I’ve recently opened up an RESP (Registered Education Savings Plan) for my youngest, and after talking to some other parents about it, I’m baffled at how many people a) don’t do this, and/or b) don’t understand the benefits of it.
I graduated with a whack-load of student loans, and accumulated even more with the additional studies that I never finished (sadly). I can’t imagine how much money I paid to the government in interest. I’m sure I could have financed a few dozen Lululemon shopping trips.
So, when I had kids, I wanted to give them the gift of not having to bear that same burden (at least not to the same extent). Though, I do still think there is value in kids contributing to their education, since it’s easy to take things like a free education for granted.
When each of them were born, I set up an account and starting plunking away a few bucks at a time for their post-secondary educations, and it feels pretty great.
And, while some people think that it’s just better to wait until the kids are grown when they have more money to contribute, there are a bunch of benefits to starting now and taking advantage of FREE money that the provincial and federal government have made available (money from the government? I know, right?).
Ok, so here are some of the things you can take advantage of (some are even available if you don’t fall under the low-income umbrella):
- Canadian Government matching — For the first $2,500 you deposit into each child’s RESP, you will receive 20% matching. That means contributing $1,000 per year will yield an additional $200 from the government. Nice thing about this system? It doesn’t matter how little you contribute, the matching is automatic once you’ve enrolled. Plus, your bank can set it up for you.
- The BC Training and Education Savings Grant — For all children born after January 1, 2007, there is an available grant of $1,200 that is not dependent upon income level. The program won’t be up and running until 2015, but if you have an eligible RESP you’ll be notified when it’s time to apply.
- Canada Learning Bond — Offered for those that are categorized as low-income, this can give you one-time $500 payment, plus a $100 per year payment for each child.
Some days when I’m having one of those “I’m so disorganized, I’m failing my poor children” days, it’s nice to have this to fall back on. I can think, “OK, well, I’m not organized, but my kids are going to college/university, dammit!”
And, when I show them the growing balances on their accounts, they don’t really understand, unless I translate it into how many Hot Wheels, Pokemon cards, or Monster High dolls it could buy. That’s alright, because one day they’ll get it.