We’re hitting pause on the home design front and talking money sense today guys. This is an especially good one for any Canadian parents out there.
After Maya was first born, once I was able to pull myself together enough to put on anything but pyjama pants and leave the house (you know what I’m talking about, mamas!!), one of the first things I did was make an appointment to open up an RESP – “Registered Education Savings Plan” – account for her. Maybe it seems like overkill to have jumped to doing this when she was only a few months old, but I had been watching an episode of CityLine where they were talking about how important it is to contribute to your child’s RESP as early as possible. There were some pretty stark numbers that really stuck with me — even if you put in the exact same overall contribution, there was a huge difference if you started it right away, versus waiting until your child was say 10 or older. All those years of earning interest compounded to a much higher end amount. I knew I wanted to start contributing as early as we could.
So off I went to RBC (our bank) and met with one of their advisors to create the new account. It was really pretty simple – they walked me through the different investment options, I chose something pretty safe, and then it was just a matter of the logistics of opening up a new account. I’m able to view it online, which is nice since we do online banking, and we can make contributions anytime. We setup a monthly withdrawal of $100 so we are constantly contributing in a way that doesn’t feel like a huge sacrifice. Then at the end of the year, with generous family members who give contributions in place of Christmas gifts, we top up the account.
And you know about the matching program, right? Here is how it works: The Canada Education Savings Grant matches up to 20% on the first $2500 contributed annually. This means an additional $500 a year in the RESP, up to a lifetime maximum of $7200. So yeah, it’s pretty sweet. Assuming we are able to, our hope is to reach that contribution every year so that we can reap the full rewards of the matching program as early as possible.
We got the matching last year, and it was pretty exciting to see the account grow so quickly. Whether Maya wants to use it for university, college, an apprenticeship, whatever, we really hope to be able to support her as much as we can. This monkey is already growing up way too fast for mummy and daddy… !
You can find out more about RESP accounts here, and can even enter the “Grow your RESP with RBC” contest. There are 4 prizes of $500 to be won! There is also a twitter party happening on Wednesday October 1, 2014, with six $100 gift cards up for grabs. Head on twitter and search for #RESPwithRBC to participate!
To the parents out there – have you been able to open up education accounts for your kiddo(s)? Was it pretty straight forward? Do you set savings goals for yourself?
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.