A post-secondary education is one of the most important gifts you can give your children. Not only does it provide better career opportunities and self-confidence, it has far reaching economic benefits as well. Yet few families can afford the escalating costs of higher education. You’ll need a sound strategy to pay for your loved ones’ higher education.
One of the ideas is to save through a Registered Education Savings Plan (RESP). While you save, the Canadian government will contribute 20% on your first $2,500 of contributions annually through the Canada Education Savings Grant (CESG) to a lifetime maximum of $7,200 per child. Taking advantage of this free money can go a long way toward financing your child’s education. Setting aside even small monthly amounts will translate into substantial savings later on. When your children attend a post-secondary institution, all your contributions are passed on to them tax-free and taxes are paid only on the investment growth and grants (usually at a much lower tax rate).
Contributions to an RESP and the amount eligible for the CESGs are limited. Given escalating educational fees, you may want to contribute more, and you can set up an additional non-registered saving plan to do so. We can explain alternatives that may be right for you.