It’s September, holy cow! As a popular meme that is circulating says, “I can't believe it's September! I was just March like 16 years ago!” 2020 has certainly brought it’s fair share of challenges and surprises - we’ve been living through what feels like an eternity of uncertainty and for people who like to plan this is difficult. Whatever your back-to-school looks like this year…planning for post-secondary education may be one thing that you can act on now to create a better, more secure future for your family.
Today’s job market requires a higher level of skills and education than ever before – whether it is through a trade school, university, or college. These programs are increasingly expensive and the costs of studying at home, or away can create some very real barriers for students. Personal and student loans may be available - but who wants to graduate with a heap of debt? Fortunately, there are ways to save for your child (or children’s) education and set them up for success – it is never too early (but it can be too late!)
When considering different savings plans for your child’s education a Registered Education Savings Plan (RESP) likely comes to mind. RESPs are an effective investment tool that can help you save for post-secondary education. RESPs are flexible, convenient and tax-efficient. Almost anyone can open an RESP for a child – parents, a grandparent or other family members, you can hold an individual RESP (for one child) or a family RESP (for multiple children). You can contribute monthly, or sporadically with Birthday or Christmas money, income tax refunds, a bonus from work, etc. The money can grow tax-free in the plan for up to 36 years. There is a total lifetime contribution limit of $50,000 per child, and when the funds are eventually withdrawn, they are taxed in the student beneficiary’s name, typically in a low-income bracket.
The most attractive advantage of an RESP is the Canada Education Savings Grant (CESG) which provides a 20% match on all contributions to a maximum of $500/child/year and a total of $7,200 (per child) over the lifetime of an RESP. Some families may also qualify for the Canadian Learning Bond (CLB) which provides financial support to lower income families. The earlier you can set up an RESP, the more time your RESP contributions (and government grants) have to grow.
If, like me, you cannot believe that your new-born baby is now entering Grade 3, you suddenly realise how quickly time flies. One minute you are snapping their picture on first day of Kindergarten, the next you are helping them fill out university applications. Setting up an RESP is one thing you can do today to bring peace of mind, and set your child up for future success.
Brooklyn Scott is a Financial Advisor/Mutual Funds Representative for Lewis & Jones Group/Desjardins Financial Group/Desjardins Financial Security Investments Inc. in Killarney, Manitoba.
Mutual funds are distributed through Desjardins Financial Security Investments Inc. For insurance products, Desjardins Financial Security Investments Inc. acts as a national insurance brokerage agency.