Registered Savings Education Savings Plan or RESP is a great way to make sure that you save enough money to give your child a decent education. In the recent times, the cost of education has been consistently rising and if this trend continues then soon it will be very hard for middle class and lower income people in Canada to afford good secondary education for their kids.
Start savings early
You can contribute up to $50,000 in a RESP plan such as Knowledge First Financial for your child in total. That is a very big amount but if you start early and save consistently you can get to the magic number. Reaching $50,000 will mean that you will enjoy the maximum gains in terms of investment returns and grants. And remember the whole amount is completely tax free. So, open a RESP as soon as you can after your child’s birth.
Take advantage of incentives
You can get benefits amounting to $7,200 in total from the Government of Canada on your RESP scheme such as Knowledge First Financial. However, to get the yearly $500 you will need to contribute a total of $2500 every year. However, don’t worry if you fall short one year, you can recover the grant next year. Make use of any sudden windfalls such as monetary gifts that your child receives as well as any bonuses, tax returns etc. that you get in order to get to $2500.
Fix your saving budget and stick to it
Take careful stock of all your expenses and find out exactly how much you can comfortably save every month. Stick to that amount; don’t reduce it later even if you are having money issues. You will find that once you get into the habit of saving, it will become much easier. Set up automatic withdrawal of the amount with the bank so that money gets transferred to the RESP account without you having to do anything. This way at the end of the year you won’t have to scrape together a huge amount to get to $2500.