Baby's First Bank AccountParents dream that their baby will become the next Jane Goodall, Albert Einstein or any other famous intellectual you can imagine. Most of the time it doesn’t take much to be convinced either! Our little two-month old daughter will play walk when we hold her with her feet to the ground and my wife always exclaims “She’s a genius!” – I rest my case. Whether or not your child is destined to write the next great novel or make an important scientific discovery, it’s important to help children achieve their goals by giving them access to the best education possible. Fast-forward 18 years: your budding Mozart has been accepted to the post secondary school of his dreams and the whole family is bursting with pride and excitement--until you get a look at the tuition fees. As a parent, you don’t have to be a genius to plan ahead for this day—it’s known as the RESP (Registered Education Savings Plan).
An RESP is the younger sibling of the RRSP, without the sexy tax break. Essentially, an RESP is an account where contributions can be made and the investments are allowed to grow tax-free. Your child must be named the beneficiary and can use the funds in this account towards the costs of post secondary education. What is so fantastic about this is that the Canadian government has a program called the Canada Education Savings Grant (CESG) that will match a portion of your contributions made to this account (based on family income). It’s a no-brainer: if you save for your children’s education, they will be rewarded with free money! The maximum the CESG will contribute is $7200.00, but still, this is a great opportunity to bankroll something extra for your child’s future. To qualify, your child must:
-Be a Canadian citizen
-Possess a Social Insurance Number
-Have a Registered Education Savings Plan set up in their name
-Make a contribution to the RESP account
Contributions can be made as a lump sum or set up to be withdrawn at pre-set intervals throughout the year. The cutoff date for contributions is December 31st of each year. To find out more, speak with a representative from your bank who can explain the ins and outs of RESPs, and help you choose one best suited for your child (Group, Family, Individual, etc.).
To read more about RESPs on-line, click here. We all want to be sure we provide the best education we can for our child, and an RESP is a little piece of genius parents can bring to the table while their little one grows.
-- Mike Lett
| 
