The quick and short answer is simply yes! This is a no brainier for the vast majority of parents. This is basically free government money; so why not take advantage of it? How exactly does an RESP account work and what is the amount that should be contributed in order to reap the max benefits of the account? An RESP stands for a “Registered Education Savings Plan” the purpose of the account is to save for your child’s University/College education. When you make contributions the government will add money to the account; in the form of a grant. There is a variety of grants available from the government.
- Canada Education Savings Grant (CESG) This is the draw for most Canadians to contribute towards an RESP. No matter what you income is; the government will top up the account based on what you contribute.
- Canada Learning Bond (CLB) An additional 500$ for lower wage families, provides incentive to open a RESP account.
- Provincial education savings program
The max contribution for a TFSA account is $2500 dollars per year. Even if you are unable to contribute that amount, in the current calendar year; the interest earnings are not lost. Any contribution amounts that have been missed can be added to the account, when you are in a better financial. A few question you may be left asking yourself is what do I do if I have more than one child? If you have more than one child you can have a family plan and choose to split the amount with between them or give it all to the first one that goes to school. Another common concern is what happens if my child does not want to study? If your child chooses to not study and they are over 21 years old, you can have the money from the account transferred to your RRSP account.