You have kids? Start saving money for college. One of the best ways to pay tuition is a Registered Education Savings Plan (RESP). The only difficulty with this plan is that parents should begin saving money when children are still young, to save the money that would make a significant contribution to the cost of education.
Sad truth is that we have a student not living with his parents and a student at a college or University for four years has to pay of approximately 80 000 dollars for his or her education.
Apparently, many people are frightened by this prospect, because they believe that they will not be able to accumulate such a large sum, therefore it not worth trying.
Survey of TD Canada Trust financial company showed that among students of colleges and universities in the country, only 27% of people can rely on savings in the RESP to pay tuition. Experts believe that this is a sad statistics.
Member of TD Canada Trust Kerry Russell, who has over 20 years of experience in providing financial services, talks about the benefits of deferring to the RESP.
The Federal Government has developed a plan of Canada Education Savings Grant to help parents save money for the education of their children. Under this program, the State will add to the amount of $7200 for the entire duration of the RESP. The main attachment is 20% of the first 2500 made by the parents, but, in general, the assistance of the State varies depending on the parents’ income: families with lower incomes will receive greater support.
For example, if your annual income is $38 000, and the RESP will give 500 dollars a year, the State will add another 200 dollars. Over time, this could significantly increase the amount accrued.
Another benefit of this method is that the accumulation of dividends and interest accrued on the RESP is not taxed. The tax is to be paid when withdrawing money, when your kid goes to school. However, the income tax will be calculated taking into account the student’s earnings, not his parents, so chances are good that pay would have to be a little or nothing at all.
Another thing, if you regularly start your saving early putting off relatively small sum for your children’s education, you can save more money than you think. For example, if you are able to save up to $50 a week for 15 years, the Government grants you to obtain more than 45 000 dollars just in time. Thanks to this, you will also be able to avoid taking loans in the future.
So if you haven’t started saving for the education of the younger generation, then grab your child’s Social Insurance Number and go to your bank to open an RESP.
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