Child Education Fund (RESP) – 6 Reasons you Should Start Now

RESPs, Child Education Savings

It never seems the right time to invest in your future. As much as you try money always seems to go out as fast as it comes in. So is it really the right time to put money away for a Child Education Fund or RESP (Registered Education Saving Plan)? My opinion yes, 100 times yes! Start as soon as they are born. My drooling, footy PJ wearing, vacuum fearing baby has an RESP right now.  I also think its a good idea to invest in your own future as well.

Here’s why:

1.Investing a Little Over a Long Time Pays

That little bit every month may not seem like much and I’m sure you could use it for groceries or other bills but projected school costs for my little one to go to 4 years of university is estimated at $64,000. YIKES! Do you really want to deal with that in 17 years? Or leave them to deal with their education? Putting just a little each pay cheque, can gain interest and snowball into nice lump sum.

2. Longer Term Investments can Ride out the Ups and Downs of the Market

Another advantage to start investing early is riding out the ups and downs of investments. The markets are constantly changing and some years they are down. Investing money long term allows you to invest in higher risk, higher return investments because you have the time to let the marketing bounce back. You don’t have to invest in high risk accounts if you don’t want to. you simply inform your financial adviser what types of investments you are comfortable with and they will show you profiles that are Low, Medium, Moderate or high risk.

3.Make It Automatic and You Won’t Even Miss It

If you have the money come out automatically on your pay day, after a few times you don’t even miss the money. Anyone looking to invest in their families future but don’t know where to start; I highly recommend this easy to read book called The Automatic Millionaire. I crushed it in a few short days and I felt better informed from reading it. It is what inspired me to invest in RRSPs when I was young and I am so happy I read it. Its educates and offers easy ways to invest without breaking the bank.



4.Reduce Stress on your Children

I have countless friends who struggled with their fiances for school and ended up dropping out because it was too much. Others I watched them stress and struggle during and after their completion of University or College because their debt was so huge. I was fortunate to have my education covered and only needed to fund getting to and from school, a.k.a. my totally awesome and money pit of a car. I got in a bit of debt, but got out of it before I was 30. Even now, I am watching young family members who need to scale back their education in order to pay for it.

5.Government Gives you Cash for RESP!

You heard me, in an effort to encourage parents and grandparents to save for their future generation’s education the government offers additional funds depending on  your income and annual contribution. In our situation for every $200/month invested the government gives another $40/month.

6. Roll it Back into RRSPs

Any money not used for your children’s school gets kicked back to you for RRSP. So if your kid decides school is not for them you get to put the RESP towards your retirement (sans Government top-up for RESP).

If you saved for 4 years of university but your child only does 2 years of college you again gain any extra back form the RESP to roll into RRSPs. Yes, I am excited about this.

BONUS: 7. Reduce YOUR Stress

You have enough to worry about. I just finished a meeting setting up my daughter’s RESP and working out my husbands and my RRSPs and I swear to God I feel high from excitement. I feel like I won the lottery. I know that if continued to contribute to our RESP and RRSPs as we are, there is no worries for retirement even, with the projected cost of living. This is an amazing feeling. RESP, RRSPs were fears in the back of my mind and now its something I want to share and encourage everyone to do.

So I recommend to you, find a highly recommended financial adviser or go to your bank and start an RESP for your child and a RRSP for yourself. If you have one already see how its doing and if there is any changes you should be making.

What are your thoughts on paying for your child’s education? Some say its not teaching them responsibility in life, what are your thoughts?




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2 Comment

  1. W says: Reply

    I also ponder who is best to pay for post-secondary…

    Depending on geographic location, the costs & government policies vary. In Ontario, Canada, I reckon avg. full-course tuition is approx. $7,000.00/year(fall/winter semester)… add on books $1,000.00-2,000.00… and that’s assuming you can attend one within public transit range (double tuition for accommodation/food?)

    My understanding of the costs in USA is multiples worse… $15-20K/semester

    With min. wage at $11.25(ON), I think the child would need to work quite a bit. While I do agree working while a student is important and builds character, it also takes away from their studies.

    When I was in university, during the semester I would work on avg. 35 hrs/wk. In retrospect, it was a bit foolish as my costs/hr @ university was much higher than wage/hr @ work. For sure, it was a detriment to my studies.

    At the same time, I still finished my soft degree (ENG LIT) despite applying low-mid effort for its entirety. Not sure that would be possible in STEM degree. More important than a goofy university degree was learning/destroying my own boundaries. I forget most of my university education, but haven’t forgot the latter.

    In today’s traditional job market, if starting from the beginning, I believe it’s very difficult to compete without a university degree. In this way, should the parent not make major efforts or contributions to their child’s education payments? Is it not unlike supplying your children nutritious food?

    When your daughter reaches the age of university, I hope the concept of university is radically different. Almost anything the university can do today is dated and could be done at greater efficacy, delivered to more students and at a lower cost, online. MIT is free online, today.

    As well, it seems the university path is failing the majority who graduate. The traditional job market is changing rapidly, and doesn’t require so many labourers. Never bet against technology. At this point in time, I believe university education is a massive gamble.

    One niche school I found was this one:
    12 wks, 66hrs+week @ $19,000.00
    I think this type of investment of education would go a lot further. But it’s specific to Java/APP dev.

  2. Formyinsanity says: Reply

    Yes! I hope to the way the universities are run change. Having a college design background I found the hands on approach extremely beneficial. I took away practical knowledge that was applied in my work and that I built off of. I have one lecture course I would relate to a University style and I retained enough to pass the exam and have now forgotten.
    However, recently I attended McMaster’s Project Management in their continuing education program and found it very hands on, I left with the fundamentals. It was 10 weeks on length about 24 hours/week. It was very well done, a small class size and practical. This is what I hope for my daughter’s education.
    Like you said, you pretty much cannot get a job under there is some post secondary on your resume, my husband and I will pay fully for school. I think as far as cars go we will be encouraging her to get a job in high school so she can purchase a car, start a savings account and have her own spending money.

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