There is no doubt that educating children these days is tough. There are bills to pay, and food needs to be put on the table. In some cases, a child’s education can suffer because money is tight. If this sounds familiar, the good news is that a Registered Education Savings Plan can help anyone to save money smartly for the child’s education after high school. So, should you do it and what are the biggest benefits?
1. Sheltered From Taxes
They say that there are two things that can’t be avoided in life: death and taxes. But did you know that that you set up a Registered Education Savings Plan (RESP), you avoid paying taxes on it until withdrawals are made? This means that it will grow over time and the compound interest will ensure this.
In a world where paying taxes seems inevitable and affects the budgets of entire families, not paying taxes on a special savings account is definitely a very good deal.
2. You’ll Get Some Free Government Money Too
In addition to no taxes and the fantastic compound interest that grows the RESP account, there is a scheme called the Canadian Education Savings Grant (CESG). This means that the government will pay twenty percent extra as a percentage of savings up to a maximum of $500 per year. This means that if you start the heritage RESP plan when a child is young, they will have significant savings once the graduate and start looking to move into further education. This is all courtesy of the government.
3. Flexible Withdrawal Arrangements
Once a child has graduated from high school and decides to enter further education, it’s really important that the money that they have available to them is flexible. A heritage RESP allows flexible withdrawals so that any amount can be taken at any time.
Additionally, there are few restrictions on spending, either. As long as the funds are spent on educational needs, it can be used for anything that is related, including laptops, tablets, stationery, textbooks, and so on.
4. Less Pressure on the Family Budget
Perhaps the single most important benefit of all to the RESP is that it reduces the financial burden on families from all walks of life. The fact is that most people just aren’t good at saving money long-term. We are creatures of habit, and we seek out short term pleasures and gains at the expense of long term planning.
The heritage RESP provides every family with the chance to save money for the next generation for when it is needed. There are no taxes, few restrictions, and even extra money from the government to help supplement the total.
5. Great Help in an Uncertain World
Every family needs help once in a while, and in this day and age there are more families in need of it than ever before. RESP provides an insurance policy against hard times and
ensures that children can graduate and get the education that they need in order to find work and live a more fruitful life.