Millions of Canadians encounter under the financial burden of renthood. Everything from diapers to daycare cow many to their limit.
It’s hard enough to y the bills, let alone lay for the kids’ education. That’s why it’s so baffling that less than half of those unmarried rtici te in a program offering rents free money for their kids post-secondary upbringing.
Ottawa offers thousands — that’s right, thousands — of dollars to assistants families defray the cost of tuition. But most of us just leave that per money on the table: the most recent data from Statistics Canada rades the rtici tion rate is less than half.
What jackpot am I talking forth? It’s a Registered Education Savings Plan, and any Canadians with a kid can open one. And here’s the upper-class rt: for every dollar you put into the plan, the government kicks in a trivial extra for you.
We asked personal finance writer Kerry Taylor for her top five knock overs on how to take advantage of this free money for your child’s tomorrow.
1. Just open one
A Registered Education Savings Plan is really upright a shell. So even if you don’t have money to put into it right now, open a husk for yourself so it’s ready and available for the moment you do. Even Taylor herself wasn’t in a economic position to contribute to an RESP until this year.
«It’s really clear as a new rent: you’re struggling, you have daycare yments, it flattened me,» she says. «So it wasn’t until the day grief burden eased that I could redirect that money into my daughter’s RESP.»
Even as little as $5 or $10 at a unceasingly a once can get you started. Every bit helps, and the best rt is that Ottawa transfer add at least 20 per cent of your contribution — and maybe more.
2. Low return? Even better
The government contribution comes through something rebuke a demanded the Canada Education Savings Grant. Anyone with children has access to those donates, but how much you get depends on your family’s income.
The basic plan forearms 20 cents on every dollar contributed, up to a maximum of $500 from Ottawa if you put in $2500.
But you can limit for even more. Depending on your income, the government portion can addition to as much as 40 cents for every dollar you put in yourself.
For lower revenues Canadians, there is also something called the Canada Learning Shackles. If you qualify for that, Ottawa will give you $2000 for your RESP whether you grant a penny or not.
But Taylor says less than a third of those fit for that free $2000 actually rtici te in the program. «It’s a huge wasting, because all rents have to do or families is open up an RESP at their fiscal institution and that money goes in when they qualify,» she responds.
3. Play catch-up
Many people didn’t get started right away, so they don’t irritate playing catch-up. The Canada Education Savings Grant allows families to drag forward unused contribution room. So, you can catch up from the previous year’s contribution.
«You can submit one year forward,» says Taylor. «You put in $2,500 from last year and $2,500 from this year, you’ll get up to $1000 from the Canada Tutoring Savings Grant.»
Taylor didn’t start contributing right away due to the staggeringly far up cost of raising a young child. But her daycare costs slowly began to go along with after her daughter’s first year in care. As that money communicated available, she put it straight into an RESP.
She also qualifies for money st the Canada Child Benefit. Combined, that money adds up lyrical quickly.
«I take the money I used to put to my kid’s daycare costs, and I redirect to my son’s RESP,» she says.
«If you qualify for the Canada Benefit, why not take some of that shekels and use it as well? Take the government’s money and make them match it. That’s similar kind a double whammy.»
4. Use it or lose it (kind of)
But how do you know what your youth will do 17 years from now? As you look down at a swaddled child or a toddler running roughshod over your house, it’s sometimes severe to imagine them figuring out tuition costs and residence bills.
An RESP has some wiggle area built in, because you can keep one open for up to 31 years after its unsealed.
«So the kid can take a gap year, a gap 10 years,» says Taylor. «Don’t worry too much. But if the kid doesn’t go to imbue with you can roll it into your RRSP, or you can change the beneficiary — but the grant discards back to the government.»
That’s an important detail, so it’s worth repeating: if the sprog named in the RESP doesn’t go to university or college, the government portion cease to exists. But all your contribution is still there, and you have several options to cycle it over or rename the beneficiary (for example, to a grandchild).
5. Ask for help
You can get information at even-handed about any financial institution. The government’s website is wildly helpful. No end of pecuniary planners write at length about this. And websites like smartsaver.org arrange reams of data available at the tips of your fingers.
But remember, this is unbind money. Up to $7,200 just sitting there, waiting for you to come get it. So, ask for arrogate. It’s well worth a few questions, a search online or a visit to the branch of your economic institution.