Parental investment

Parental investment refers to the time, effort and money parents devote to their kids. It takes a tremendous toll on parents. Pulling it off requires planning and consistency.

The context for this conversation is that one of our team members is pregnant and she opened up about the parental experience.

Among other impacts, planning for a child takes a toll on the family’s finances. This includes setting money aside for big ticket items future items such as the child’s education, future car and house, as well as increased regular expenses including daycare, clothing and food.

My colleague is getting in action to plan her finances for when her second child is born in a few months. One thing she is putting in place to ensure success for her family is setting aside the government’s child tax benefit.

The way she sees it, that money belongs to the child. It’s like some quick, extra, easy “free” money. It’s a bonus and it frees the family from having to scramble, at least for that little bit of cash.

But how long is a piece of string? One hundred dollars does not seem like much during any given month, but it adds up. Over a year, it amounts to $1,200. By the time the kid is 18, he or she will have over $21,000 which is roughly three years of university tuition in Ontario.

If the kid has been working part time summer jobs and saved a few extra thousand, he/she has the possibility of graduating debt free. Rock ‘n’ roll.

A measly hundred dollars saved diligently every single month creates the possibility of a young adult graduating from a standard four year post-secondary program with nearly no debt. And that doesn’t account for any interest earned on that sum.

Just keep in mind that you must save that hundred Every. Single. Month. Like a heart, you cannot miss a beat, else it throws off everything. It’s certainly challenging maintaining that kind of commitment over so many years. But it’s a powerful option if we want to set up our kids for success. Drop us a comment below and let’s continue the conversation.