The year was 1987. The Edmonton Oilers won the Stanley Cup. The Simpsons aired for the first time. Three Men and a Baby reigned at the box office. Hilary Duff was born… and so was my brother.
I was four years old when my squishy little bro entered the world. This was also the time when my parents decided to open a Registered Education Savings Plan f(RESP) for each of us. They decided to contribute more money to my brother’s plan because (no kidding) my Dad figured that as a boy, he wouldn’t be as smart, and would earn fewer scholarships. I think my brother actually surpassed me in the scholarship department, but he also had the more expensive education since he entered university after tuition fees in BC had skyrocketed and went on to do a (very expensive) Masters. He was also way cooler than me and chose to live on campus. Not so cool: his $30,000 in student debt.
My parents were apprehensive about contributing too much to our RESPs because at the time, they could only be used for your standard university-level education. Nowadays, RESPs can fund university, college, apprenticeships, non-credit courses and more. It also wasn’t until 1998 that the Canadian government launched the Canada Education Savings Grant, which matches up to 20% on the first $2,500 contributed annually. (In other words, the government could chip in $500 per year to your child’s RESP.) My Dad says that if the government had been offering free(ish) money when we were little, he’d definitely have been more diligent about our RESP contributions!
Because I witnessed my tuition fees double between my first and second year at UBC from around $2500 to $5000 (thanks, Gordon Campbell!), not to mention the student strike here in Québec in 2011 that only partially succeeded at keeping the lid on Canada’s lowest tuition fees, the cost of Cub’s education was front of mind even while he was in my belly. There was never a question of IF we would start an RESP for him, it was simply a matter of WHEN.
We decided to go with sooner rather than later, wanting to maximize what we could receive from the government. With all of our banking accounts, our mortgage, credit cards and line of credit already happily serviced by RBC, I rolled Cub over to our local branch when he was only a few months old to start his RESP and open his “Leo” kids’ bank account. I believe I even nursed him while we were filling out the paperwork!
Looking over the documents my Mom so carefully kept from the RESPs they opened for my brother and me, I’m surprised to see how much it actually cost them to contribute! They had to pay the RESP company a total of $800 in enrollment fees, depository fees and insurance premiums for our two accounts. Their annual contribution to my brother and my’s accounts was only $220 and $159 respectively.
Vintage RESP documentation, courtesy of my Mom:
Guess what it cost me to open and maintain Cub’s RESP at RBC? Zero. Zilch. Nada. Every penny we put towards his education is his to keep.
And while pennies are out of circulation, one of the main ways we add money to his RESP (it’s super easy via online banking) is by putting all our spare change in his piggy bank. We also put in the cash he receives on special occasions, then top up with whatever we can manage. Starting in 2015 we plan to set up an RESP-Matic®, through which we’ll contribute a set amount every week.
Although Papa Wolf thinks society will collapse and we’ll have returned to the dark ages by the time Cub turns 18, I prefer for us to be prepared for a brighter future. Thanks to my parents, I was responsible for almost none of the costs associated with my own post-secondary education, and I would like to be able to offer the same luxury to my children. The only way this will be possible is if we start saving now. Although there are other options such as Tax-Free Savings Accounts and the like, I don’t see why I’d turn down the chance at adding the government’s annual contributions to Cub’s nest egg. (Or should I call it a “den egg”?)
Enter for your chance to win one of 4 prizes of $500 towards your child’s RESP!
Disclosure: I am part of the RBC RESP blogger program with Mom Central Canada and I receive special perks as part of my affiliation with this group. The opinions on this blog are my own