RESP Myths

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.

  1. 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.

  1. 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.

  1. 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.

  1. 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.

IMG_2864.JPG

2 Comment

  1. I have not done this yet. I need to do this! I have plans to visit RBC next week to open an account so I will investigate this further. Thanks Sarah!

  2. Maija says: Reply

    This sentence really puts everythig into perspective to me —> “Saving just $25 a week can add up to over $50,000 in 18 years.”

    Thank you!

Leave a Reply