As a new grandparent, it’s normal to want to help your children with their little bundle in any way you can. A new baby brings a lot of joy into the family, but there are also many challenges that come with the new addition, including the biggest of all, saving for his or her future.
If you’re thinking about your grandchild’s future and want to help but aren’t sure where to start, we’ve gathered some tips here to help make the process easier. Each of these suggestions can go a long way on their own, so feel free to use whichever one works best for you but be sure to always check with your children first before you settle on an option.
Opening an RESP
This savings plan can be opened by anyone related to the child and is used to build up funds for his or her post-secondary education. With an RESP, the subscriber of the plan is the person who makes contributions to the account, while the promoter/provider agrees to use the funds to cover the cost of educational expenses. The subscriber would then choose a beneficiary and the plan’s benefit would go directly to him or her.
Opening an RESP also gives you access to the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB), both of which add additional funds to the RESP through the government of Canada. If you decide to open an RESP, include your children in the process and open it as early as you can to allow adequate time for the funds to grow for your grandchild.
Update Your Will
If you have amassed a little nest egg and were planning to leave it to your children, you may want to also consider including your grandchildren as well. You can set up some guidelines in your will that outline how the funds are to be used and when it should be accessible for your grandchildren. For example, some people choose to set up the inheritance so that their grandson or granddaughter cannot access it until they have hit a certain age.
You may also consider sitting down with a financial advisor when planning out your will for future grandchildren. It’s best to meet with a professional in this instance because involving future grandchildren or great-grandchildren can be more difficult and tricky when leaving behind wealth and property.
Additional Savings Account
Aside from opening up an RESP, having another savings account on the side for yourself can also be beneficial. Put whatever you can into this secondary savings account and try to keep the funds solely retained for your grandchildren, if you can’t keep it all saved for them aim for reserving at least half of the total amount for them.
Since acquiring all the essentials for a new baby can be difficult for new parents, this account can be used to help cover early expenses like a crib, stroller, or high chair. As your grandchild grows, the money saved in your account can also be used to help the parents cover larger costs like a first car or textbooks.
Offer Your Time
Being there for your grandkids and watching them can also help save your children money. For new parents, spending on babysitting or daycare services can be quite pricey over time, especially with multiple children.
Even if you can’t be there every day, you should sit down with your children and discuss the days you can pitch in. Watching the grandkids two or three days a week will still help cut back on spending for childcare while also allowing you to build your relationship with your grandson or granddaughter.
The Right Insurance Plan
Finally, life insurance coverage is critical as a final way to offer protection to your loved ones. Life is never guaranteed and preparing for anything is even more important when you have a new grandchild in the family.
If you are looking into insurance coverage, it’s best to designate either your children or your grandchildren as your plan’s beneficiary so they will receive your plan’s benefit tax-free if something happens to you. This factor alone makes a life insurance plan one of the ideal ways to keep loved ones financially secure in the event of the unexpected.
The fear of medical exams or health questionnaires shouldn’t hold you back from finding the right coverage. Today, there are many no medical and guaranteed plans available to Canadians that are over the age of 50 at affordable rates. The process of applying and being accepted is quick and you can have the coverage you need faster than ever.