SIMPLE STEPS TO GROWING YOUR CHILD’S EDUCATION FUND: Gurbinder Mander, Envision Financial

School is almost back in session for another year, and whether your children are off to kindergarten or starting their high school days, it’s the perfect time to review your kids’ education savings plans. It’s a daunting task, especially if you barely have enough to get by now, but fortunately, there are some great programs to help you grow your education savings.

Here are some tips from Gurbinder Mander, branch manager of the North Delta branch of Envision Financial, a division of First West Credit Union:

OPEN AN RESP
Getting an early start is a worn out cliché when it comes to education savings it couldn’t be truer. A cookie jar to hold your savings may suffice for the short-term but at some point, you should contact your branch and make an appointment to open a Registered Education Savings Plan (RESP) for your child. Family plans are a good option if you have more than one child, or you can add siblings to your plan if the family expands along the way.

One thing to note is that RESP contributions are not tax deductible, and when your child withdraws the funds, they must claim the income and pay the tax. As most students don’t have a lot of income, chances are these taxes will be negligible. While there is a cost to open an RESP it is minimal (typically around $25) especially compared to the government benefits it will enable you to receive.

MAXIMIZE YOUR SAVINGS WITH GOVERNMENT GRANTS
Once you have your RESP, you can apply for the British Columbia Training and Education Savings Grant as soon as your children turn six and you will receive $1,200. Make sure to apply before their ninth birthday or you will miss out entirely on this one. Since this is a relatively new program, there are special provisions for kids born between 2006 and 2010—children born as early as 2006 are still eligible to apply.

Another great program that you can take part in right from the birth of your child is the Canada Education Savings Grant (CESG). You will receive a 20 percent grant for every dollar you put into your RESP up to a maximum of $2,500 each year. In other words, if you put in $2,500 the government will add $500. You can collect up to $7,200 in grants before your child turns 17 and unused grant room can be carried forward. As you grow older and have more income, you can deposit more into the RESP and collect your CESG from previous years. Low and middle-income families may also qualify for an additional grant amount of up to $100 per year. The application process is easy; your local financial expert will apply for the CESG on your behalf when you open your RESP.

MAKE REGULAR CONTRIBUTIONS, EVEN IF THEY ARE SMALL
Despite the appeal of free government money, it is still difficult for many of us to find the funds, especially the $2,500 needed to take full advantage of the CESG program. The key is to make regular contributions and get into the saving mode regardless of whether or not you will be able to max out your yearly grants. One option is to use a portion of your Canada Child benefit, which may have increased this past July depending on your family situation. You could set up an automatic transfer each month to match the timing of the payment, and it would add up to a substantial amount by the end of the year.

Education costs continue to rise, and you need to get going on your savings plan as soon as possible. The mere thought of student debt may sway your child’s career choice, and the burden itself can seriously delay their life milestones. Why not give them a head start and help your kids keep their options open?