Investing in education for your child is very important, and to ensure that families all across the country take it seriously, Canada encourages its citizens to take advantage of a Heritage Education Funds Plan. There are a few things that you will want to know about saving for your child’s future so that you get the most out of this savings and understand how to correctly open the account.
1. Be Prepared
One problem that many parents have when they go to open a Registered Education Savings Plan (RESP) for their child is that they are not prepared with the right documents. This will prevent you from being able to open an account, which is why you want to make sure that you know what you will need and have everything with you. You will need to bring not only your child’s social insurance card, but yours as well. Additionally, you need your child’s permanent resident card or birth certificate. It’s only when you are prepared with this information that you can open an account.
2. Plan Ahead
Before going and opening a RESP for your child, you will want to have done some planning as to how you want to invest the savings. While you can make this decision at the time of opening the account, it’s a good idea to spend some time considering your different options before you meet with the financial advisor. There are a few options for how you are going to invest the savings, including mutual funds, a low-risk GIC, or a no-risk savings account. What you choose will be determined in part by how adverse you are to risk and what kind of savings you have already started for your child.
3. Learn About the Canada Learning Bond
You will want to spend some time to find out whether or not your child is eligible for the Canada Learning Bond (CLB). There are a few qualifications that your child will have to meet, including being born in or after 2004, and you must receive the National Child Benefit Supplement as a part of your Canada Child Tax Benefit. If you and your child are eligible, then you will be able to enjoy an extra deposit when you apply for the CLB and open a Heritage RESP, so it is something that is worth checking out and taking advantage of, if possible.
4. You Don’t Have to Open with a Deposit
Some people avoid opening a RESP because they do not have the money to put in an initial deposit. If you are eligible for CLB you can go ahead and open a RESP and apply for the CLB. This is a great way to start planning and preparing for the future education for your child.
5. Get Your Match
By making deposits to your child’s RESP, you will be eligible for a savings match. The amount that the government will match will vary and depend on your income. Make sure that you understand the income requirements for various match cutoffs so that you can plan for the most money to be saved in the RESP.