RESP

If you’re looking for ways to save for your children’s education, the first step is to understand the costs involved. In addition to tuition fees and the cost of books, you’ll also need to think about living expenses and transportation. If your child won’t be entering post-secondary education for several years, it may be too soon to know whether you’ll have to cover all these expenses. However, by starting to save now, you’ll be ready when the time comes.

A simple way to get started is to set up a separate account. You could contribute to a Registered Education Savings Plan (RESP), an investment vehicle specifically designed for education savings.

The earlier you start contributing to an RESP, the more time your money has to grow tax-free. RESPs are registered with the Canada Revenue Agency and are therefore tax-advantaged. These plans are offered by many financial institutions, which manage the contributions and later make the payments to the child. RESP contributions, subject to a maximum of $50,000 per beneficiary over the life of the plan, grow tax-free until withdrawn.