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How do Registered Education Savings Plans (RESPs) work?

Natasha Mills is a devoted mother to an incredible new set of boy-girl twins named Mila and Liam, along with her amazing five-year-old son, Hudson. With a bachelor’s degree in psychology and over ten years of experience in professional sales, Natasha’s passion for motherhood was ignited when she welcomed Hudson into her life. This newfound passion led her to embark on a journey of writing and connecting with women and mothers from around the world.

Registered Education Savings Plans (RESPs) function as extended savings strategies akin to Registered Retirement Savings Plans (RRSPs), offering tax protection for contributed funds. While RRSPs primarily focus on retirement, RESPs are specifically tailored to aid parents in preparing and saving for their child’s post-secondary education. By comprehending the intricacies of RESPs and capitalizing on eligible benefits, they have the capacity to experience substantial growth (with a maximum limit of $50,000 per child).


What are RESPs and what are my experiences with them?

When I discovered I was expecting twins in 2020, my understanding of RESPs was quite limited. The news of my pregnancy caught me off guard, and receiving it during the onset of lockdowns heightened my already overwhelming uncertainty. With the numerous expenses that accompany caring for newborns, budgeting for two additional RESP accounts was the furthest thing from my mind.

In 2016, I opened an RESP for my first child, Hudson, with a major bank. Although I recognized the importance of saving for my children’s education, I didn’t prioritize making regular contributions. Besides, I had assumed that the grandparents would lend us a hand, right?

Unlocking the potential of RESPs.

Anyone has the ability to establish an RESP for a child as the beneficiary. These plans offer great flexibility as long as you stay within the lifetime maximum contribution limit. Additionally, when the child is prepared to pursue post-secondary education, they can access the funds.

To optimize the benefits of RESPs, it is crucial to comprehend the Canadian Education Savings Grant and its associated conditions. One significant aspect to consider is that the federal government matches 20% of contributions, up to a maximum of $500 per child annually, provided that you contribute $2,500 per year to each RESP. Although we haven’t met these requirements for our RESP yet, we are now prepared to embark on this journey.

How did Coast Capital help me prioritize RESPs?

Since joining Coast Capital, my knowledge about the significance of RESPs has significantly increased. Coast Capital, as a member-owned financial cooperative with a legacy of over 80 years, excels in offering genuine guidance for real-life situations. The encouraging news is that if you’re in a situation like ours where you’re trying to catch up, you have until the end of the year when a child turns 17 to make contributions.

Being a member of Coast Capital has provided me with valuable support when it comes to family matters, including access to online resources that enlighten me on how to maximize the power of an RESP. Coast Capital’s website offers excellent resources that I wish I had read before the arrival of my twins, such as an ebook on how to manage money. This experience has made me realize the crucial role RESPs play in securing my children’s future and why relying solely on grandparents for post-secondary education funding is not a reliable option, given how expensive it can be. When all factors are taken into account, the annual cost per child can easily exceed $20,000.

How to budget and plan for RESPs.

To fully utilize the available government grants (up to $7,200 per child), we should aim to save approximately $630 per month for our children. Considering the impact of rising inflation, this adjustment may not be easy, but it is a vital step for us to take. Starting to work towards this goal is important for our family’s financial well-being.

Coast Capital has educated me about the distinction between proactive and reactive planning, a concept covered in ebook on how to manage money. For as long as I can recall, we have been reactive planners, dealing with financial burdens as they arise and making adjustments accordingly. However, when it comes to something as crucial and costly as post-secondary education, we can no longer leave it to chance. We need to shift our approach and start preparing ahead of time. Moreover, we are eager to witness the compounding interest in our contributions as they begin to grow.

Coast Capital introduced me to the 50:20:30 rule, a budgeting concept that provides a straightforward framework for monitoring expenses. Our plan is to create a new budget that incorporates regular contributions to RESPs, and we will review it periodically. Additionally, we will begin utilizing Coast’s Money Manager app, which offers a consolidated view of all our accounts from various institutions in one place. The app’s built-in budgeting features, tailored to our previous spending patterns, will assist us in paying off debt and improving our financial situation. This tool allows us to break down our expenses into manageable contributions, making the process more attainable.

RESP as preparation for the future 

When it comes to budgeting for a baby or expanding your family with multiple children, there are several small actions we can take that can make a big difference.

The key lies in making adjustments to our spending habits. By carefully reviewing and modifying lifestyle expenses, we can distinguish between necessary and unnecessary expenditures. This may involve canceling subscription services that don’t provide sufficient value and capitalizing on any available financial savings. Collectively, these actions can have a significant impact on our finances.

Switch to Coast Capital and learn what it’s like to have a real partner. Open a Free Chequing, Free Debit and More Account and enjoy no monthly fees, no minimum balance, unlimited day-to-day transactions and more. Open an account today!


The stuff we have to say. 
This article is provided for general information purposes only. It is not to be relied upon as financial, tax, or investment advice or guarantees about the future, nor should it be considered a recommendation to buy or sell. Information contained in this article, including information relating to interest rates, market conditions, tax rules, fees, and other investment factors are subject to change without notice and Cost Capital Savings Federal Credit Union is not responsible to update this information. All third party sources are believed to be accurate and reliable as of the date of publication and Coast Capital Savings Federal Credit Union does not guarantee accuracy or reliability of such sources. Readers should consult their own professional advisor for specific financial, investment, and tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.


Natasha Mills

Natasha Mills

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