We all know – even those of us who don’t have them – that kids change our lives irreversibly. You’ll discover new depths of love and joy, of course, but sleepless nights are also one part of the equation. Incessant coughs and colds another. And a lighter wallet from day one!

Well, to be fair, sleep is something we can all catch up on. And runny noses eventually run dry. But what about the money part? Yes, that’s right…

How Much Does It Cost to Raise a Child to Adulthood?

If you’re a parent or grandparent, you may intuitively understand how much it costs to raise a child (a lot) but perhaps don’t have an exact dollar figure in mind. At Everything Retirement, we believe in the principle that good ideas don’t mind where they come from. So, although our credit union partners had no part in the research shared here, we find it both extremely relevant and fascinating to read.

Financial research published several years ago offered a detailed analysis of the real cost of child-rearing, and a startling conclusion: “It can cost over $250,000 to raise a child of 18.”

They broke down the costs as follows:

  • Total cost: $253,954
  • Per year: $ 13,366
  • Per month: $ 1,114

They went on to analyze these expenses at each life stage:

  • Infancy (Birth – 5 years, monthly day care): $1,370/month
  • Childhood & teen years (5 years – 18 years): $1,060/year
  • Young adult (18 years +): $16,600/year

Based on such authoritative sources as MoneySense and the Government of Canada, these numbers are truly an eye-opener for most people.

The research summary went on to state: “With the cost of tuition, books, housing and other education expenses on the rise, it’s natural to find the thought of saving for a child’s college or university years daunting. Many parents find it helpful to get the facts on future education costs, in order to set savings goals.”

Some Welcome Suggestions

In acknowledging just how daunting the cost of a post-secondary education seems, the article made several important practical suggestions:

  1. Start saving as early as possible, since every little bit adds up.
  2. Break those savings challenges down into smaller goals, like paying for a child’s first year of college or university.
  3. Remember that your child (children) may supplement your savings though part-time or summer work, or through government loans, scholarships, grants and matching programs.

Registered Education Savings Plan (RESP)

Finally, and this is really important: consider opening a Registered Education Savings Plan (RESP). RESPs are investment accounts specifically designed to save for the cost of a college or university education.

Like RRSPs and TFSAs, an RESP allows investments inside the account to grow tax free, meaning no taxes on capital gains and no income taxes on interest and dividend payments.

The big benefit with RESPs, though, is that the government pays you to save by kicking in a grant of up to $7,200 over the life of the plan. There are individual options as well as family RESP plans to consider, with benefits to each. An RESP can be opened by a parent, grandparent or even someone outside the family, like a generous uncle or godparent.

Consult the Experts

Most parents want to give their children the best of everything, and nothing could be more important than ensuring they get the best education money can buy. Along with buying a home and making provision for retirement, it’s one of the most financially challenging issues most of us have to face.

With the right advice, saving for your child’s post-secondary education may be more attainable than you thought. For help in this matter, why not consult one of our credit union partners at Coastal Community Credit Union, Coastal Community Private Wealth Group or Interior Savings. They have experts who can help you and your family design an educational savings plan that’s right for your circumstances and resources. It’s what they do.