Thursday, October 13, 2016

Planning & Saving for Their Bright Futures with

When I started university back in the 80s, my tuition was $582 a semester. I worked a summer job, then part-time during the year, lived at home, and came out debt-free. Those days are long gone. Our big guy now pays about $4000 per semester. Heaven only knows what it will be when Boo gets to that stage!

It's clearly unrealistic to expect our kids will be able to pay for higher education on their own. Student loans are available, but they don't cover the whole cost, and even if they did, would I really want my boys starting out adult life with that kind of debt? Not if I can help it.

I think we can agree it's time to start saving, but what's the best approach? And how can we encourage our kids to get involved too?

Involving Our Kids

The first step in getting your child involved in thinking about their future, their career, and saving for it, is to make it relevant. You can talk about your own career and what drew you to it. What is it about your work that brings you joy and fulfilment? You can read books with characters doing different jobs and have your child point out the various tasks they do, how they help others, how they make things, whatever it might be. Ask your child what things they enjoy doing. Do they love buidling blocks? Maybe they'd enjoy a career in the construction industry, or as an architect. Do they play school with their dolls? How about teaching as a career! Basically, keep the conversation going. Their career goals will change many times over the years, but the seed will be planted that will keep them thinking about the future and assessing their options.

To encourage an appreciation of savings, we made sure Boo was aware of how we were saving for him. When his bank statement arrives, we review it with him; we point out the contributions we've made and highlight the interest he's earned. He knows his savings account is for his university, as is his RESP. From an early age we've talked about how critical it is to plan ahead and put money aside early, so we can increase our investment and be able to afford higher education costs when the itme comes. We've also encouraged him to set aside a portion of any monetary gifts he receives for Christmas or birthdays. These are his own contributions to his future, and they go into his savings account to earn interest and increase over time. He seems to feel a sense of pride in his own contributions, and by not making him deposit the whole gift, he gets to have some immediate benefit as well He's still a kid, after all :)

Investment Decisions

To get the best investment advice for your personal situation, you should speak with a financial advisor. They can educate you on the various investment options out there, from standard savings accounts, to mutual funds, stocks, TFSAs, and RESPs. A mix of these options can work out well, but - I implore you - don't leave out the RESP.

A Registered Education Savings Program (RESP) provides a safe place to invest for your child's future, and allows you to cash in on government grants to increase your savings. That's right - free money from the government that you can only get through your RESP.  The Canada Education Savings Grant provides 20 cents on every dollar you invest, up to a maximum of $500 per year, until age 17. Low and middle income families may also be eligible for an Additional Canada Education Savings Grant (up to $100).

There's also the Canada Learning Bond, which is available for children whose families receive the National Child Benefit Supplement, and could provide up to $2000 as a kick-start to your child's RESP. Eligible families can receive this bond even if they do not make a contribution to the RESP themselves. To date, less than 40% of eligible families have claimed their Bond. That’s over 1.5 million Canadian children who are missing out on the opportunity to have their education savings started with free money!! I do not like leaving free money on the table.

Haven't set up an RESP for your child yet? The options can be rather overwhelming. I did not do enough research before we set up Boo's plan, for sure. is a non-profit, community project, dedicated to helping Canadian families access the information they need on RESPs, and helping them to select and set up the one that will work best for them.  They have joined with financial institutions across the country to help applicants get an RESP started with $0: no enrolment fee, no annual fee and no contribution required. Sound good? Head to their How to Start Page to learn more and get going.

About SmartSAVER

SmartSAVER is a national charity. We work with communities across Canada to make it easier for modest-income families to save for their kids’ future education using no-fee Registered Education Savings Plans (RESPs) to access federal government grants including the Canada Learning Bond. Key to our success is working with off- and online communities that parents trust for parenting or financial literacy advice.

A Giveaway is offering one lucky RMB reader a $50 gift card. Use it to treat yourself, buy books for your child, or off-set other costs so you can add $50 to your child's RESP. It's really up to you :) Entries are via the widget below and will be accepted until 11:59pm ET, October 23. Giveaway is open to Canadian residents only. Best of luck!


Disclosure: This post has been brought to you by SmartSAVER. All opinions on this blog remain my own.

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