Saving for your child’s education is no easy feat. To help you with these upcoming expenses, you should contribute to a Registered Educational Savings Plan (RESP). If you are still hesitant, below are just a few reasons why you should open one right away:
Divide and Conquer
If you added education savings in a multi-purpose account, it becomes too easy to spend the money on other expenses. Having an RESP means you have a separate account dedicated solely to your child’s education.
Tax Free Savings
Any interest, dividends, or capital gains are earned inside an RESP account are not taxable. That means the sooner you open an account, the longer that investment has to grow tax free.
RESPs are also eligible for grant money, such as the Canadian Education Savings Grant, based on the amount of your yearly contributions. The grants are worth 20% of every dollar you add, up to a maximum amount.
Tuition Fees Rising
Because it can get quite expensive for students, many parents pay for large portions of their child’s tuition, books, and additional costs of post-secondary education. However, when you have a fully funded RESP, you have already removed much, if not all, of your potential financial duty.
Reduce Student Loans
To afford post-secondary education, students often need to take out loans. But depending on the job market for their field of study, they may find it difficult to find adequate employment to pay for their living expenses as well as their student loan. To reduce the likelihood of starting out in debt, opening an RESP gives them a better starting place for life in the working world.
Minimize the Need for Work During School
To be a successful student, your child needs sufficient time to study, ask questions, and complete assignments. However, if they need to work during school to pay for their basic needs, they have less time to devote to their school work or become involved in campus life. An RESP provides the freedom to study hard during the school year, while learning about the workforce can be reserved for the summers.
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Saving for your child’s post-secondary education tears down financial barriers and provides the opportunity for your child to flourish academically. The sooner you open an RESP, the sooner you can take advantage of its many benefits.