Children and Post Secondary: Why We Might Not Pay For All Of It

Knowing the financial mess one can end up in from not having a savings plan for post secondary education first hand, hubby and I opened a RESP for our daughter when she was 5 weeks old. I remember the representative going through the projected education costs for when she’s ready to graduate and was blown away. How can universities justify such an insane inflation?

This week a local news story came out about the rising costs of tuition in Canada. Tuition has increased 5% this year alone. Holy Cow.

At this rate, when baby girl is ready for post secondary, in 18 or so years (should she chose university/undergraduate degree), we’re looking at over $12,000/year. That’s assuming she lives at home and hasn’t factored in books or any other added expenses.

Hubby and I have every intention of continuing regular monthly contributions, plus additional savings when she receives money as gifts and such, but we have no intention of stretching ourselves thin financially for her educational savings. When the time comes and have have more money for saving (vs debt payoff) investing as much money as possible into our own retirement savings is more important than throwing additional money into her RESP.

In a perfect world she gets a part time job when she turns 16 and learns the importance of saving for things that she wants, education included, but despite the finical mess I’m in, I have no problems with student loans and (student) lines of credit. Very rarely in life does the opportunity to borrow at such low interest rates come up, and with proper money management and budgeting skills could be a smart move. I truly believe that if there is some financial responsibility in your education it encourages you to work harder. For this reason if our savings isn’t enough to cover her I’m not going to worry about it. By the time she goes off for school she’s guaranteed to have learned good money management skills-a promise I make for her-and can properly manage a little credit in her name.

I have friends who insist on having enough savings for any and all education their child may pursue, even if they chose something like medicine or dentistry.

Just an FYI this year’s tuition costs for these programs:

Dentistry students paid the highest average undergraduate fees at $16,910. Medical students paid an average of $11,891 and pharmacy students paid $10,297.

Read it on Global News: Global Maritimes | Undergrad tuition up five per cent this year, more than triple inflation

At the 5% inflation we’re looking at almost $41,000/year for dentistry in 18 years…Just sayin’.

Maybe I’m a mean mom, or totally alone on this, but if we’re fortunate enough that our child can get through Medical or Dental school, I’m pretty sure they won’t have much problem paying off the degree, that’s for sure.

For those with children, who are saving for their post secondary education? Who is prepared to pay for 100% of it, regardless of academic pursuits?

 

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My Week Of Huge Financial Mistakes

This was a bad week.

I made mistakes I’m not proud of but will never do again. Ever.

It all 100% stems from not having an emergency/life fund. This is something we’re working on but won’t have the extra funds to start this for a week or two.

Last week my husband was diagnosed with diabetes. Long story short, he never had a family doctor growing up-or one he liked I should say- so never went. I finally got him on with mine and our daughters, and the diagnosis came in, in 26years he’s never had blood work done until 2 weeks ago. His blood sugars are crazy high and the doctor thinks given his age and how uncontrolled they are he’s most likely had it his whole life but it went undiagnosed. Talk about scary. In hindsight is 100% explains pretty much everything that’s ever been wrong with him in the 10 years we’ve been together.

Welcome Mistake #1.

We get paid Monday at midnight. On Tuesday I get groceries, spending our weekly food budget. After hubby’s diagnosis we ended up back in the grocery store on the weekend to pick up a few more diabetic friendly foods (the man who skips breakfast now has to eat it and we didn’t have anything at home other than my cereal which he truly hates). We didn’t spend a whole lot (less than $25.00) but the fact is we didn’t have any room in the weekly spending budget to account for that. I have a slight contingency built in to our weekly monies (ie 20-30 bucks that’s not accounted for) but that was spent on the new prescriptions we had to pick up for him (Thank God we have insurance that covered 80-100% of everything or it would have cost us hundreds). Where did that 25.00 come from? Our billing account, the mistake being I full well knew our insurance was due to come out Monday. I took a gamble thinking our pay might get deposited before the withdraw happens. It didn’t.

Cost of mistake #1? $90.00 in NSF charges ($45 for house ins, $45 for car insurance) plus our insurance charges a fee of $25.00/claim so another $50.00 I seriously had ZERO idea NSF charges were so high, until this week I have never had one. So our $25.00 grocery trip actually cost us $165.00. I’m ashamed.

Mistake #2.

Hubby was put on insulin. When we went to the pharmacy to pick up his new prescription the pharmacist gave us a vial of insulin. We thought hubby was supposed to be on the pen-loaded cartridge insulin but due to some miscommunication between us and the pharmacist (he confused us greatly) we ended up leaving the pharmacy with the vial before checking with the doctor to confirm he wanted vial vs. cartridge. He wanted cartridge so we unnecessarily paid for the vial.

Even with insurance, the cost of this mistake: $14.52 vial prescription we can’t use, plus the new prescriptions, about $32.00…total cost of mistake #2 $46.52. Ugh.

Mistake #3

This really isn’t a huge mistake but may have lessened the blow of mistakes #1 and #2. Put too much gas in the car. I have a budget for weekly gas but put more than normal in this week thinking we would be going away this weekend with the family. We’re not going away now so ended up tying about $30.00 in gas money up, it’s probably less gas that we’ll need this coming week so will even out but that $30.00 would have come in handy.

Total of mistakes: $241.52 

I know people are sick of blog posts about emergency funds/savings but this is my personal blog about personal experiences and I’m just now seriously realizing the importance. Next pay, even if it’s $5.00 will be put into savings and NOT touched.

Here’s hoping for a better week next week. Happy Weekend 🙂

Saving While In Debt

This is something I struggle with. There’s something almost oxymoronic about having money in a bank account when you owe so much money.

Our savings account is currently at $0.03, I kid you not. We’re just starting everything and have yet to make a deposit. September is our catch-up month before starting fresh in October with the debt management program. We will be contributing to savings but when our (minimum payment) debt load is about 23% of our monthly income I cannot justify the suggested 10% savings. It is simply not going to happen.

Here’s what I’m thinking:

5% I can do, but not monthly. Hubby and I are paid bi-weekly I will be using our ‘extra pay months’ to top up our menial monthly savings to an annual total of 5%. The ‘leftover’ money from the extra pays will be put into savings as well for irregular ‘life stuff’ such as oil changes, home repairs, vet appointments etc. Again, I have a hard time savings, say $50/month for ‘home repairs’ when I might only need $200 a year.  I would much rather just set money into a ‘life savings’ account to be used only when needed, if needed at all.

Which brings me to my second point, since this is money that will only be used, if needed, do I really need to distinguish between the 5% annual savings for rainy day/emergencies or just have one account for everything? I mean we’re not using the money unless needed so do I really need to separate the two? Should I take the 5% and invest it?

I’m having a hard time defining how I should be saving and where the money should go (TFSA? RRSP? Sav acct?) I just feel like, for now, we should work up to a few thousand in an account incase we have an emergency but maybe not commit the money into a RRSP/TFSA until we’re done with the DMP, at which point we will have more freedom in the budget to allocate to ‘proper savings’ (RRSP’s etc).

Any insight or tips about what works for you would be fantastic!