Think Like the Wealthy: How Affluent Families Pay for Their Children's Education, Activities and Future

A child changes every number in a household budget. Diapers become daycare, daycare becomes school fees, and before long there is a hockey bag in the hallway, a university acceptance on the fridge and a young adult asking about a first car. Statistics Canada estimates that a two-parent family with two children and a higher income spends about $403,910 on each child from birth to age 17, in 2017 dollars, before any private school, competitive sport or university is added.

So how do affluent families carry those costs without giving up their own future? If you want to be wealthy, think like the wealthy. They know the cost before it arrives, they decide in advance which capital will pay it, and they start when time is on their side. Nothing in that list needs a large income to begin. It needs a plan, written down early, and the patience to keep it.

The figures here come from public sources, each named with its date, and from one illustrative family whose numbers are assumptions shown in full. No insurer, product, dividend scale or real loan rate appears. I am paid by insurer commissions when a policy is bought. Reading costs you nothing, and the decisions stay yours.

How much does it cost to raise a child in Canada?

Statistics Canada estimated, in a study released on 29 September 2023, that two-parent families with two children spend $293,000 per child to age 17 in the middle income group, in 2017 dollars. The figure rises with income. These are averages for the years 2014 to 2017, not a budget for your family.

The study, Estimating Expenditures on Children by Families in Canada, 2014 to 2017, looked at what households actually spend, not at what a child "should" cost. It divided two-parent, two-child families into three income groups and estimated the spending on each child to age 17 and to age 22.

Source: Statistics Canada, Estimating Expenditures on Children by Families in Canada, 2014 to 2017, released 29 September 2023. Figures are per child, for two-parent families with two children, in 2017 dollars.

Three things stand out. First, housing takes between 27% and 32% of spending on a child in the study. A bigger home, in a neighbourhood chosen for its schools, is part of the cost of a child even though no invoice says so. Second, the higher income group spends about $142,370 more per child to age 22 than the middle group. That gap is choice, not necessity: better housing, more activities, more travel. Third, the teen years cost more each year than the early years in every income group.

These figures are in 2017 dollars, and prices have risen since. I could not confirm a conversion to 2026 dollars with the Bank of Canada's inflation calculator, so the table stays in 2017 dollars, as the study published it.

A family that reads this table as a bill to dread has missed its use. It is a map: the largest costs arrive at known ages, years ahead.

What do affluent families add, stage by stage?

On top of the everyday costs in the Statistics Canada table, affluent families may add private school, sometimes boarding, competitive sport, university without student debt, a first car, help with a wedding and help with a first home. Each has a known season, and several can overlap in the same years.

Here is what those stages cost, where a published figure exists.

Private school. NextSchool, a Canadian private school directory, published its Private School Tuition in Canada 2026 report in April 2026, based on 424 schools. It puts the national average day tuition at $17,861, with Quebec at $20,933 and Ontario at $18,778. Full boarding runs from $45,000 to $75,000 a year in the same report. These are a vendor's figures, gathered from schools that list with it, and your school's fee schedule is the number to use. Uniforms, trips, technology and building fund contributions can sit outside the tuition line.

Competitive sport. Money.ca, in an article of 20 September 2025 citing an analysis by RBC, reported an average of $4,478 a year for hockey, and more than $7,000 a year for players aged 13 to 16. Tournament travel, specialised coaching and summer camps are where the bill grows. The guide to paying for travel and children's sports shows how those lump-sum bills can be timed.

University. Statistics Canada reported in The Daily of 10 September 2025 that average undergraduate tuition for Canadian full-time students is $7,734 for 2025/2026, and $3,963 in Quebec. Tuition is only part of it. Residence, meal plans, books, travel home and, for some programs, a laptop or equipment add to it, and a child who studies in another province or abroad changes the figure again.

A first car, a wedding, a first home. These arrive later and vary too widely for an average to help. A first car may be a modest used vehicle or a new one. A wedding can be small or very large; the sister article on how affluent families pay for a dream wedding goes through those costs with their sources. Help with a first home can mean a gift toward the down payment, a family loan with its own written terms, or nothing at all. Each family decides. What matters here is that these costs, too, are visible years ahead.

The wealthy do not wait for each invoice and then look for the money. They list the stages, put a rough figure beside each one and decide which capital will meet it.

What does the timeline of known costs look like?

Drawn as a line from birth to about age 30, a child's large costs arrive in a fairly predictable order: early childcare, school, activities, the teen years, post-secondary studies, then launching into adult life. The dates are known long before the amounts, and the dates are what make planning possible.

Picture a line across a page, with your child's birth at the left end and, about thirty years later, an adult with a career, perhaps a spouse and a home at the right. Between them, the costs fall in this order.

The table holds no dollar figures on purpose. Your figures are your own. Fill them in with your schools, your sports and your plans, and the line becomes your family's cost calendar.

How do wealthy families think about these costs?

They follow five habits more than any product: they learn the cost before it arrives, ask which capital will pay it and what that capital stops doing, start when time is longest, keep a reserve they control, and think in generations. Each habit is free, and each one changes the decisions that follow.

1. Know the cost before it arrives. A wealthy family does not discover the cost of university in August of the first year. It puts the stages on paper while the child is still small and updates the figures every few years. The timeline above is the first draft.
2. Ask which capital pays, and what it stops doing. Every dollar that pays a tuition bill comes from somewhere: this month's income, a savings account, a registered plan, a line of credit, a policy loan. Each source gives something up. Savings stop earning interest. Investments sold stop growing and may trigger tax. Borrowed money costs interest. The question is never only "can we pay?" but "which money pays, and what does that money stop doing for us?"
3. Start when time is longest. The years between a birth and a first tuition bill are especially precious years for this purpose. A grant that is matched each year, a contract that takes years to build value, a habit of setting money aside: all of them reward an early start and none of them can buy back the years lost.
4. Keep a reserve you control. Wealthy families arrange for capital they can reach on their own terms, without asking a lender to approve the purpose. That reserve may be savings, a non-registered account or the cash value of a permanent life insurance contract. What matters is that the family, not a lender, decides when it is used and how it is rebuilt.
5. Think in generations. A wealthy family plans for the child, and also for the child's children. The capital that pays for one generation's education can, if it is kept and rebuilt, be there for the next. That is the idea of generational wealth: a family that keeps its capital working across thirty-year cycles, not one that spends it once.

None of these habits needs a particular product. The tools come after.

Which tools do families use, and what does each one do?

Families use several tools side by side: a registered education savings plan with its federal grant, a tax-free savings account, monthly cash flow, credit, and, for those who own one, a policy loan on a participating whole life contract. Each does a different job. None replaces the others, and none is ranked here.

The table below shows each tool by what it does. It does not say which to use first; that depends on your income, your tax situation, your existing accounts and your children's ages.

The Canada Education Savings Grant is what sets the RESP row apart. The Government of Canada's page on the grant says it pays 20% on the first $2,500 contributed each year for a child, which is up to $500 a year in basic grant, to a lifetime maximum of $7,200 per child, until the end of the calendar year the child turns 17. Questions about which investments the plan should hold, and how its payments are taxed, belong with a representative registered for the investments the plan would hold, or with your accountant.

A TFSA does a different job. The Canada Revenue Agency says, on its page What is a TFSA, that contributions and income earned in the account are generally tax-free, even when withdrawn. Its page on withdrawals adds that an amount withdrawn is added back to your contribution room only on January 1 of the following year. Credit is an honest tool too when the family knows, before signing, who it will owe, at what rate and for how long.

The policy loan does not replace an RESP: the RESP collects a grant that nothing else in the table offers, and the policy is life insurance first. What follows explains how a family builds that last row, and what it costs.

How does Infinite Financial Sovereignty® apply to a family with children?

It starts with the parents. Participating whole life insurance is placed first on the parents, whose income the family depends on, and only then, if it fits, on each child from birth. Over the years, the cash value can secure loans from the insurer, which bear interest, for the costs on the timeline.

Infinite Financial Sovereignty® is my approach to applying, within Canadian law, the principles of the Infinite Banking method: a family arranges a source of financing it controls, using permanent life insurance it owns, and repays that financing with the same discipline it would show an outside lender. Three facts frame it before anything else.

First, the contract is life insurance. Its first job is to pay a death benefit to the beneficiaries when the person insured dies. The cash value that builds inside it is a feature of permanent insurance, not an account and not a guarantee of any return. Premiums are paid with after-tax income, the same as any other spending; the contract does not spare the family from earning that money.

Second, the parents come first, for a plain reason. A child's costs are paid from the parents' income. If a parent dies or the income stops, the timeline above does not stop with it. The first protection a family with children needs is coverage on the people who earn the money, in an amount based on what the family would lose. A family that insures a child before its parents are properly covered has the order reversed.

Third, it takes time. In the early years, depending on the design, much of each premium goes to the cost of insurance and the insurer's expenses, so the loan value is small. A contract that is meant to help pay for university when a child is 18 needs to start long before. That is why the habit "start when time is longest" matters more here than anywhere else.

Once the parents' coverage is in place, some families add a participating whole life contract on each child, owned by a parent. The child's contract then builds its own cash value over the child's whole life, starting from an age when insurance on a healthy child costs less than it will later. The next section explains how that works and who decides what.

The page on the interest a two-income family pays looks at the same idea from the side of interest already paid to outside lenders.

Can parents insure a newborn, and who decides the amount?

Yes, a parent can apply for life insurance on a child, sometimes from shortly after birth, and the parent is the owner. The insurer decides whether to issue it and how much, and some insurers limit a child's coverage by reference to the parents' coverage. Tax rules limit how much value the contract can hold.

Three people appear on the contract, and they are not the same person.

• The owner, called the policyholder in Quebec, is a parent in the arrangement described here. The owner pays the premium, names the beneficiary, requests policy loans and makes every decision the contract allows.
• The person insured is the child. The death benefit is paid when the person insured dies. A young child has no say in the contract and no right to its cash value.
• The beneficiary receives the death benefit. On a child's contract, the owner may name a parent or both parents.

Who may insure whom is set by law. Across Canada, a person can insure another person's life if they have an insurable interest in that life or the written consent of the person insured. In Quebec, article 2418 of the Civil Code sets that rule, and article 2419 lists the lives in which a person has an insurable interest, which include the person's descendants. A newborn cannot sign a consent, so the parent's insurable interest is what allows the application.

The insurer decides the rest. It sets the youngest age at which it will issue a contract, the amount it will issue, and the health questions it asks. Some insurers limit coverage on a child by reference to the coverage already in force on the parents. Ask the insurer for its own rule.

Tax law adds a ceiling. The exempt test in the Income Tax Regulations limits how much value can build up in a contract relative to its coverage. A contract that keeps its exempt status lets its growth accumulate without annual tax, and an insurer can refuse an extra payment that would make the contract fail the test. You cannot put unlimited money into a small contract on a child.

Some contracts on children also carry a guaranteed insurability rider, where the insurer offers one. It lets the child buy more coverage at set ages or events later in life without new medical evidence, within the limits the rider sets. The page on guaranteed insurability explains what such a rider does and what it costs. The pages on insuring a child and who owns a child's policy go further into both questions.

How can a policy loan pay for a child's costs?

The owner asks the insurer for a loan secured by the contract's cash value. The insurer lends at a rate it sets and may change, and receives the interest. The cash value stays in the contract. The loan can be taxable above the adjusted cost basis, and anything unpaid reduces the death benefit.

1. The owner requests a policy loan. The request goes to the insurer, which checks the loan value available and the contract's requirements, such as the consent of an irrevocable beneficiary. Ask in advance which form it uses and how long requests are taking.
2. The insurer advances its own money. The insurer is the lender. It charges interest at a rate it sets and may change, and the interest is paid to the insurer. The cash value is not withdrawn; it stays in the contract as the security for the loan.
3. The family pays the bill. The tuition is paid on time, from money the insurer advanced.
4. The family repays the insurer. Depending on the contract, a policy loan may have no fixed repayment schedule. That freedom is real, and it is also the trap. The family that does this well sets a monthly repayment the day it takes the loan, makes it automatic, and treats the loan with at least the respect it would show an outside lender.

Four rules travel with every policy loan.

Unpaid amounts reduce the death benefit. While a loan is outstanding, the loan and accrued interest come off what the beneficiaries would receive. Depending on the contract, unpaid interest is added to the loan and then bears interest itself.

The contract can end if the loan overtakes the value. If the loan and interest grow larger than the value securing them, the contract can lapse after the notice the contract provides. A lapse with a loan outstanding can create taxable income, to the extent the proceeds, which take the loan into account, exceed the adjusted cost basis, in a year when money may already be short.

A policy loan can be taxable. Under s. 148(9) of the Income Tax Act, a policy loan is a disposition of an interest in the contract. The part of the loan proceeds above the contract's adjusted cost basis immediately before the loan is income in that year, and the loan lowers the basis. If part of a loan was taxed, repaying it can give a deduction under paragraph 60(s) in the year of repayment, up to the amount previously included. Before each loan, ask the insurer for the adjusted cost basis and any income it would report, and confirm with your accountant.

Dividends are not guaranteed. The contract's guaranteed values grow on the schedule the contract sets. Dividends, if the insurer's board declares them, are credited under the contract's rules and can be reduced. Some contracts credit a different dividend on the part of the cash value that secures a loan. Ask the insurer, in writing, how yours works.

The interest on a loan used for tuition, sport or a private school is a personal cost. It is not deductible, because the money is not used to earn income, so it is paid with after-tax money, like interest on any other personal loan.

Why accept that interest? Not because it is cheaper; the worked example below shows that drawing savings costs less. The case is that the cash value is not spent, the life insurance stays in force, and the family repays on a schedule it sets. The page on parents, university fees and a cost with a known date works through the tuition case in more detail.

How does the contract pass to the adult child?

The owner can transfer ownership of a child's contract to the child once the child is an adult, or name the child as successor owner. A transfer to a child of the policyholder can be made without tax under conditions in the Income Tax Act, which an accountant should confirm before the transfer.

A contract a parent took out at birth can become, decades later, the young adult's own. That is thinking in generations, and the details matter.

A transfer during the parent's life. The parent, as owner, signs the insurer's transfer form and the child becomes the owner. From then on, the child decides: the beneficiary, the loans, the premiums. The Income Tax Act can allow a transfer of a contract to a child of the policyholder without tax, under conditions. Confirm with your accountant, in writing, that your transfer meets them before you sign, and ask what tax position your child takes over with the contract. A sale, a transfer to someone who is not the policyholder's child, or a transfer through an estate may be treated differently.

A successor owner. The owner can also name a successor owner in the contract, to take over if the owner dies first. In Quebec, the Civil Code calls this person a subrogated policyholder. Without one, a contract owned by a parent who dies passes through the parent's estate, with the delay and cost of settling it, and the estate route may not qualify for the transfer to a child described above; ask your accountant before relying on it. Naming a successor owner is a tax decision as well as an administrative one.

Timing. Nothing happens automatically when a child turns 18. The owner chooses the moment, when the young adult seems ready. The page on teaching the concept to your children offers a way to have that conversation.

After the transfer. The contract belongs to the child. Its cash value, any loan outstanding and every decision are now theirs. A loan the parent took and did not repay passes with the contract, so settle it, or agree in writing who will, before the transfer.

What does planning across three generations look like?

In the first generation, parents own contracts on themselves and on their children. In the second, the adult child owns their own contract and, later, contracts on their children. In the third, the grandchild starts life insured. Each handover is a decision, with its own tax and legal steps.

This is where the habit "think in generations" becomes concrete.

The table describes one pattern, not a rule. A grandparent who owns a contract on a grandchild is its owner, with every decision that brings, and needs a successor owner too.

How does it work for an illustrative family?

An illustrative family; names and figures are examples. Two working parents insure themselves first, then each child, and use an RESP with its grant. When a child starts university, they pay $20,000 a year by policy loan at an assumed 6.5%, repaid over twelve months. Over four years, the interest paid to the insurer is about $2,845.

Every figure below is an assumption chosen to show the arithmetic. None is a quote from an insurer, a lender or a school.

The grant. At $500 a year, the basic grant reaches the $7,200 lifetime maximum for each child in the fifteenth year of contributions: 14 years at $500 make $7,000, and the fifteenth year adds the last $200. The contributions themselves come from after-tax income.

The loan, year by year. A $20,000 loan at 6.5%, repaid in 12 equal monthly payments, needs about $1,725.93 a month. Over the year, the family pays about $711.14 in interest to the insurer. Four years of the same pattern cost about $2,844.56 in interest. If both children's studies overlapped, two loans would run at once and the monthly repayment would be about $3,451.86.

The savings route. Drawing $20,000 from savings at 2.5% and rebuilding it in 12 equal deposits gives up about $271.87 of interest a year, about $1,087.47 over four years, before tax. After tax at the assumed 45%, that is about $598.11.

The measure that matters: after-tax cost. The loan interest is a personal cost, paid from after-tax income. At the assumed 45% marginal rate, earning enough to keep $2,844.56 after tax takes about $5,171.93 of income before tax. The savings route gives up less. In interest alone, over four years, the policy loan costs about $1,757.09 more than the savings route, before tax.

What both routes share. Either way, the $80,000 of university costs is paid with after-tax money. At the assumed 45% rate, keeping $80,000 after tax takes about $145,454.55 of income before tax. No route avoids earning that money, and the contract does not either.

What differs. After the fourth September, the savings route leaves the account rebuilt, if it was rebuilt. The policy route leaves each loan repaid, the cash value still in the contract and the life insurance in force throughout. While each loan was outstanding, the death benefit was lower by up to about $20,000 plus accrued interest. Whether any dividend was credited on the borrowed part, and at what rate, depends on the contract and on dividends that are not guaranteed.

That is the honest picture: the policy route costs more interest here. If a reserve the family controls, and a contract that can later pass to the child, are not worth about $1,757 to you over four years, the savings route is sound.

What are the drawbacks and risks?

The contract takes years to build loan value, premiums must be paid for decades, early surrender can return less than was paid, loan interest is a real cost paid to the insurer, dividends are not guaranteed, and an unpaid loan can end the contract with a tax bill. The discipline of repayment rests on the family.

• Time. A contract started at a child's birth may hold little loan value for several years, too little for private school at age 5. Ask for the guaranteed and illustrated cash value, and the maximum loan, at each date you plan to use it.
• Premiums for decades. Participating whole life is designed to be kept for life. If you are not confident you can carry the premiums on the parents' contracts and the children's contracts through the expensive years on the timeline, do not start them all at once.
• Early exit. A contract cancelled in its first years can return less than was paid in. The cost of insurance and the insurer's expenses come first.
• Interest. Every policy loan bears interest paid to the insurer, at a rate the insurer sets and may change. In the example above, it costs more than drawing savings.
• Dividends. They are not guaranteed and can be reduced. A plan that works only with a particular dividend is fragile.
• Unrepaid loans. A loan that is never repaid grows as interest is added, reduces the death benefit, and can end the contract if it overtakes the value securing it, with possible tax on the ending.
• Two kinds of debt within the family. If a parent takes a policy loan and passes the money to an adult child as a loan, there are two debts: the parent owes the insurer, and the child owes the parent under a separate agreement. Write the second one down.
• A child's contract replaces nothing else. It is not a substitute for adequate coverage on the parents, nor for an emergency fund outside the contract.

What should you ask before acting?

Ask the insurer how the loan rate is set, how interest is charged, how dividends treat borrowed value, how much loan value there will be at each date you need it, and what the adjusted cost basis is. Ask your accountant about the transfer to a child. Ask yourself whether you will repay.

Questions for the insurer and your representative, in writing:

1. On the parents' contracts and on each child's, what is the guaranteed cash value and the illustrated cash value in each of the years I plan to borrow?
2. How is the loan rate set, can it change, and is interest charged monthly or on the anniversary?
3. Does an outstanding loan change the dividend credited on the part of the cash value that secures it?
4. What is the youngest age at which you will insure a child, how much will you issue, and do you limit it by reference to the parents' coverage?
5. Is a guaranteed insurability rider available on a child's contract, at what cost, and at which ages or events can it be used?
6. How much can be paid into the contract each year before the exempt test limits it?
7. What is the adjusted cost basis today, and what income would you report on the loan I have in mind?
8. How do I name a successor owner, or in Quebec a subrogated policyholder, and how is a transfer to my child made?
9. How are you paid on this contract, and by whom?

Questions for your accountant:

1. Does the transfer I plan to my child meet the conditions of the Income Tax Act, and what tax position will my child take over?
2. If I die before the transfer, what happens to the contract and to the tax?

Questions for yourself:

1. Is our own coverage, as parents, in place and sufficient?
2. Which costs on our timeline will this reserve pay, and which will the RESP, savings or cash flow pay?
3. What monthly repayment will I set for each loan, and when will each loan be clear?
4. Who will I talk to about the contract when my child is ready to own it?

How should you read these figures?

The Statistics Canada figures are averages in 2017 dollars, the private school and sport figures are vendor and media figures with their dates, and every number in the illustrative family is an assumption. Replace each with your own figures before deciding anything.

The cost table shows what families spent on average between 2014 and 2017, by income group. It does not show what your child will cost, and it is not adjusted for the price increases since. The private school figures come from a directory's report of the schools in its listing, and the hockey figure from a media article citing an analysis; they are useful as a scale, not as a quote.

No real loan rate, dividend scale, premium or cash value appears in this article, because those belong to a specific contract from a specific insurer and change over time. The 6.5% loan rate, the 2.5% savings rate and the 45% marginal tax rate are assumptions chosen to show the arithmetic. In interest alone, in this example, the policy loan costs more than drawing savings; any case for the contract rests on the points that differ, not on the interest.

To test your own case, replace each assumption with the insurer's written answers, your fee schedules and your accountant's estimate of your marginal rate.

Who this does not suit

This approach does not suit you if the parents' own coverage is not yet in place, if you carry debt at high interest that you cannot pay down, or if you have no emergency fund outside the contract. It does not suit you if your budget could not carry the premiums through the years when school, sport and university costs peak together, or if you need the money for a cost that arrives in the next year or two, before a new contract can carry it.

It does not suit you if, being honest, you would not repay a loan that no one schedules for you. And it does not suit you if an RESP, a TFSA and savings already do what you need. That is a sound choice, and the five habits above work with those tools too.

It can suit you if you need permanent life insurance on the parents, have years before the large costs arrive, can keep the premiums going through the expensive years, and want a reserve you control that can later pass to your children.

If that describes you, start with the self-check on the Becoming a Client page. For the household decisions around this one, the family finance section covers the rest.