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Turn Your Child’s RESP into a Financial Literacy Tool
 
October 19, 2019

With consumer debt reaching new heights, it’s never been more important to teach children about money. Why not reinforce the concept of saving by opening an RESP and encouraging your children to contribute?
First off, the decision to open an RESP is a financial literacy lesson in itself: not all savings vehicles are created equal. The government grant amounts to 20 percent of the first $2,500 contributed each year. That’s like picking up 20 percent interest out of the gate – a result that would be hard to duplicate in any other investment.

When your children start kindergarten, explain that you’re saving for them to go to “big school” when they’re older, so they can choose to do whatever they want in life. This will not only promote saving but also inspire them to reflect on their futures.

To get them actively involved, encourage them to contribute a portion of their allowance, piggy-bank savings or summer-jobs earnings — and show how they’re money is growing.

And when you feel they’re ready, introduce them to the idea of regular monthly saving. This will not only help them become disciplined savers but also teach them the benefits of compounding, which occurs when you earn interest on your accumulated savings.
 
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Get started by estimating the expenses your children will incur during their post-secondary school years. Keep in mind that the cost of tuition, housing, books and incidentals continues to rise, so you must adjust your figures for anticipated inflation. Through this process, you can quite accurately determine the monthly, yearly or one-time deposit required to fund the future costs of education.

Education Planning Calculator

Next, you need to decide on the best investment vehicle to reach your savings goals. The most popular educational savings vehicle today is the Registered Educational Savings Plan, or RESP, as it is commonly known. You also have other options, including an In-Trust Account and a Scholarship Trust Fund.

Read through the information and if you have any specific questions send us an email and we would be pleased to help.
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Additional Information

Benefits of an RESP

  • Up to $7,200 in Government Grants
  • Tax-Sheltered Growth
  • Flexible Investment Options
  • Tax Savings

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