Thinking About Opening An RESP?
Are you at that age now where you’re thinking about settling down with your spouse and doing some fluid transfers the old fashioned way to make some kids happen? (please tell me you got that reference?) Perhaps you already have kids? Maybe-someday-who-knows? Well, real talk, if you are going to reproduce at some point, set them up for success by opening an RESP account in their name. It’s a special kind of savings account that allows you to contribute money that they themselves will use after high school, plus it comes with a whole number of perks like free money from the federal government! Tax Free savings! More! We opened an RESP for kiddo when she was born and have been contributing to it twice a month ever since.
Full transparency: this is a sponsored post, but 100% our own opinions. RESPs are important.
What Exactly Is An RESP?
An RESP, or, Registered Education Savings Plan, is an investment into your children’s future, setting aside money for them to use on their education, such as paying for college/university tuition, apprenticeship programs, books, or other super fun time surprise costs associated with learning.
You CAN open an RESP account with your bank, however that may not always be the best idea. Banks don’t fall under the jurisdiction of the Alberta Insurance Council, which regulates insurance/financial investment products in Alberta to ensure you’re getting the best rates. Whomever you open an RESP with, ensure they’re on the list of accredited insurance agencies in Alberta or you might not be getting the best deal. Just make sure to do your due diligence when picking a provider, bank or not.
What Are The Benefits Of Getting An RESP?
First and foremost, you’re making moves to save money for your child’s education. The importance of how awesome that is cannot be understated. Even if you can’t save hundreds of dollars per month, every little bit counts, and it matters.
The Federal Government Will Match Your Contributions!
Up to a certain amount, and there are some rules for eligibility, but yes you read that correctly, the feds will donate money through the Canada Education Savings Grant to your RESP. There are further federal grants that you may qualify for too. Additionally there are provincial education savings programs you may qualify for if you live in Saskatchewan, BC or Quebec.
Anyone Can Contribute Money To An RESP
One of the best things about RESPs is that friends or family can contribute to it on their own. Anyone can as long as they have the account details. This can be good for things like birthday presents or Christmas gifts. Grandparents love spending money on that kind of stuff hey.
Tax Free Investment Earnings
You can invest in stocks, bonds, GICs, and mutual funds with the savings, and any money that you earn is tax free (this is a good thing!). The more money in an RESP, the more it’s earning potential is.
The Student Pays The Tax, Not You!
When it comes time for student to use the money, they take what are called ‘EAPs’, or Education Assistance Payments, from the RESP, which they also will include in their own personal income tax. Because students have little to no other income, they won’t have to pay much at all for income tax, if any!
There are a lot of details that aren’t covered here, because this is a topic that can get pretty in depth. If you’re unsure of RESPs it would be best to have someone explain it in person, no? See below!
Learn More About RESPs – Free Info Sessions!
Once or twice a month Vik from Alberta Insurance Management hosts free information sessions, usually at the various Calgary Public Libraries. These aren’t sales meetings, they’re information sessions and he’ll walk you through RESPs from beginning to end and answer any questions you have about them. No sales pitches of any kind. If you’ve ever wanted to know more about RESPs, better sooner rather than later.
Vik also provides free RESP info sessions to groups or community members at their request, at a [private/public] venue of their choice. No obligation, no pressure, totally free. Contact him to arrange.
What to expect: (1hr – everything is explained in detail)
- What is an RESP?
- How does the government help?
- Government grants that are available to Alberta residents
- Who offers RESPs and how can you start one?
- What are the different types of plans?
- Tips for shopping around for an RESP
- Questions to ask your RESP provider
September 2019 Information Sessions
As I said, we’ve personally been paying into an RESP since our kiddo was born. Two payments each month. Every month. It’s important. We wouldn’t have put this post together if it weren’t. Give your kiddo a head start and plan for their future – you won’t regret it!