Know how much should you save
There’s no hard and fast rule of exactly what dollar amount to set aside for your child’s future, but I have an important guideline of my own: never sacrifice your own long-term financial security when saving for your kids.
Parents might be tempted to forego their own retirement savings to build up their children’s education funds or help them buy a house — both of which are important stepping stones that we’ll get to later — but it’s important to ensure there’s enough in your own bank account before you start handing dollars over to the next generation. Before contributing to an education fund or house down payment, make sure you’ve built your emergency fund and are on track for retirement. Once those essentials are covered, you can start putting aside money to help your child get a strong financial start in adulthood.
Consider more than just an RESP for their education
The Registered Education Savings Plan (RESP) is the most effective way for Canadians to save for their child's post-secondary education. Contributions grow tax-free, and the government adds up to $7,200 in grants through the Canada Education Savings Grant (CESG).
However, there are some limitations to the RESP. There is a lifetime contribution limit of only $50,000, not including grants. And it’s possible that even a fully-funded RESP won’t be enough to pay for a college education by the time your child is ready to attend post-secondary. To put the cost of education in perspective, consider the following:
- Tuition costs have surged 40% over the past decade.
- In 2023, the average tuition in Canada was just under $6,575 per year.
- A four-year degree with housing, food, and books could easily exceed $100,000 by the time your child enters university.
- Graduate and professional programs, like law or medicine, can push that number even higher.
Supplement the RESP with high-interest savings accounts or investment accounts, especially if you plan to save more aggressively or expect your child to pursue further education. By putting a little extra in a savings or investment account, you can supplement what you’ll accumulate with the RESP and provide for additional educational costs down the road.
Read more: Best high-interest savings accounts in Canada
Help them buy their first home
Another practical way for parents to help provide their kids with long-term financial security is to help with the down payment on their first home.
Housing prices in Canada remain high. The national average home price hovers around $700,000, making it tough for first-time buyers to enter the market. If you're in a position to help, contributing to your child's first down payment can be one of the most powerful ways to support their financial future.
Just be mindful:
- Make sure they can afford the ongoing costs of ownership (mortgage, taxes, maintenance).
- Consider using the First Home Savings Account (FHSA) to maximize tax advantages.
- Even a gift of $10,000 or $20,000 can be life-changing when used adult-children are able to use it strategically, such as part of a down payment on a home.
Since the price tag to become a homeowner can seem impossible for new grads any boost to your child's first-home down payment fund from the Bank of Mom & Dad can really help them to start their #adulting sooner, without the burden of too much debt. Just make sure you don’t help out too much by getting them into a house they can’t actually afford!
Help pay for a reliable car or their wedding
Even if tuition bills are paid, or your child decides not to attend post-secondary, it doesn’t mean their road ahead is free of financial hurdles. One of the best ways to ensure they start adulthood on the best financial footing is to help pay for larger expenses, such as a reliable car or their wedding.
In Canada, the average wedding costs over $30,000 — and nearly 1 in 3 couples go into debt to pay for their big day!
Helping your child cover even a portion of the cost can reduce financial stress and set them up for a better start in married life. Consider earmarking savings for:
- The wedding dress
- The venue deposit
- The reception bar tab
Even small gestures can have a big emotional — and financial — impact.
Help your adult-children skip out on expensive car loans
For many young adults, having a safe and reliable car is a necessity — not a luxury. Whether it’s to commute to school, get to work, or simply gain some independence, access to a vehicle can open up critical opportunities.
But buying a car is no small expense. The average cost of a used vehicle in Canada now exceeds $25,000, and insurance premiums for new drivers can be steep.
To help, consider the following:
- Contribute to a vehicle savings fund over time.
- Offer to match their savings or help with a larger down payment.
- Gift your old vehicle if it’s still roadworthy and affordable to insure.
Encourage your child to consider fuel-efficient, low-maintenance models, and coach them on budgeting for gas, maintenance, and insurance. Helping with transportation can reduce stress and expand opportunities — especially in cities or towns with limited public transit.
Bottom line
From school to weddings to real estate, there’s no shortage of ways to support your child financially. But the best gifts aren’t always flashy — they’re foundational. Help your child avoid debt, build wealth, and gain independence. Start small if needed, but start now. You’ll be giving them something they can build their future on.
—with files from Romana King
