When looking at your child’s future, it may become overwhelming especially when you start thinking about all of the costs related to their post-secondary education. A Registered Education Savings Plan (RESP) is a great investment to help you put aside money for your child’s education.
What is an RESP?
An RESP is a tax-deferred, savings account that can be used to save money for your child’s post-secondary education. You can contribute as much as you’d like (up to a lifetime maximum of $50,000) and watch it grow.
To help your money grow faster, the federal government also contributes a percentage of money to the RESP each year based on your contributions.
What types of RESPs are there?
There are two different types of RESPs available – family plans and individual plans.
A family plan is available for families with multiple children, allowing you add multiple beneficiaries to one plan.
An individual plan can be set up for one beneficiary, and can only have one beneficiary. A common scenario for an individual plan would be in a blended family situation. More details on the two plans can be found here.
When is the best time to start saving for a child’s education?
Starting early, and contributing often, is key. The sooner you start to save, the sooner you’ll start earning interest on your money and receiving federal contributions to your RESP.
Even if you don’t start early, it’s never too late to start. There’s no better time to start than today. By just saving as little as $5 each week, it can add up quickly and help your child in their post-secondary dreams.
How much should I save?
An education savings calculator can help you figure out the cost of your child’s post-secondary education and map out what type of savings you’ll need to help meet your financial goals.
I’m not sure I can afford a RESP. Is there a minimum amount I must contribute each month or yearly?
Some types of RESPs have no minimum deposit requirements, while other RESPs do. It’s important you talk to a financial advisor to determine what RESP works best for you and what you can afford, whether monthly or yearly.
Where can I go for more information or set up a RESP today?
To learn more on RESPs visit the Government of Canada’s website.
To determine what RESP is best for you and set up an RESP, talk to your financial advisor today.