Kids are expensive, aren't they? Between groceries, clothing, phone bills, ... never mind trying to save for their education! But of course it is important - we all want the best for our kids.
We want to set them up to succeed in life, which usually includes making sure they can go to college or university. So how do you save for this event, given all the other financial demands in your life?
The answer is actually simple: start a Registered Education Savings Plan, or an RESP, for short. An RESP is a government approved investment plan that helps you save money for your child's post-secondary education.
It's a great way to save, because your money grows on a tax-deferred basis. This means income is not taxed until you take it out for your child's education. And as a student, they probably won't have much in the way of taxable income, so they will likely have little or no tax to pay when that time comes.
And you know what? You get some savings help along the way from the government. That's right - eligible RESP contributions automatically receive a grant from the Government of Canada until the year your child turns 17. So on top of what you've contributed, you can get an extra $500 or more per year... or up to $7,200 over the life of the plan.
That's 7,200 reasons right there to set up an RESP. And you don't need a lot to start - as little as $25 per month in fact. You can make things really easy by setting up automatic contributions so you'll hardly notice the money coming out. And if you need to, you can change your contributions just by giving us a call.
And grandparents, relatives or friends can also easily contribute to your child's education. So instead of buying the latest toy, they can give the gift of education. The best part? No assembly required.
Please visit the RBC Advice Centre for more information.
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