Children’s Education Funds Reviews: Common RESP Mistakes Made By Parents
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When you become a parent, you receive plenty of advice on how to raise a child, whether you
ask for it or not. Your friends and family may swoop in and tell you how to burp, feed, dress,
and carry your baby, but more than likely, they never end up giving you the advice you need
most — what is best for your child in the long-term?
When your children are young, long-term doesn’t resonate with you. Those early years are all
about survival, meeting daily needs and keeping your head above water.
Once you get past the infant stage, being mindful of your child’s future shifts to the forefront. Now it becomes a
question of, how do I best help them along their journey to adulthood? H
Have I done enough to save for their higher education?
At a time when tuition is on the rise in Canada, it’s now more important than ever for parents to
set money aside as early as possible for their child’s future education. One of the best ways to
do so is by opening a Registered Education Savings Plan, or RESP.
Having helped thousands of Canadian families find the right RESP for their finances, Children’s
Education Funds Inc. also has experience as to what parents should avoid when it comes to
setting up and maintaining an RESP.
Children’s Education Funds Inc. reviews common RESP-related mistakes:
Mistake #1: Starting too late
While it’s better to start an RESP late than not at all, the earlier you start, the better off your
savings will be. Some of the benefits of starting an RESP early include the fact that your
savings will grow tax-deferred and will benefit from compounded interest.
If you can’t afford to contribute to an RESP right now, it might be worth asking grandparents and other family
members to contribute instead. Even a small amount of money goes a long way to helping your
child pay for his or her post-secondary education in the future.
Mistake #2: Forgetting about it
If you regularly contribute to your child’s RESP, kudos! You are on the right path. While making
regular contributions is a good thing, it’s important not to forget about your child’s RESP. It’s
always a good idea to reevaluate your budget every few months. If you get a raise at work, or
even a decent tax-refund, consider contributing more to your child’s RESP. Even $10 or $20
more a month can go a long way to paying for your child’s post-secondary education.
Mistake #3: Not taking advantage of government incentives
As the saying goes, information is power and parents should be aware of all the government
grants and incentives that they are eligible for.
When you contribute $2,500 per year to an RESP, you can qualify for the full $500 Canada Education Savings Grant (CESG).
That’s a great incentive to get the most out of your money. Don’t worry, if you aren’t contributing the full
$2,500, you’re not alone –many parents are not taking full advantage. Again, it is best to
examine your budget for ways to save money, so your child can receive the full grant,
Mistake #4: Setting the RESP on autopilot
While RESPs are convenient because you can set one up and let the provider take care of
it for you, it is best to check on it regularly to keep abreast of all news related to your child’s
account. For instance, you want to always be up-to-date with any changes and eligible grants
and incentives for the account and to ensure all incentives are fully taken advantage of.
Now that you are aware of some of the most common RESP mistakes and how to avoid them,
perhaps the next time someone give you unsolicited advice about your child, you can assure
them that you already have a solid financial plan in place for their future.
Maybe you can even help guide a fellow parent along their own journey by sharing this useful information on how to
save for higher education.