Financial Planning Strategies for Working Parents
Juggling work, family, and personal growth can be challenging, but with the right financial strategies, you can make this school year a success:
Create or Revisit Your Budget: With the start of the school year, expenses can increase—think school supplies, extracurricular activities, and even higher grocery bills. Now is the time to revisit your budget to account for these additional costs. Ensure you’re allocating funds for both short-term needs and long-term goals.
Emergency Fund Check-Up: Unexpected expenses often crop up during the school year, from car repairs to medical bills. Ensure your emergency fund is robust enough to cover three to six months of living expenses. If it’s been depleted over the summer, consider prioritizing its replenishment.
Consider Professional Development: September is a great time to think about your own education. If you’re considering going back to school, look into tuition reimbursement programs offered by your employer or explore tax credits that could ease the financial burden.
RESP Withdrawals: Making the Most of Your Savings
If you have a child heading to post-secondary school this fall, September is when you might need to start tapping into their Registered Education Savings Plan (RESP). Here’s how to do it strategically:
Plan Withdrawals Carefully: Start by withdrawing the government grant portion first (known as the Educational Assistance Payments, or EAPs), which is taxable in the hands of your child. Since students typically have a lower income, they’ll likely pay little to no tax on this money. Keep the contributions portion (which is not taxed when withdrawn) for later in their education if possible.
Coordinate with Other Financial Aid: Ensure that RESP withdrawals align with other sources of financial aid, such as scholarships, bursaries, or student loans. Proper coordination can help minimize taxes and maximize the funds available for your child’s education.
Review Your RESP Strategy: If you have multiple children, consider how much you’ve allocated to each. Adjust your strategy if needed to ensure all your children benefit from the RESP savings.
RESP Deadline Approaching: Maximize Your Contributions by December 31
It is also a reminder that the deadline to maximize your RESP contributions is on December 31. Here’s what you need to know:
Catch-Up Contributions: If you haven’t been able to contribute the full $2,500 per year to your child’s RESP, consider making catch-up contributions. The government matches 20% of your contributions with the Canada Education Savings Grant (CESG), up to $500 per year. If you have unused grant room, you can receive up to $1,000 in CESG per year with catch-up contributions.
Plan for the Future: If your child is still young, it’s not too late to start an RESP or increase your contributions. The earlier you start, the more you can take advantage of compound growth and government grants.
Consult a Financial Advisor: If you’re unsure how to maximize your RESP contributions or withdrawals, now is a great time to consult with me. I can help you develop a strategy that aligns with your family’s educational and financial goals..
Preparing for the Last Quarter of the Year
September is also a pivotal month to start preparing for the final quarter of the year. As you head into the last stretch of 2024, consider these tips:
Review Your Financial Goals: Take a moment to review the financial goals you set at the beginning of the year. Are you on track? If not, what can you do in the next few months to get back on course?
Tax Planning: Begin gathering receipts and documentation for any deductions or credits you plan to claim for 2024. Early preparation can help you avoid last-minute stress and ensure you’re taking full advantage of available tax benefits.
Year-End Investments: Consider any last-minute investments or contributions that can benefit you before the year ends, such as RRSP contributions, charitable donations, or topping up your Tax-Free Savings Account (TFSA).
Final Thoughts
September is a month of new beginnings, not just for students but for working adults and parents as well. By taking the time to review your financial plans, RESP strategies, and preparing for the final quarter of the year, you can set yourself and your family up for success in the months ahead. Whether you’re managing your own education, helping your kids with theirs, or simply looking to finish the year strong, strategic financial planning is key.
Here’s to a productive and financially savvy back-to-school season!
Author: Komal Kaur
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