The Canadian government's Registered Education Savings Plan (R.E.S.P.) program is a great way for parents to save for a child's education. When used intelligently, the plan can really allow parents to give their child significant funds for their education while outlaying very little of their own money.
What do I mean by this? There are several ways to use the plan intelligently, but by 'used intelligently' I am referring to 2 practices in particular:
Invest fully, EARLY
Utilize the Universal Child Care Benefit (UCCB) and the Canadian Tax Benefit (if applicable)
By following these 2 simple tips, funding your desired portion of your child's education will be a breeze....much easier than first year chemistry anyway... Here's an example. Let's take two sets of parents, we'll call them the 'Smiths' and the 'Einsteins'.
On April 15, 2008 the Smiths gave birth to a bouncing baby boy named Darryl. But there were planes to catch and bills to pay, so the Smiths put off starting a nest egg for Darryl's education until 2020 when he was 12 years old. At that time they began putting in the maximum amount per year ($2,500) in order to still receive the 20% CESG grant ($500) that the government provides. The Smiths also did not use the $100 / month, that the government of Canada dolls out until the child is age 6 in the form of the UCCB, they hardly even noticed it....
Amount of their own money invested by the Smiths = $15,000
Amount Available for Darryl's Education in 2026 = $23,416
On the same day the Einsteins gave birth to a baby girl named Cheryl. Knowing the power of compounding, the theory of relativity, as well as the benefits of living below your means, the Einsteins began investing the $2,500 annually in the first year of Cheryl's life. Not only did they take this wise route but they also took the UCCB amount of $100 per month and used this as part of their $2,500 per year. The Einsteins had the Government of Canada giving them money upon money by having them match the UCCB to the tune of 20%. When Cheryl turned 6 Albert and his wife abruptly stopped all contributions.
Amount of their own money invested by the Einsteins = $7,800
Amount Available for Cheryl's Education in 2026 = $58,965
Both families invested for 6 years, but because the Einsteins invested early and utilized the monthly UCCB they were able to provide over $58,000 vs. the Smith's $23,416. The Einsteins pulled this off using half the funds that the Smiths used.
*rate of return used was 8%, assumed deposits made a beginning of each year.
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