to ease financial worries. Many experts urge individuals to start making regular contributions early, it is never too late to put funds together.

Financial advisors are readily available to help relieve the inevitable headaches of financial planning and allow you to gain a strong understanding of the investment options that best suit your needs.

Subscribe to our Mailing List

© 2022 The Silhouette. All Rights Reserved. McMaster University's Student Newspaper.