Every parent has a dream of getting their child to make their way through university and to have a better future. Once the dream of reaching this goal falls away, the anxieties that come with having to pay for this secondary education can be downright nightmare inducing. However, if you start saving from when your child is at an early age, you can give yourself a financial foundation that can make a world of difference. Starting a Registered Education Savings Plan –heritage RESP can be one of the best decisions that parents can make. Not only do these accounts give you the ability to save up specifically for your child’s education, but it also comes with a long list of other potential advantages. Here are a few of the ways you and your child can benefit from a RESP today and in the future.
1. The Money You Need When You Need it
All too often parents find themselves putting money away in a standard savings account specifically for their child’s future education only to find themselves breaking into it when they fall on hard times. However, when you open a RESP, you’ll be able to put money into the account which can then not be touched until the time comes to enrol at a university. No more having to worry about touching the account for other things. You can guarantee you’ll have saved up a good amount of money over the years which will be there for you when you really need it.
2. Government Aid
Another serious benefit to starting a Registered Education Savings Plan will be the government grants and additional incentives. Generally speaking, the government will provide each account holder with an additional 20% annually on the first $2,500 that you place in the account. Additionally, qualified families can even receive an additional 20% for the first $500, depending on their current financial situation. This added money will seriously come in handy later on down the road.
3. Tax Benefits
While it’s true that you will be unable to use these contributions as tax write offs, you can still benefit from a RESP in terms of taxes. Because this account is designated for a child’s education, the money that enters into the account cannot be considered taxable income as long as it stays in the plan. Additionally, because many students find it hard enough to survive university on their own without having to hold down a job, once the money is released to them it is considered theirs in every way, ensuring they’ll have to pay little to no taxes on it at all.
4. Use it on What You Want
Once the money can be released to your child, they’ll be able to use it for however they deem fit in terms of their education. Whether it be for tuition, books, or even living expenses. This means that even if they receive an unbelievable scholarship where their tuition is easily covered, this money can still be put to good use in other areas.
Understanding your options and knowing the best ways to invest can be a game changer when it comes to your child’s education. Keep these benefits in mind and start considering a RESP today.