4 minutes read

Ten Quick Tips for your Canadian RESP

Vincent Heys

If you’re a parent in Canada, you might have heard about an RESP. Before the acronym scares you away, let’s break down what it is, and how you can best maximize it. Read on for our ten quick tips for your Canadian RESP.

What is an RESP?

RESP stands for Registered Education Savings Plan, and it is incentivized by the government to help parents save for their child’s college education. This is a fantastic “forced” saving mechanism that allows you to plan and prepare for your child’s tertiary education. (At Wealthstack, we’re all about saving and preparing for the future – you can check out our financial resources to set you up for saving success. Or create your own Dashboard to keep up with your goals.) 

You can choose which provider to set up your RESP with (check out Tip Number 5) and then your child, or children, will be linked to the Primary Caregiver (usually one of the parents) on that account. When it comes time to use the savings for college, you simply contact the administrator of your RESP, send them a confirmation of enrolment into a university and the money will be paid out to you, or directly to the institution.

Most of the time a savings goal of $50 000 is sufficient, but rather use Wealthstack.ca’s comprehensive calculators to do the number crunching and find out exactly what you need to bank before your child spread their wings. Create your Dashboard for free and track your savings as they grow.

Our ten quick tips for your Canadian RESP:

Whether you’re a new parent or have just received your Permanent Resident status in Canada, here’s how to get the most out of your RESP:

  1. Aim to put $2 500 per child into your RESP every year.

    The first $2 500 will activate a government sponsorship of $500 to add to your savings.

  2. You can go back one year on contributing to your RESP.

    This means that if you haven’t contributed to your RESP recently, you can add $2 500 now for last year and you’ll still activate your government grant amount.

  3. Allocate your savings wisely between siblings.

    You can, for example, allocate $500 savings into your RESP but ask your administrator to split $300 to your oldest child who will be going to college sooner, and $100 each to your two younger children.

  4. Get started as soon as possible.

    Set up your RESP early, ideally when your child is born. If you’ve got permanent residency in Canada, you are eligible for an RESP – so be sure to get started as soon as you receive your PR status.

  5. Choose the right RESP Provider.

    We suggest you open your RESP with a provider with cost-effective portfolios. One example is to use ETFs (see the link here).

  6. Use your ‘free money’

    Every month, the Canadian Government will give you Child Grant. The best thing you can do with this grant (or ‘free money’ as we like to call it) is to put it straight into your RESP. You’ll be saving money you didn’t earn, and the government will give you 20% MORE on the Child Grant!

  7. Understand your Risk Profile when setting up your RESP.

    For example, if you’ve got an older child, you’ll want to go with a lower risk investment as you’ll need the cash sooner. However, for a younger child, you’ve got time on your side, so you can choose a higher risk profile.

  8. Withdrawing from your RESP.

    When the time comes, and you need to withdraw money from your RESP for your child’s education, it’s helpful to understand that there are two “pots” of money in your RESP. Pot One is filled with your own contributions and Pot Two is filled with the growth and government grant contributions. You, or your child, can draw out of the first pot, tax free. The second pot of cash can only be drawn out by your child (mostly tax free).

  9. Partner with your children.

    You can partner with your children to pay for their education by encouraging them to get a job as soon as they can. Let them work to learn the ropes of earning their own money, saving for their future, and budgeting. Teaching these principles [link] early will serve your child, and your family, well when it comes time for college.

  10. Track progress. Don’t panic.

    Despite what it may look like, this is not a big financial goal and you’ve got time to build up savings for your child’s education – don’t panic. At the same time you can’t go along blindly, only checking your RESP when it’s time to fill out college applications. Rather set realistic goals through proper calculations and track your growth often. Wealthstack.ca created our Dashboard tool just for you. Set up your Dashboard in less than 7 minutes and get RESP calculations, plus many more, to help you stay on track for the future you’re dreaming of.

If you’ve got more questions about your RESP, chat to a Wealthstack Expert or pop us an email, we’d love to hear from you.


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