Author Archives: Stephanie

RESP with RBC: Helping my kids plan for their Future

Disclosure: I am part of the RBC RESP blogger program with Influence Central and I receive special perks as part of my affiliation with this group. The opinions on this blog are my own.

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When I went to university, I made the tough decision to move from my parents home in Ontario back home to Manitoba. It was the place I grew up, where most of my family were and in spite of the shifty weather that everyone complains about, the horrible roads with potholes the size of small villages and the mosquito’s, this was where I was meant to be.

Moving out wasn’t easy and maintaining an apartment, a full university course load and a full time AND part time job wore me out. By the end of my first year, I was completely burnt out, sleep deprived and barely passing any of my courses. As much as I wished that I’d had a university fund from my parents, I didn’t. I don’t blame my parents or think they did me a disservice in any way, shape or form. Money was tight growing up and my parents worked darn hard to give my brother and I a normal life. Any time they could help us out, they did and I’m sure they did much more than was within their means to ensure that we were able to complete our educations. In the end, I completed my degree but it meant shouldering a lot of student debt in the process that wore on me for a long time until I was finally able to pay it off.

Now that I’m a parent, not only do I fully appreciate how tough of a job it is, I also completely understand both the need and the challenge of providing for my kids’ future while at the same time instilling in them the strong and admirable work ethic that my parents modeled for me all through my life. Working to pay for my education was tough but it also taught me the value of hard work. As much as I want my kids to learn that same lesson, I also want to provide them with the means to pursue a career path that they are passionate about.

This is why Hubby and I have already started RESP’s for all 3 of our kids. We don’t contribute a ton, only what we feel we can reasonably budget but we’re already seeing the growth and accumulation in just a few short years. I have no idea what university will cost by the time my kids are grown and how many years they’ll need to complete it. If they can get through it with minimal debt and with lots of time to study hard and achieve their goals, then I want to help in any way I can.

It doesn't take much to save for your kid's future.
It doesn’t take much to save for your kid’s future.

I still hope they’ll work in the summer and contribute as well but only time will tell. Ultimately, I want to help set them up for success and avoid some of the stress and exhaustion that I experienced. University is hard enough with the competition for limited spots in various programs, endless course work and exams. If I can shoulder some of the financial burden, I want to.

The benefit to starting an RESP for my kids at such a young age is that we don’t have to contribute a lot to see our money grow (18 years is a long time after all) over time.

So what is an RESP? Glad you asked! RBC has provided this explanation (also available on their website) :

“The Registered Education Savings Plan (RESP) is a tax-sheltered plan that can help you save for a child’s post-secondary education. With the high cost of education, many parents, grandparents and other family and friends are recognizing the need to save well before the expenses become a reality.”

Some interesting facts (courtesy of RBC) about saving for a child’s education you may want to consider if RESP’s have been on your brain but you’re not sure if it’s really worth starting one:

  • Tax-Deferred Earnings:  RESPs offer tax deferral. This means that interest income and investment growth earned within an RESP are not taxed as long as the funds remain in the plan. Withdrawals from an RESP are taxed in the hands of the student, which usually means they pay little or no tax.
  • The Canada Education Savings Grant: With the CESG, for an eligible beneficiary under the age of 18, the government matches 20% on the first $2,500 contributed annually to an RESP. The maximum total CESG the government will give, up to age 18, is $7,200 per beneficiary. The grant proceeds are invested along with your contributions, further enhancing the benefits of tax-deferred and compound investment growth within your plan.
  • Canada Learning Bond: A $500 CLB is provided for children of families who are entitled to the National Child Benefit Supplement and who are born after December 31, 2003. These children also qualify for CLB instalments of $100 per year until age 15, as long as they continue to receive the National Child Benefit Supplement. The total maximum CLB payable per child is $2,000. CLBs are allocated to a specific child; unlike CESGs, they cannot be shared with other beneficiaries. There is no requirement to make contributions in order to qualify for the CLB.
  • Provincial Government Incentives:

    Alberta Centennial Education Savings (ACES)
    The ACES Plan will contribute $500 to the RESP of any child born to an Alberta resident after December 31, 2004. An additional grant of $100 will be paid when the child reaches age 8, 11 and 14, provided he or she is still in school. The total ACES grant is $800, and can be shared among siblings.

    Quebec Education Saving Incentive (QESI)
    QESI is a tax credit introduced by the Quebec government to support the education savings of its residents. Annual RESP contributions of up to $2,500 are eligible for a basic tax credit of 10%. Lower-income families are eligible for an increased tax credit (5% or 10%) on the first $500 of annual RESP contributions.

Other good points of reference from RBC about the benefits of their RESP’s:

  • Flexibility: what if my child doesn’t go to university?
  • How much and how often do I have to contribute?
  • Convenience: Option to save automatically and easily with RESP-Matic: — with available frequencies ranging from weekly
    to annually

Book and appointment with an RBC advisor for more information and to ask any questions you might have!

Need more? Well okay then! RBC is hosting a Twitter party on September 17th, 2015 beginning at 9:00pm EST where they will have financial advisors ready to answer any and all of your questions. Participants will also be eligible to win one of 6 $150 Visa Gift cards during the evening. Follow #RESPwithRBC for your chance to win and increase your education saving knowledge!

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