You may know the RESP basics and are ready to start investing or have already opened an RESP. Here are 6 ways to help ensure you maximize the benefits of your child’s RESP.
Like any investment, the earlier you start, the better. But don’t worry if you are starting later – you can still take advantage of both compound growth and government grants to grow your money. In fact, the government lets you catch up one missed year of Canada Education Savings Grant (CESG) and Quebec Education Savings Incentive at a time. However, once your child reaches the age of 11, you start to run out of time to catch up on the missed government grants. So starting as early as you can is best.
Some provinces—including Quebec and British Columbia—offer additional grants or incentives on top of the CESG. The Canada Learning Bond (CLB) is also available for lower-income families who are eligible.
It’s true that consistent, monthly payments to your child’s RESP can help keep you on track. Another tip is to find opportunities where you can boost your savings. Adding your tax refund or funds from a salary increase at work can help you add a bit more to your child’s RESP. Remember, “every little bit helps.”
To receive the maximum annual CESG from the Federal government of $500, you need to contribute $2,500 a year to the RESP. If you aren’t able to do that – you should know that your child can carry forward any unused grant contribution room until they turn 17. So, if you can increase your contribution in later years it’ll help you get closer to receiving that maximum amount of CESG per child which is $7,200.
Reviewing your child’s RESP from time to time can help ensure you’re making the most of government grants and keep you on top of the latest updates about your account.
Asking your family and friends to contribute money to your child’s RESP as a gift on birthdays, special milestones and holidays is a great way to add to your savings. Toys and clothes are great presents, but an RESP contribution is a gift that will help your child’s future success.
Once you set up your child’s RESP, you’re already on the right track to saving for your child’s future education. Keep these tips in mind to meet your goals and make the most of your savings to help your child make the most of their future.