GUEST COLUMN: Saving up for school

Registered Education Savings Plans (RESP) are an easy way to start saving for post-secondary education.

Do you have children that you would like to help through college or university?

A Registered Education Savings Plan (RESP) is a fantastic, easy way to start saving, and the government even kicks in an additional 20 per cent to help little Johnny get that post-secondary education. Anyone can open an RESP account for a child – parents, grandparents, guardians, relatives or friends.

RESPs are a way to help you save for your child’s post-secondary education. Like with any savings program, the sooner you start saving (i.e. when the child is born), the better off you will be because of compounding interest. It also grows tax-deferred until it is withdrawn. Because the student withdraws it, it is taxed based on their income, which is usually quite low.

The grant paid by the government is called the Canadian Education Savings Grant (CESG), with a maximum pay out of $7,200 per child of free money. This is based on the grant equaling 20 per cent of what you invest (up to a maximum of $50,000 for each child). There are also additional programs to help such as the Canadian Learning Bond of $500 from the Government of Canada.

The B.C. Liberals also have a families first program outlined in the election platform, where they will invest $1,200 into the RESP accounts when the child turns six (born on or after Jan. 1, 2007). You may apply for the grant between the child’s sixth and seventh birthday.

So what do you need to start an RESP for your children? First they each need to have a Social Insurance Number (SIN). You can apply for the child’s SIN at any Service Canada Centre (Vernon’s is located at 3202-31 St.) You will need their birth certificate to apply.

To open an RESP (individual or family account), go to your bank or financial planner and they can assist you. Ask your provider about the various grants available to take advantage of what you are eligible for. You can have money added every month from your own bank account. You can start with any amount. Even a $25 to $50 contribution per month when the child is born will add up to significant amount when they turn 17 or 18. This is very do-able for most families. Getting started is the biggest challenge for most people.

There are many websites with lots of information about RESPs if you have more questions. Of course your bank officer or financial planner can also give you any information you may need to get started.

Free money is a stake so if you haven’t already, set up an RESP for your children. They will thank you for helping make post-secondary education possible.

Kathi Bridge is a money coach and educator with Money Coaches Canada. This article is provided for information purposes only. Please consult with a professional advisor before implementing a strategy.

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