Why You Need A Registered Education Savings Plan
Education is becoming more and more expensive in Canada. Many parents worry about how they will be able to afford saving for their child’s education and what is the best way to save. It is important to begin saving early and to save as much as you can. A Registered Education Savings Plan is the perfect way of ensuring that your child will have what they need when they finish high school.
There are a many reasons that a Registered Education Savings Plan is the right choice for education savings. Here are the three major reasons to open one of these plans.
Opening a Registered Education Savings Plan, or RESP, is the first step to applying for financial aid from the Government of Canada that is designed to encourage parents to begin saving early for their child’s education. The Canadian Education Savings Grant may give up to $7,200 for your child’s education, while the Canada Learning Bond will give up to $2,000. In addition, many provinces also have grants and other programs. These together can put a sizable amount toward your child’s future and get your savings to a great start.
Because Canadians who contribute to a RESP can do so with tax-deferred income, even more money can be put into a child’s account. In addition, contributing to an RESP may have positive overall tax benefits. These plans are designed to make it easy and beneficial to save by offering tax benefits to Canadian families on a budget.
Savings Earmarked for Education
Many people are tempted to remove money from long term savings accounts. RESPs remove this temptation by only allowing money to be removed for educational expenses after high school. They cover a wide variety of expenses such as tuition and books, but they cannot be used to pay for home repairs or a vacation as other types of savings account may be. This encourages parents to save consistently without removing funds for non-necessities.
Every parent should open a Registered Education Savings Plan for their child’s future. Education is essential to modern life and likely to be even more so in the future. An RESP will allow you to plan for your child to have the best possible chance at a happy, successful life. Begin saving now to ensure the child you love has the money they need when they are ready to continue their education.