Building a bright financial future for your child
Written by: Joan Battram & Linda Kew | Member Service Representatives | Parkhill Branch
When a child is born so many responsibilities come with raising this child. One thing that can easily be taken care of is their education. Opening an RESP (Registered Education Savings Plan) could be one of the smartest decisions that you will make, however, there are a few details that you’ll want to understand prior to doing so.
An Education Savings Plan or Registered Educations Savings Plan (RESP) can help parents, family and friends save towards a child’s future post-secondary education. At Mainstreet Credit Union we can assist you in not only understanding what an RESP is, but more importantly, how to personalize it to suit your needs.
Here are a few important tips that you’ll want to consider before opening an RESP:
The earlier you start, the less you would need to contribute each month. Invest early and watch the RESP grow with interest over time along with your kids.
Save What You Can Afford
The amount you save will be unique to you. Remember every little bit is a step in the right direction!
Set-up a monthly automatic contribution, even if it is a small amount, this way the savings happens without thought given how busy we all are.
Make it Flexible
You have options for education savings. Perhaps you want to look at a TFSA (Tax Free Savings Account) which can be withdrawn tax free for any purpose and does not have to go towards education. Or perhaps an RESP family plan vs an individual plan to offer flexibility.
Gain More Than Just What You Put In
The government will add 20% annually to the first $2500 contributed, a $500 bonus every year!
Know Your Facts
The lifetime contribution limit for each beneficiary of a RESP plan is $50,000
Taking the first step of opening an RESP, or other savings plan for your child’s education, can help your child have more choices in life and set them up to achieve financial independence. It is never too late to start. Encourage children to save their earnings of cash gifts from family to add to the plan and start showing them how to get their money working to maximize opportunities for their future.
Note: Parents aren’t the only ones who can open an RESP for a child. If you have a grandchild, niece, or nephew, you can open an RESP for them. In fact, anyone can get an RESP for a child. You could even open an RESP for one of your friends’ children if you’re feeling generous!
Reach out to Mainstreet today to get started! Book a meeting with a Mainstreet advisor today.