My parents weren’t able to help out with my post-secondary education the way they would have liked to, and my experience paying my own way led me to write Sink or Swim: Get Your Degree Without Drowning in Debt. Once I had kids, everything about spending and saving and earning changed, and I used my experiences to write Money Smart Mom: Financially Fit Parenting.
I’ve written a great deal about Registered Education Savings Plans (RESPs) for magazines, newspapers and online financial sites. I feel very strongly that they’re a critical part of raising kids. While I certainly don’t expect to give my kids a free ride, I do want to help them understand money management and have more options for their schooling than I felt were available to me.
Also, I don’t want to explain why they had approximately 2,900 Monster High dolls but no RESPs.
There are a few misconceptions about RESPs that I’d like to address because I think they hold parents back from starting to save early.
- RESPs are hard to set up.
Nope. Most banks have RESP experts to help guide you in setting up your RESP. RBC even has their RBC RESP-Matic®, which allows you to contribute regularly and automatically, and you can change the amount as needed. Whatever you do, avoid the group pooled plans that might have a kiosk at the mall, or send you direct mail. You can learn more about why these pooled plans are not a good idea in my post at Yummy Mummy Club.
- If your kids don’t go to post-secondary, you’ll lose your investment.
Nope. You have the flexibility to use the RESP for university, college, apprenticeship, non-credit courses etc., and if your child doesn’t use the funds, you can use your contributions and earnings to fund your RRSP.
- You have to know a lot about investing.
Nope. You can find more great tips on saving for your child’s education at rbc.com/education, and the RBC experts will help you make an education decision on where to invest your money.
- I don’t have enough money to save any significant amount.
Are you sure? Saving just $25 a week can add up to over $50,000 in 18 years. The Canada Education Savings Grant matches up to 20% on the first $2,500 contributed annually. That could mean up to an additional $500 a year in your RESP, up to a lifetime maximum of $7,200.
Have I convinced you to set up your RESP yet? I hope so! If you want a head start, you can enter the Grow Your RESP with RBC contest. With four prizes of $500 for use towards an RESP to be won, winners can get a head start in saving for their child’s dreams.
Don’t forget to also join in on the Twitter party on October 1 using the hashtag #RESPwithRBC and you might win one of six $100 gift cards.
Disclosure: I am part of the RBC RESP blogger program with Mom Central Canada and I receive special perks as part of my affiliation with this group. The opinions on this blog are my own.