Our children today will face a myriad of financial challenges which will be more difficult than what we (adults) have faced in our lives. Schooling costs more, housing costs an incredible amount more, wedding costs have gone up, and just keeping food on the table are becoming huge expenses.
Take control of their financial future rather than waiting for the housing market to crash or for the government to develop a funding program.
There is a very under-utilized program that exists to help parents get ahead and start saving now to help their kids later. The Registered Education Savings Plan (RESP) is very rarely used to its full potential. This is obviously designed to help with education funding. If you start early and use this plan to its full potential, it will lower the burden of education costs later and perhaps free up some money to help in other areas as well.
You can contribute $2500 per year per child to maximize this plan. Unused room can be carried forward, but you can only catch up on one past year at a time. So we highly recommend you start while they are young rather than play catch up. 20% of this money is matched by the government and all the money gets invested. The lifetime maximum grant is $7200.
Chances are you are receiving the Canada Child Benefit – a tax-free benefit far higher than the generation before you received to help with the costs of raising children. We challenge you to pretend you are not receiving this benefit, and direct this money to a RESP. Sit back and watch it grow. Your kids will appreciate it very much!
You might also like to read about how to talk to your kids about money.
Or if your child is getting ready to attend College or University then Household Finances for Students might also be a good read.
This information has been prepared by Raymer Financial who is an Investment Advisor for iA Private Wealth Inc. and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this document comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces in which they are registered.
iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.