Wise parents think far in advance and many financial planners will advise even expectant parents to begin thinking about which education savings plan they would like to choose for their newborn. A resp or Registered Education Savings Plan is a savings plan that is not something you can deduct from your taxes, but you will not need to pay taxes on the growth that the savings plan gathers.
Finding a resp that best fits your future plans is easy. It can be far too early to know the number of years your child will attend college, but it is best to choose the plan that makes the most sense for your budget and your pattern of saving.
The subscriber for the resp can be someone other than the parents of the child. Grandparents, aunts, uncles, cousins or godparents can all be the one who starts the account and makes the contributions over the course of the next few decades. The education savings plan accounts can be open for contributions for up to thirty one years and may remain open an addition four years as the funds are used to pay for post secondary education costs.
The options for how the money can be added to the account allow for there to be something that fits everyone's budget. Regularly scheduled pre-authorized automatic payments can be set up from a bank account, credit or debit cards can be used, directly depositing money via cheque or money order or online banking are the choices, making it easy for anyone to find their best option.
The structure of the resp means that the monies you put aside can be used for the child's first year of their college courses. The second, third and fourth years are paid for by a combination of grant monies, interest earned on the deposited money from the account, and scholarships granted to eligible students.
Ensure the future education of your young child with a responsible savings program while they are still young.
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