Budgeting for your child’s education

When it comes to their children’s education, a growing number of families are exploring alternatives to publicly funded schools — a trend dating back to pre-pandemic times.

According to Statistics Canada, enrolments in private and independent schools have been increasing at a higher rate than public school enrolments every year since 2015. This is despite the additional expense of private school tuition, which can vary vastly depending on the institution.

But, given current economic challenges, is it still possible for some parents to send their children to private school when they are facing tighter budgets due to increased interest rates and food prices?

“The short answer to that question is, ‘Yes,’” said Jonathan Rivard, a financial adviser and the regional leader for Eastern Canada with Edward Jones. “But it takes a lot of planning and budgeting of short-, mid- and long-term goals in order to make that happen — unless people have incredible financial resources.”

He said every family’s situation is different, so their financial goals and challenges will also be different. When it comes to investing in their children’s education, parents need to focus on the areas of their budgets where they can save money now.

“Much like medical advice, everybody’s circumstances are different,” Rivard said. “It’s all circumstantial based on what that individual’s goals are, their income, risk tolerance and their time horizons.

“Keeping your focus on the long-term goal while maintaining discipline can be hard to do in a volatile environment where there’s a lot of concern out there in the economy. That’s why it requires sitting down with somebody to provide guidance and an opinion.”

Rivard said it is important to do your homework — more than typing in a few Google searches — and meet with a financial planner who can walk you through some options and develop a workable budget so you can save for your child’s tuition.

“It can be really easy to jump in and say, ‘Here’s what I want,’ without putting a strategy in place,” he said. “What I always advise parents who want to put kids in private school, is to first develop an education funding goal. Secondly, find out where they stand today financially. And lastly, understand what your options are.

“There are a lot of ways to save and invest money and a financial advisor will help determine the best way to help finance your child’s education while balancing other needs, such as retirement, mortgage payments or insurance. Those life expenses that people have.”

As well, Rivard said parents that want to enrol their kids in private school need to explore ways of reducing their cost of living to they can save additional money. This might mean holding off on that long-awaited kitchen renovation, not breaking ground for that backyard pool, changing your vacation plans, or not getting that new car just yet.

“Those are things, from my observation, that people may want to defer,” said Rivard, who adds parents should also look at how they are paying for those things. “Are we putting it on a line of credit? Are we putting it on a credit card? Are we adding to our mortgage, potentially?”

He said parents should consider the actual costs they incur when borrowing money, like interest fees, and how much they will have to pay over the life of those loans. “Living within your means is important.”

As far as timing is concerned, Rivard said the earlier you can start saving for your children’s education, the better. Time, he said, is one of the biggest assets parents have.  
“Saving a specific amount of money every month can make a significant difference on achieving your financial goals, whether it’s putting your kids through private school or having a comfortable retirement,” he said.

Of course, if you start later than expected, that’s okay, too. Rivard said you can get on track at any time, especially if you are getting advice from a trusted and informed source.

Talking about personal finances can be a tough subject to for some people to broach, he said, but “I would anchor everybody in the fact that, if they’ve got a written plan in place, they’ll feel good about the direction that they’re headed in. It’ll provide a lot of clarity on what will work and what won’t to build their confidence.”