Canada Registered Education Savings Plan (RESP)

Canada REgistered Education Savings Plan (RESP)
While checking over our bank and credit accounts yesterday, Richard noticed that Elliott’s Registered Education Savings Plan (RESP) had over $700 in it. Since we only contribute $50 a month right now, and just opened the account in January, $700 seemed a bit high. That’s when I remembered… Canada Learning Bond. It turns out, that’s where the extra $500 came from.

When we opened the RESP at the bank, they asked us if we wanted to participate in the Canada Learning Bond. We’d read about it before going to set up the account and knew that we wanted to do that for sure. Who says no to free money? Not us!

In case you don’t know, when you open an RESP for your child(ren), Human Resources and Skills Development Canada (HRSDC) provides an additional incentive of up to $2,000 to help families start saving early for their child(ren)’s education (after high-school). The Canada Learning Bond (CLB) will deposit the money directly into the RESP. The CLB is not a universal benefit for all Canadian families – it must be applied for and can be obtained only if your family meets the following criteria:

1. Your child was born after December 31st, 2003
2. Your family NET income is less than $37,885 per year

There is also something called the National Child Benefit (NCB), which is a joint initiative of the federal, provincial and territorial governments. This initiative is designed to:

– help prevent and reduce the depth of child poverty
– ensure that families will always be better off as a result of parents working
– reduce overlap and duplication of government programs and services

This benefit is paid monthly to low-income families with children under 18 years of age.

The National Child Benefit will provide an initial $500 (thank you for ours!) to your child’s RESP. To help cover the cost of opening an RESP (if you have to pay), HRSDC will pay an extra $25 with the first $500 bond. After that, the CLB will also pay $100 a year for up to 15 years for each year the family is entitled to the NCB supplement for the child.

Guess what? You can get even MORE free money! On the first $500 you save every year in your child’s RESP, the Canada Education Savings Grant will give you:

– up to $200, if your net family income is $39,065 or less
– up to $150, if your net family income is between $39,065 and $78,130
– up to $100, if your net family income is more than $78,130.

When you save more than $500 each year, the Canada Education Savings Grant could add up to $400 on the next $2,000. Please note that the family income amounts are updated every year, so be sure to check.

The maximum amount of grant per child is $7,200. That’s FREE MONEY for your child’s education! You’d be crazy not to take advantage of this.

In simple terms: Open an RESP for your child. Put any amount of money in there to start. The government will deposit $500 immediately afterwards – FOR FREE! On the first $500 (yearly) that you put into the RESP, you can get even more money – up to $200. When you save more than $500 (yearly) you can get up to $400 more on the next $2,000. In the end, you can get $7,200 for your child’s education FOR FREE!

I don’t know about you, but I find it very difficult to walk away from free money. If you have children, please please please start an RESP for them. If you think you can’t afford it, find a way. Cut out that morning coffee, live with 1 vehicle instead of 2, do whatever you need to do to save some money. Even if you can only afford $25 a month – that’s a start! You can always add more money later.

Click here to read more about RESPs and all of the benefits that come along with them!

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Comments
  1. Moi says:

    Hi Mrs. January.

    Love your blog. I’m curious though, about the links that you post, usually at the bottom of a post. Today was about mattresses, yesterday’s about steel drums … was just wondering what these links were about. Just tickles your funnybone, or is there some sort of revenue achieved for you by others clicking on the links??

  2. Cassie Howard says:

    thank you! i’m glad you enjoy it! 🙂

    i dont get revenue from people clicking on the links. i do, however, get it just from posting the link. it’s a program called PAYU2BLOG and they pay you a few dollars for every link you post… usually about 20 links a month or so.

  3. maria says:

    so, through a bank is better than a group company?

  4. Mrs January says:

    maria: It depends on your own financial situation. The answer will be different for everyone. You need to research all of your options to decide what works best for your family.

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