COVID-19 changed your post-secondary plans? Ways to modify your education budget

#Managing your money

You and your parents have been saving for your post-secondary education for a long time, but like so many 2020 plans, you’ve probably had to make adjustments. If you’re delaying your education, what should you do with the money set aside to pay your tuition, buy books or cover living expenses? Even if you’re still attending classes online, you may have extra funds because you’re living with your parents rather than in residence or a rental.

 

Whether you’re taking a year off or you’re attending classes online, we have some tips to help you make the most of this change to your education budget.

Save or pay off debt

Do you already have debt from previous school years? Consider if it’s better to save money you’re not spending this school year or if you should put it towards past debt. This article can help you decide which strategy is best for your situation.

Investing for the short term

If you decide to save, you may consider putting some of your savings into short term investments. They let you pull out your money after a fixed amount of time, generally less than five years.

Before you decide to invest any of your savings, consider how comfortable you are with risk. This article can help you understand risk vs. reward when it comes to investing.

You could also look at placing your education fund into a high-yield savings account. Some of these are basically the same as a typical savings account, only with a higher annual interest rate.

Add to an RESP or a TFSA

If your parents have a registered education savings plan (RESP) set up for your education, or if you have a tax-free savings account (TFSA), you could consider adding unspent education funds to this year’s contributions. Keep in mind, though, there may be tax implications if you or your parents decide to later withdraw this money.

This article has more information about TFSAs and how they work. And remember, the earlier you save, the more you can reap the benefits of compound growth.

Contact an advisor

Working with a financial security advisor isn’t just for those already launched in their careers; it can be helpful at any stage to get expert guidance and advice. Find an advisor near you today.

Consider if it’s better to save money you’re not spending this school year or if you should put it towards past debt.
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The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.

 

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Freedom 55 Financial security advisors are with you every step of the way. Not only will they guide you through the financial security planning process by focusing on your personal needs and goals, they’ll help you understand your options so you can make smart choices. And as your needs change, your financial security plan can change, too. That’s true financial freedom.

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