Saving for your Newborn’s Education with an RESP

Out of the hospital and the first thing you’re going to think about is probably not about saving for the newborn’s college education but call us crazy…it’s one of the first things we did. When Little Monkey was born my parents gave us quite a few presents, one of which was a wad of cash. The hubs took matters into his own hands, met with our bank adviser as soon as we had her social insurance card in hand and set everything up. When Baby Boy came around, same thing happened. Learning about the Registered Education Savings Plan (RESP) in Canada should definitely be on every Canadian parent’s to do list.

 

RESP , saving educationWe invested in the  RESP from the very start because both of us went on to get our masters and one of us (ahem. No judgement) had quite a bit of debt after grad school. My parents paid for my entire schooling, from private school to grad school as an international student. International students end up paying almost thrice as much as locals! Needless to say, I am very fortunate that my parents had saved up for my education. It totally freaks me out to think that they had to cough up over $30,000 annually for four years of college and then two more years of grad school. Our kids were doomed! College will probably cost $100k annually by the time Baby Boy and ‘Little Monkey get to that stage. FREAKS ME OUT! I bet Little Monkey is going to at laugh the chump change we found her playing with during a holiday in Mahone Bay back in the summer of 2012!

 

Disclosure: I am part of the RBC RESP blogger program with Mom Central Canada and I receive special perks as part of my affiliation with this group. The opinions on this blog, as always, are totally mine.

 

In order to keep our hopes of having astronauts and mad scientists in the family, the hubs invested a fair amount of time researching the details and with the help of our adviser, came up with a plan that works for us.

Here are a few tips that you may find helpful if you’re thinking about opening an RESP

 

  • It’s never too early or too late to start saving for a child’s education but it is easier if you start early and contribute regularly
  • Remember that the cost of a pizza a week adds up to quite the savings ($25 a week can add up to $50,911 in 18 years)
  • There’s free money for you to grab!! You can receive free money from the government! YES!! The Canada Education Savings Grant will match up to 20% on the first $2,500 contributed annually. That could mean up to an additional $500 a year in your RESP, up to a lifetime maximum of $7,200!
  • You have the flexibility to use the RESP for university, college, apprenticeship, non-credit courses etc., and if your child doesn’t use the funds, you can use your contributions and earnings to fund your RRSP! In fact there’s plenty of ways to use the money if traditional education isn’t what they want. You do have to pay taxes to get it out but the money is theirs no matter what. You know what this means? Your kid can use the money to travel during their gap year!

 

IMG_20130513_213715 (Custom)With advice from RBC, it’s easy to start. Our adviser pointed out that we can invest the savings any way we wanted. Whilst they’re young we chose to be more aggressive and as the college years approach we plan to switch from growth funds to savings deposits and bonds. There are many ways to save for a child’s education – with gifts from relatives and friends to a weekly contribution that fits your budget. You can find more great tips on saving for your child’s education by clicking here and here.

 

Grow Your RESP by entering the RBC contest there’s 4 prizes of $500 (towards an RESP) to be won, so get a head start in saving for your child’s dreams. Even if those dreams right now involve being a Rock star Disney Princess!

  • Victoria Ess
    September 18, 2014 at 12:41 am

    It’s crazy how much domestic tuition fees has risen over the past decade and international fees are astronomical! It’s really great that you two are already getting a head start on saving up for their future.

  • marnie m
    September 19, 2014 at 1:07 pm

    Geez. We have some savings but didn’t think about RESP plans. I like that they can pull it out later for other stuff and not be tied to traditional education. Going to see the tax implications of that …thanks for bringing this to my attention

  • Eldon
    September 20, 2014 at 11:00 pm

    Thanks for the tip about the free money from government!

  • nicolthepickle
    October 3, 2014 at 9:11 am

    That is a great picture of your baby. I agree it is scary to think about how much schooling will cost by the time our kids are old enough. (My kids are the same age as yours).

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