Are you feeling the financial stress that comes with sending a kid off to college one day? You’re not alone.
Thankfully, there are simple steps that parents and guardians can take to save for their children’s education. And it all starts with opening a Registered Education Savings Plan, better known as an RESP. An RESP is a government program designed to encourage caregivers, parents, or even grandparents, to save for a child’s college education. The premise of an RESP is that if you save some funds, the government will chip in too—it’s basically free money. Plus, the interest you earn from RESP savings and investments is tax-deferred until the money is used for education.
Here is a bit more about RESP options you should take advantage of to save yourself some stress
3 grants to take advantage of
- BC Training and Education Savings Grant (BCTESG)
This grant is specific to British Columbians. The BCTESG is a one-time $1,200 grant and it’s given with no matching contribution required. Your child is eligible as soon as they turn 6 years old. Don’t procrastinate on this one—it’s only available until the child turns 9 years old.
- Canada Learning Bond (CLB)
If you have a modest income and your child was born after January 1, 2004, you could be eligible for the CLB. The government will initially give you a $500 contribution plus $25 to cover the cost of setting up the RESP. They’ll contribute another $100 each year that your family is still eligible until your child turns 15. The maximum amount you can receive is $2,000. The best part is that if you don’t get around to applying for the CLB, you have until your child is 18 years-old to receive back-payments for the years your family was eligible.
- Canada Education Savings Grant (CESG)
Regardless of family income, with a CESG, the government will contribute 20% of what you’ve already saved in the RESP, to a maximum of $500/year and $7,200/lifetime. If you contribute $2500 a year into an RESP, that’s a free $500 a year—not too shabby.
If you’re eligible for all three grants and you contribute the maximums annually, you could get $10,400 by the time your kid is ready for college. Who doesn’t like free money?
If you’re you looking to get started, here’s where to begin.
- Read about the different RESP options.
- Re-work your budget to find some room for RESP contributions.
- Open an RESP and set up a recurring transfer to the account.
- Begin the application process for the grants.
We can help every step of the way.
If you feel overwhelmed by all the RESP talk or you just need advice, give us a shout. We’re here to help.