|Me at high school grad with my dad and my sister|
I'm not sure how they did it, but they paid for all of the expenses associated with my first year away at Wilfred Laurier University in Waterloo - residence, books, meal plan, tuition. Their costs went down some in my second to fourth years when I decided to return to Hamilton to attend McMaster University. I only began paying for my own studies when I started my Masters program at Western.
All of this is to say that it's important to my husband and I that our children pursue post-secondary studies. The strange thing is, although we started saving money for their education when they were small, we never developed a proper savings strategy until just this year. Generally I'm responsible for the finances in our house and somehow I had a mental barrier when it came to actually getting down to the business of starting a registered education savings plan (RESP).
I finally made an appointment with an advisor at RBC recently. I was a bit sheepish, having waited so long to contribute, but Sophia was friendly and helpful and she reassured me that I'm not the first person to have waited this long. I told her that my husband and I are not big risk-takers and she suggested some lower-risk mutual funds. We also elected to put some of the cash in GICs.
Get Your Free Money!
No matter what you choose to put into your child's education plan, one of the main benefits of contributing is the government grant. The Canada Education Savings Grant matches up to 20% of the first $2,500 contributed annually per child. That could mean up to $500 a year, with a lifetime maximum of $7,200. That's free money.
If you come to the table late, like us, you can still access the government savings grant by contributing the funds retroactively, two years at a time. That means you can contribute $5,000 per child in one year - $2,500 for the current year and $2,500 for the last year you didn't contribute previously.
|My McMaster University grad pic|
Save Early & Regularly
Of course, coming up with $5,000 in one year isn't easy for most of us. The better idea is to save early and regularly. Especially when the kids are small, because all that money they get from grandparents and relatives can go right into RESPs. That becomes more difficult later when they want to spend that money on video games!
A family RESP means if one child doesn't use the funds the other can. And the money isn't just for university - it can be accessed for college, apprenticeship and non-credit courses. If your child doesn't use the funds, you can use your contributions and earnings to fund your RRSP.
With Sophia's advice, the savings process was so easy that I wonder just why we waited so long. All I needed to bring to our meeting was the children's social insurance numbers and my cheque book. Next up for us is meeting with Sophia again in December to discuss making monthly contributions with RESP-matic. Even if we can contribute $50 a month per child, it will make a big difference in the long run.
Get advice about saving for your child's future here. Find answers to your questions about RESPs here.
Have you started saving for your child's education?
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 are my own. #SaveWithRBC