One of the best things a parent can do is to contribute to a RESP for their child’s future education.
With the cost of post-secondary education rising every year, students are graduating with more and more student debt. This can lead to your adult child having to delay important milestones like buying their first home, getting married or travelling the world.
However, as parents, there can also be a lot of competing financial priorities that can make saving for a child’s education rather difficult, be it paying the mortgage or simply saving for retirement. So, instead of going it alone, why not make it a team effort?
Have your child help contribute to their own RESP.
To encourage them to do so, why not make an arrangement where you’ll match every dollar they put in? For example, once they get a part-time job, you could set a goal and tell them that you’ll put in $1,250 per year if they do the same. That way, their plan will grow by $2,500 every year and can be maximized through government grants.
If other family members want to help too, the more the merrier. With everyone contributing to a family RESP, your child is more likely to take full advantage of government grants and get a boost to their education savings.
At the end of the day, one of the best things you can do for your child is teach them financial responsibility before adulthood. When you ask your teenager to contribute to their RESP, it feels more like a partnership. They’ll get a sense of the value of the money being put towards their schooling, adding another motivating factor to completing their education.
When doing so however, it’s important to sit down with your child and come up with an arrangement that works for both of you. By doing so, you can come up with a realistic plan and educate your child on the financial realities of life, helping them to get just a little better with their own personal finances while motivating them to save and do well in school.
In the end, your child will have more money in their RESP, less student debt upon graduation and you’ll teach them a valuable lesson in savings. It’s a win-win situation.