A Registered Education Savings Plan (RESP) is designed to help you save for your child’s post-secondary education. Not only does your money grow tax-free, the government contributes generous grants (Canadian Education Savings Grant (CESG)), which adds a guaranteed 20% return to the account on your child’s behalf. The 20% return is based on eligible contributions up to a maximum of $500 a year on a $2,500 contribution. That means saving money, earns you money.

The money earned in a RESP can be used to help pay for a variety of post-secondary programs. This could include full-time and part-time university and college studies, apprenticeship programs and trade schools, as well as school-related expenses like textbooks, rent and other living costs.

With the cost of tuition on the rise, having a savings plan for your child’s education will make things feel far more manageable in the long run. So, invest in your child’s future as early as possible and maximize your savings potential with the help of a RESP specialist.

7 tips to help you start saving for your child’s RESP

1. Make a point of depositing right into the RESP early on and benefit from compound growth. The longer you leave your money, the greater the opportunity for growth ($100 per month in an investment at an annualized rate of 4% will be worth $31,664.44 after 18 years when compounded monthly.)
2. Set up monthly pre-authorized payments and investing becomes an automatic habit right from the beginning.
3. Consider your overall budget and identify areas where you can scale back – $200 a month might be a matter of eliminating a couple of dinners out at restaurants.
4. Stick to what you can afford but remember you can increase your contributions – take advantage of major opportunities to invest that extra money, like when you no longer have to pay for daycare.
5. Make additional lump sum payments whenever possible, utilizing benefits like year-end bonuses or tax refunds.
6. Suggest that family members and close friends make contributions as birthday and Christmas gifts (as an alternative to clothes and toys every year).
7. Once your child is old enough, encourage them to contribute to their own plan (it’ll help them understand the value of money and help them learn to budget).

Invest in your child’s RESP plan early and get a head start on setting them up for future success!

To learn more about RESP’s and your child’s future, reach out to Karen Wallace from Knowledge First Financial.