Preparing for your child’s post-secondary education can be financially challenging. However, Registered Education Savings Accounts (RESPs) can be a valuable tool to help you save for this important milestone. As the year comes to an end, it’s the perfect time to learn more, add to your RESP contributions, and take advantage of government grants and incentives. In this blog, we’ll provide strategic tips and practical advice to help you optimize your RESP savings journey.
What is an RESP
We all know post-secondary education can be expensive. The Registered Education Savings Plan (RESP) is a long-term savings plan to help you and other families save for a child’s education after high school, including trade schools, CEGEPs, colleges, universities, and apprenticeship programs. These savings plans provide safe ways to save for your children’s future education today, so when it comes time to enroll them in their future career education, you know you have it covered.
There is no annual limit to how much you can contribute to the RESP. Over the lifetime of the RESP, the maximum that can be contributed is $50,000 per beneficiary.
The importance of contributing to a RESP before year-end
It is important to contribute to your RESP before the end of the year for several reasons. By making your contributions before the year-end, you can take advantage of the tax benefits that an RESP offers. Some federal programs will contribute to your RESPs based on your contributions of the year – so be sure to put away what you can to maximize those additional contributions! Also, the earlier you make your contributions, the more time it will take to grow tax-free.
How to Maximize Your RESP Contributions
Take Advantage of Automatic Transfers:
The end of the year can be a busy time, and it’s easy to forget about RESP contributions. But don’t worry; there’s an easy way to ensure you make contributions all year round without thinking about it! You can set up automatic transfers from your chequing account, which means you don’t have to worry about remembering to make contributions. You can even choose how much money you want to transfer, so saving without stress is easy. This way, you can ensure you’re taking advantage of all the benefits of an RESP without hassle.
Encourage Contributions from Family: A Gift of Education
Investing in your child’s education can be a joint effort by involving other family members in the RESP journey. Instead of traditional gifts, you can suggest contributions to your child’s RESP on special occasions such as birthdays, holidays, or other important events. Contributions from grandparents, aunts, uncles, and other family members grow like your own, significantly boosting the educational fund and instilling a sense of shared responsibility for your child’s future.
By contributing to your child’s RESP, family members are also actively participating in creating an educational legacy. It’s a tangible way for them to support your child’s aspirations and contribute to their future success. It’s also a great opportunity to educate your family members about the importance of financial planning for education.
How to Ask for Family Contributions:
Asking for money from family can be difficult, but there are ways to communicate your wishes effectively. Here are three things you can do to make it easier:
- Share Your Dream: Start by sharing your vision for your child’s education with family members. Explain the benefits of contributing to the RESP and how their support can make a lasting impact.
- Offer Simple Solutions: Make it easy for family members to contribute by providing them with the necessary account details or setting up a system where they can easily transfer funds. Many financial institutions, including Integris Credit Union, offer user-friendly platforms for online contributions.
- Celebrate Together!: Use educational milestones, such as the start of a new school year or the completion of an academic term, as opportunities for family members to contribute. This not only ties the contributions to meaningful moments but also keeps the momentum going throughout the year.
Encouraging family contributions to your child’s RESP transforms the act of giving into a legacy-building endeavor. It aligns with the spirit of collaboration and shared responsibility, creating a robust financial foundation that supports your child’s educational aspirations. At Integris Credit Union, we understand the importance of family involvement in education planning and are here to assist you in making this journey as seamless as possible.
Explore Provincial and Federal Contribution Programs & Grants:
Are you aware of the multiple ways you can receive free government contributions for your child’s RESP account? The Provincial Government of British Columbia and the Federal Government of Canada offer programs and grants you can easily apply for to help build your RESP accounts – for free! By taking advantage of these programs, you can grow your RESP accounts even if you are unable to contribute at the moment.
British Columbia Grants
The BC Government encourages all families with RESP accounts to apply for the British Columbia Training & Education Savings Grant (BCTESG). This grant provides a one-time contribution of $1,200 to eligible children. Grant requirements are:
- The child can apply between their 6th birthday and the day of their 9th birthday,
- Parent or guardian plus the child must be residents of British Columbia at the time of application and,
- have a valid Social Insurance Number.
To learn more about the BCTESG, please visit: British Columbia Training & Education Savings Grant Website.
Federal Programs & Grants
The Government of Canada also offers additional education savings incentives linked to RESPs, specifically the Canada Learning Bond and the Canada Education Savings Grant.
Canada Learning Bond/ The Northern Promise:
The Canada Learning Bond (CLB) program was established by the Federal Government in 2004 to encourage families to save for their children’s future. However, the program has not been accessible to many families in Northern BC. To address this issue, the Canadian government has created the Northern Promise initiative, which involves collaboration between Northern BC’s four post-secondary institutions and area credit unions, including Integris Credit Union. Through the Northern Promise, we are working together to increase participation in the CLB program.
The CLB contributes up to $2,000 in an RESP for an eligible child. This includes $500 for the first year of eligibility and $100 each year the child continues to be eligible (up to and including the benefit year in which they turn 15).
To be eligible for the CLB, the beneficiary must:
- be a resident of Canada
- have a Social Insurance Number (SIN)
- be named as a beneficiary in an RESP
- be born on or after January 1, 2004
- be from a family with low-income
To learn more about the CLB and the Northern Promise, please visit: the Northern Promise website.
Canada Education Savings Grant (CESG):
The Canada Education Savings Grant (CESG) program helps families save for their children’s post-secondary education through percentage contribution matching. This program is different than the listed above programs, as it does require contributions to already have been made to be eligible.
The Canadian government matches a percentage of the contributions to a Registered Education Savings Plan (RESP) up to a certain limit and on the adjusted family net income. The maximum annual grant limit is $500 per beneficiary, and the lifetime limit is $7,200 per beneficiary.
To be eligible, the child must
- be a Canadian resident,
- have a valid Social Insurance Number (SIN),
- and be named on the RESP and,
- The RESP must be opened and contributions made before the end of the calendar year in which the child turns 15.
To learn more about the CESG, please visit: the Canada Education Savings Grant website.
Consult a Financial Advisor
Consulting a financial advisor can be a smart move when it comes to maximizing your savings through RESP contributions. A financial advisor can provide expert guidance tailored to your specific financial situation and goals. They can help you create a personalized savings plan and provide insight into investment options that align with your risk tolerance.
Moreover, a financial advisor can assist you in maximizing those government grants and incentives available through RESP programs like the ones listed above. They can explain the eligibility criteria and help you understand how to make the most of these opportunities.
By working with a financial advisor, you can ensure that you are making well-informed decisions and taking advantage of all available resources to maximize your savings for your child’s education.
Start Your RESP Journey with Integris Credit Union
If you still need to establish a RESP account, our Financial Advisors at Integris Credit Union can guide you. As a credit union, we prioritize our members, offering a personalized experience tailored to your unique needs.
As the year concludes, seize the opportunity to strengthen your RESP strategy. Set up automatic transfers, embrace the power of inflation, explore available grants, and encourage contributions from your extended family. At Integris Credit Union, we’re dedicated to supporting you on your savings journey. Now is the time to take proactive steps toward securing your child’s educational future – let us help you get started today.
