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Is the RESP Going to Cover Your Child’s Educational Future?

RESP for your childs education

As parents one of our main goals is that our children will be well educated in order to provide them with the means of developing financial security for them as they become adults, and are ready to start their own family.   Unfortunately many of the kids today will enter into their working years laden with a large education debt.   Not a very good way to start out in the world as an adult.

In order to try and reduce this type of situation the government put in place the RESP (registered education savings plan).   It is meant to act as an incentive for parents to save over the years in preparation for the educational costs the young people will be faced with as they enter the training for their chosen careers.

If you haven’t looked into this form of savings, you may be thinking that because there is a limit that you can contribute on a yearly basis it just isn’t going to be enough to meet the costs that will occur for the education, so it isn’t worth it.

What is important is to first really look closely at the RESP, and how becoming involved in it would affect the circumstances of your children later on.

There are actually three different plans that are available under the RESP.   There is the family plan, individual plan and the group plan.   They all have specific options and benefits to them.   It would be worth reviewing each of these and seeing which one would bring the most benefit to your child’s educational future.

Those with young families have a lot of financial weight upon them.   They have the current living costs to contend with, then they need to think and plan for their child’s educational future, then they are also being encouraged to tuck money away for their own senior years.   This can be a tough financial future protection plan to follow, as many people are struggling with how to just make ends meet for the here and now.   It is still well worth the effort to know what is available by way of savings assistance, so it can included in the future goals of the family that is trying to secure the future.

Even if there are limited funds available for saving, getting started can become the incentive for striving to increase the contributions on a yearly basis.   There are innovative ways that the RESP could be utilized.   For example, other family members could be encouraged to contribute when they are looking at giving the perfect gift for special occasions.

A good first step is to take a close look at the various RESP plans and see how these could be utilized as a starting point for the savings towards the kid’s educational future.

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Sam Seidman, CPA, CA, LPA
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Email: sam@torontoaccountant.ca

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