Tax season has come and gone, and now its time to think about your tax return. Exciting right?
In the past you may have spent that refund on things like clothes, toys or a splurge on a high-value item. Why not do something radically boring this year, like invest in an RESP?
I know what you’re thinking, “I’ll do it later, I need to spend my tax refund on other things!” Let me tell you why an RESP is the wisest use of your 2015 tax refund.
- Any investments made in an RESP are tax-sheltered. Plus, you can contribute up to $50,000 in a child’s RESP
- Time is of the essence. The sooner you start, the more you will save – it’s as simple as that. You can also receive boosts to your savings from the government sooner.
- Government Grants help you save – did I grab your attention? Canada is pretty incredible when it comes to education grants from the federal and some provincial governments. The largest is the Canada Education Savings Grant (CESG) that matches 20% of the first $2,500 you contribute each year (that’s an automatic 20% return!) up to a lifetime maximum of $7,200 per child. Additional CESG and the Canada Learning Bond (CLB) also help families with more modest income save. And, if you live in British Columbia, Quebec or Saskatchewan, your child may be eligible for additional grant money. Learn
- Investing money in your child’s future will show them how much you believe in them even before they believe in themselves. Studies show that kids are up to 3 times more likely to pursue some sort of post-secondary education when they know money has been put away for their education and up to four times as likely to graduate.
- Down the line, if your child does not end up pursuing a post-secondary education, contributions are returned to you tax-free. And, you’ll have these options for the investment income: withdraw the income and pay tax on it, transfer the income into a RRSP for yourself or your spouse OR if you have an RESP that allows it, transfer to another child or to an RDSP.
As a parent, you are always going to be worrying about your children. You may not be thinking about their education now but you really should. University can cost upwards of $20,000 a year if your child decides to study away from home. Think about that for a second.
Anyone can open an RESP for a child; parents, grandparents, even a close family friend. All they need is a Social Insurance Number and the child’s Social Insurance Number. If you would like some more information about how to start the journey towards peace of mind when it comes to paying for your kids’ education visit the Canadian Scholarship Trust Foundation’s website. Put that tax return to work this year.
Twitter Party – Chance to win cash for your RESPs.
Want to learn even more about RESPs and have a chance to win cash prizes? We are co-hosting a Twitter Party with CST Consultants on Thursday May 5th at 9PM EDT.
*Opinions expressed are those of the author, and not necessarily those of Parent Life Network or their partners.