Parents are saving but still worried about their financial future: report

A new survey finds many parents can’t afford RESPs and are turning to grandparents, as young families navigate rising costs and financial pressure.

With three kids enrolled in universities at the same time, Brad Nussbaum knows just how expensive post-secondary tuition can be.

“It’s a lot like having three kids in childcare at the same time, it’s expensive,” Nussbaum said. “School’s expensive.”

When their children were young, Nussbaum and his wife made a deal - they’d pay their kids’ post-secondary tuition, but their kids would pay for their own living expenses. They opened up Registered Education Savings Plans (RESPs) when the kids were young and while that covered most of their school fees, it didn’t pay for everything.

“One of the other things that we did was look at every scholarship out there to help them,” said Nussbaum of covering the difference. “There are a lot of scholarships that go unclaimed so we had the kids apply for every scholarship we could find.”

With the cost of living rising, more parents are feeling financial pressure when it comes to the cost of raising children in Canada, from caring for newborns to paying for post-secondary education, despite the fact that more millennial parents are actively saving for their children’s future.

“New parents today are financially planning and budgeting for the future of their children,” says Andrew Lo, president of education savings and planning company Embark, which released the Early Parent Financial Readiness Report. Lo says financial planning is not translating into financial confidence for parents. “Even though they’re saving, is that going to be enough?”

According to the survey, 33 per cent of parents say they can cover their child’s tuition, 27 per cent say they won’t be able to and 26 per cent say it will be difficult. The survey also found more than half of expectant parents feel they are only somewhat financially prepared for children while 36 per cent of new parents say they have received help from family members to cover costs.

Experts urge parents to save early

Financial planners encourage parents to start saving for education early and to take advantage of programs like the Canada Education Savings Grant (CESG) which matches 20 per cent of annual RESP contributions up to $500 per year with a $7,200 lifetime maximum per child. The Canada Learning Bond (CLB) also provides an additional $2,000 for eligible low-income families.

Nussbaum says government aid also helped with his kids’ tuition, and what it did not cover, the family picked up. This meant budgeting and watching their spending. However, Nussbaum says the sacrifices were all worth it - two kids are about to graduate while their youngest will finish school next year.

“When people talk about what are you really proud of, I’m most proud of my kids by far,” he said.