Families with modest incomes can still help put their kids through post-secondary education with smart planning and a boost from government grants and matching funds.
The
Canadian Education Savings Grant (CESG) program offers a 20 per cent bonus on up to $2,500 a year saved in an RESP, for children up to age 17. For lower income earners there is an additional grant available for the first $500 contributed in any calendar year.
Low-income families who have no education savings often qualify for the
Canada Learning Bond (CLB). It provides $25 to help cover the cost of opening an RESP, $500 to add to a RESP immediately, and $100 a year until a child turns 15. Add it all up, and it can be worth as much as $2,025 in a student's education fund.
The bond is available for children born after Dec. 31, 2003, into families who receive the National Child Benefit Supplement as part of the Canada Child Tax Benefit.
Add the maximum of $7,200 in a CESG and today's eight-year-olds could have as much as $9,225 (plus interest) by the time they're ready for university or trade school.
This should really come in handy, as average university fees are expected to hit a record high $7,437 in 2016-17; a climb of more than 300 per cent from 1990-1991.
But finding the cash to take advantage of those saving incentives can be a challenge for many families. One strategy is to encourage friends and relatives to contribute to the RESP in lieu of adding to overflowing toy boxes. There is also a growing trend in 'toonie' birthday parties among environmentally aware families and small-space dwellers as well as those on tight budgets.
Instead of splashing out for pricey big event parties with fat loot bags and expensive presents, guests are invited to bring a gift of three toonies to a modest party at home.
One toonie is for the RESP, one is for a gift (of the child's choosing), and the third is for a donation to a good cause. The made-in-Canada answer to lavish birthday spending helps teach financial literacy and is a hit at parenting and thrifty living websites.
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