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Saving for Your Child’s Education – Where to Start

Saving for Your Child’s Education – Where to Start


With many families working towards reducing debt, saving for a down-payment, and investing in our retirement, the thought of finding ways to start saving for our child’s education seems like an unattainable goal most days, especially if it’s 10 or even 18 years in the future. Post-secondary education can get quite expensive as we all know, so being able to help our children achieve a certificate, diploma or degree is a very special gift to give. If you’re wondering how to get started, here are key tips that will help:

  • Open up an RESP

A Registered Education Savings Plan (RESP) is similar in theory to an RRSP, but instead of helping Canadians save for retirement, it’s a helpful way to put aside money for your child’s education while offering incentives and tax savings. Within an RESP, you can invest up to a lifetime total of $50,000 for each child. The Canadian Government will contribute to this RESP – called the Canada Education Savings Grant (CESG). They will contribute 20% of what you put towards it (up to $500 per year), up to a maximum of $7200 in total. For low-income families, they will contribute even more. The earlier you get started with an RESP, the more government contributions will be added and the more interest will be earned along the way.

Unlike an RRSP however, contributions to an RESP aren’t tax deductible, but any investment income that’s earned will not be taxed until it’s withdrawn, which can also be a significant savings over the years. When you open up your RESP, don’t worry if you don’t have a lot to put in. Just getting started is what’s important. The rest will happen over time.

  • Get the extended family involved

At Christmastime, birthdays and other celebrations, kids can get overloaded with all sorts of toys, clothes, books or other gifts; some of which may rarely get used or enjoyed. Why not turn even a bit of that into direct education savings by letting grandparents, aunts, uncles and others close to your family know that your child has an RESP. Even if they gift $25 to the child for fun and frolicking, and another $25 towards the RESP, it will add up year after year into some solid education savings.

  • Get automated

Automatic payments are a great way to get regular contributions made to an RESP. It’s simple and effortless, especially if you have the payments come out a day or two after the Child Tax Benefit payments go into your account; you may not even notice it’s gone.

  • Get creative

Saving money isn’t easy, but when we get creative and think of alternate ways to reach our financial goals, it can actually become fun. For example, although it’s always good to donate used toys, baby furnishings, clothing, instruments and sports gear, there’s also a market for these items and you can sell them online, at a garage sale, or at a designated thrift or consignment store for extra cash. You can also involve your child early and talk about the importance of education savings; offer incentives for them to put aside a portion of babysitting money, job earnings, or gifted money they’ve received. Got a teen who wants the latest, greatest cell phone package? Negotiate something a bit less but with an extra $20/month towards their RESP. Learning (and actively practising) ways to save money is important; strong financial literacy skills are the golden ticket to a more secure future.

Helping your child achieve their educational goals without having them come out of it with a massive student debt load is something all parents care about. Although financial independence is important, we don’t want our children struggling for years after graduation, or worse, turning away exciting opportunities for their future such as a good education. If you’d like to learn more about RESPs, or any investments for your family’s future, talk to me. I’m here to help you get started with that financial plan. Reach out today and make an appointment by calling (705) 315-0516.

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