Next week the federal government will be sending money to parents across the country.
Yes, you read correctly.
As part of this year’s federal budget, the federal government announced that they will be expanding the Universal Child Care Benefit (UCCB). This means that parents with children up to 17 years of age will be given additional financial support to help with their child care choices as they try to balance their work and family life. Let me explain.
The changes being made to the Universal Child Care Benefit mean that the original family benefit of $100 a month for each child under six is increasing to $160 a month; that’s $60 more per month per child. Also, parents will now receive a new benefit of $60 per month for each child between the ages of six and 17; that’s money for kids who did not originally qualify. And the best part? Even though the first enhanced payment will be sent to parents next week, on July 20th, it will be retroactive to January 1st. So, if you have one child under six, you will receive up to $360 as a lump-sum payment for the January to June period, in addition to the original $600 benefit ($100 x six months) you already received, up to $960 in total benefits for the first half of the year. If you have two children under six years old, you’ll receive double that amount.
Now before you run out and splurge on something big, our friends at TD have suggested that you consider putting that money towards investing in your child’s future education instead. Just a thought.
How to Maximize an RESP
One simple way to maximize this new benefit is to set up a Registered Education Savings Plan (RESP) for your child(ren) or increase your annual RESP contribution if you already have one set up. When making a contribution to an RESP, the federal government’s Canada Education Savings Grant program pays a 20 per cent grant on contributions, up to a maximum of $500 per year. Parents can maximize their RESP savings even further—and take advantage of even more free money from the federal government—by making a lump sum RESP contribution with the retroactive payment they’ll receive beginning on July 20th.
When you consider the numbers, maximizing your savings today can go a long way towards minimizing some of the challenges that many Canadians face as they save for post-secondary education. According to stats from TD Economics and a 2014 TD Canada Trust survey:
- $150,000: The expected average cost of an undergraduate degree while living away from home in 2031—just 16 years from now.
- 29 per cent: The percentage of Canadian parents with children under the age of 18 who, despite rising costs, are not saving for their child’s education.
- 50 per cent: The percentage of parents who cited costs associated with raising their children—including daycare, vacations, sports and extracurricular activities—as impacting saving for post-secondary education.
To help minimize these challenges in the future, maximize your savings today by setting up regular RESP contributions and make the most with the Universal Child Care Benefit.
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*Opinions expressed are those of the author, and not necessarily those of Parent Life Network or their partners.