OT - Kids RESP's???

[maryliz]

Hi folks. Just wondering how much one tries to budget for their kids upcoming post secondary education. When you take the family budget, try to save for your retirement, balance life and all of it's costs , add in a few (or more - LOL) trips to Disney, additional vehicles, etc, how does anyone find the $$$ to take maximum advantage of the RESP program that our government has in place???

My overall goal is not to have every dime that my 2 kids will ever need in their university/college lives ... my goal is to have enough that they can afford a good portion of their lives, while working to pay off the rest. I don't think it's unreasonable to expect that they will have to fund some of it, and if that means coming out of school with student loans, then so be it. I'd just like to cut down on how much they will owe at the end.

Any thoughts and suggestions are appreciated. We're about to lose a very lucrative stock program here at work, so that will take away a good chunk of my Disney-trip fund. So it looks like I'm gonna have to get really creative in how I divide up disposable income.

 

[cdnmickeylover]

Hi Maryliz!!!

My parents started an RESP for my brother and I and paid yearly into it from the time we were really little so I knew about them when my son was born. I paid into his RESP every month from the time he was 2 months old. It was around $35/month until he was 18. He's now using the funds to pay for part of his university expenses. The first year he got back the contributions that I had made into the plan over the years and for the next 3 years he gets his share of the interest pot. I think it was with USC. The money certainly doesn't cover all of his costs but it's enough to cover his tuition and some of his books (which is basically what my brother and I got too). I was glad that I had invested some money into an RESP over the years. It certainly doesn't pay everything and my DS has to work to contribute which is not a bad thing in my opinion. So far he hasn't had to get any student loans but he's been lucky in that he joined the Reserves for a part time job which pays well and guarantees him a summer job every year.

My niece and nephews have plans as well through a bank where money is just randomly deposited to their credit. My mother set these up.

Hope this helps a bit.

Fiona

 

[Jaymie]

I currently do take full advantage of the gov program. It's $1,000/yr free money. That's $18,000 free money by the time my son goes to college/university. I have to contribute something like $167/mth. For now, we can afford it. He's an only child. We live in a house that my husband inheritated. I hate the house, but there's no mortgage, so I can't really complain.

I don't know if we'll always be able to keep up with contributing the max, but we'll see. If I need to make a change, I will.

 

[A&CsMom]

We contribute just over $50 per month to each of our kid's RESPs. That is what we can comfortably afford. My parents have also been buying the kids savings bonds every Christmas as part of their gift, which we are going to add into their RESPs when they mature. With the cost of education these days, our kids will probably have to live at home and go to post-secondary, but we luckily live within commuting distance of several very good schools.

 

[toesmom]

Hi folks. Just wondering how much one tries to budget for their kids upcoming post secondary education. When you take the family budget, try to save for your retirement, balance life and all of it's costs , add in a few (or more - LOL) trips to Disney, additional vehicles, etc, how does anyone find the $$$ to take maximum advantage of the RESP program that our government has in place???

My overall goal is not to have every dime that my 2 kids will ever need in their university/college lives ... my goal is to have enough that they can afford a good portion of their lives, while working to pay off the rest. I don't think it's unreasonable to expect that they will have to fund some of it, and if that means coming out of school with student loans, then so be it. I'd just like to cut down on how much they will owe at the end.

Any thoughts and suggestions are appreciated. We're about to lose a very lucrative stock program here at work, so that will take away a good chunk of my Disney-trip fund. So it looks like I'm gonna have to get really creative in how I divide up disposable income.

Most of the RESP companies charge very high fees and don't tell you about them. Rather, they tell the parents and grandparents how much money will be available with kids in post-secondary school.

We just went through this when my parents were starting RESP for my 4 year old son. My husband looked over the contract and just about died when he saw the high fees they charge for everything including check cashing (???) etc.

When he picked himself up off the floor, he made sure we contacted our financial advisor who told us we could invest the money without all the high fees.


So basically, more money now goes into my son's future education investment than would go into the company who is promoting the RESP.

My advice, talk to a financial planner, who has your best interest in mind. Anyone interested, I can provide the name of the planner we use and trust.

 

[wdwmike59]

I currently do take full advantage of the gov program. It's $1,000/yr free money. That's $18,000 free money by the time my son goes to college/university. I have to contribute something like $167/mth. For now, we can afford it. He's an only child. We live in a house that my husband inheritated. I hate the house, but there's no mortgage, so I can't really complain.

I don't know if we'll always be able to keep up with contributing the max, but we'll see. If I need to make a change, I will.

"Free money"? I know the gov't will contribute 20% of what you contribute annually to a max of $400 since the max you can contribute is $2000 per child. You can contribute this year for last year so you could potentially get an extra $800 from the gov't this year. Also, another trip is if you have more than one child, set up a "family plan". This way, the money isn't attributed to any one child just in case one or another doesn't go on to post secondary education and you can use it for any of the children named in the plan.

 

[Newcastle]

Some people don't agree with saving for their child's education but I think that you should try to contribute as much as you can comfortably manage and if you can start saving when your kids are really young, even better. I came out of university with an obscene amount of debt (even though I did work all through school) and I can tell you that it is very difficult to essentially start out your adult life with that kind of debt. Even if you are not able to pay for their entire university educations, the money that you are able to save will hopefully help them to start off on the right foot once they are ready to venture out into the "real world"!

 

[momto1disneyfan]

We have been contribtuting to our son's resp since he was 4. He will be 16 this year. We have put the maximum amount in his resp to get the full government benefit. For the past 2 years we have also contribute about $130 to a seperate RSP per month for his education. Yes we only have 1 child. We do not plan on paying for our sons entire eduaction. We will pay approximately 50 - 75%.

 

[maryliz]

Thanks for the insight, folks. While we did start the RESP's about 8 years ago, through a financial institution, we have not been able to contribute every year. It's amounted to approximately $1000 per year, per kid on average. I wish that I could afford to max out every year, but that's just not going to happen. I just have to remind myself that "something is better than nothing". When I stopped paying for regular daycare once both kids were in school fulltime, I started budgeting $200 a month total for the RESP's. I keep thinking of my kids as still so young, but my DD will be graduating highschool in 7 years ... and based on how fast the past few years have flown by, it's going to be here in no time.

I too have some bonds that they get at Christmas time. And will add those to the RESP's upon maturation. Great idea.

Come on Lotto 6/49!

 

[SandraC]

Oh! You are making me think about my kids post-secondary ed.

My SIL paid for her kids entire first year of U, paid $1000 towards the 2nd yr and then they were on their own. They both own houses now and are very happy people.

I liked that plan and thought I might adopt it myself.

DH's theory is to sock away rsp's for our retirement and help the kids and their education with our savings. S

 

[Allegro]

We put $1000 per kid; per year. Started last year. Its a family pan so either child can use it.

 

[Oscar T. Grouch]

I contribute the maximum monthly to get the "free" money from the government. Although I do know that "free" money is actually money my taxes paid.

 

[eeyoremum]

We recently stopped paying into our family RESP. We had the plan that took money off the "back end" so essentially if you put in say $150 this month and wanted to withdraw it anytime within the next 5 years the company would charge you a fee. If you took the money out after the 5 years there were no fees. Since we contributed monthly it would mean that some of the money would have a fee and some would not. Since ds#1 is 13 we decided to stop paying in so when he uses the money we will have no fees.

Also, since the markets have not be great we decided to stop paying into RESP put the extra $150 on our house and worry about college later. We have plenty in the RESP account and with intrest over the next few years we should be good to go. We are the type of parents to feel it is our obligation to educate our children so we will be paying the whole shot. That is just a personal choice please don't take it for a critism, every family is different.

I also like the idea of if my kids don't use the RESP it will roll over into my RSP, less the "free" $400 of course.

 

[Fellowship9798]

"Free money"? I know the gov't will contribute 20% of what you contribute annually to a max of $400 since the max you can contribute is $2000 per child. You can contribute this year for last year so you could potentially get an extra $800 from the gov't this year. Also, another trip is if you have more than one child, set up a "family plan". This way, the money isn't attributed to any one child just in case one or another doesn't go on to post secondary education and you can use it for any of the children named in the plan.

Actually, the maximum contribution to get the 20% is up to $2500 per year(therefore $500 "free money") now for 2007 onward. I think this was a recent change late in 2007 and I verified it yesterday by looking at the government information online when I was thinking about this same topic.

We're doing our best to put in the monthly maximum to get the 20% CESG for our two kids, although I don't know if we're going to be able to increase it to the new $2500/year level for a little while. There's a job change coming and my wife is home with the kids as they are 3 and 1.5 years old.

Our plan is to put away what we can and hopefully max out the 20% CESG until they go to school, then anything else they need they can get a job or a student loan for. Who knows what school will cost in 18 years, but ideally the RESP, plus work at a full time summer job will allow them not have to take a job while school is in session (with the hope that they will focus on classes and studying ) and make it through without crushing loans. That's what my parents did for me and I'm very grateful.

 

[wdwmike59]

Actually, the maximum contribution to get the 20% is up to $2500 per year(therefore $500 "free money") now for 2007 onward. I think this was a recent change late in 2007 and I verified it yesterday by looking at the government information online when I was thinking about this same topic.

Thanks for the info! I had no idea that the limit had been raised. I must phone my banking officer and ask her why she didn't let us know about that.

 

[Fellowship9798]

Thanks for the info! I had no idea that the limit had been raised. I must phone my banking officer and ask her why she didn't let us know about that.

I think it is still quite new. Not all the online information has been updated to reflect this change that seems to come from an Oct 2007 "mini-budget". See this link:

http://www.servicecanada.gc.ca/en/goc/cesg.shtml

for the following quote under "Financial Information":
"No matter what your net family income is, when you save more than $500, the Canada Education Savings Grant will give you 20 cents for every extra dollar, up to $2,500."

Might as well take advantage of as much grant money as they are willing to hand out if you can!

 

[maryliz]

We found out when we went in to contribute for this year. I had $4000 so was feeling great that we could max out for both. Then the bank tells me that it's now $2500 and did we want to do the extra ... yeah, cause I had an extra thousand dollars lying around on December 21st! Maybe another year - LOL.

It's a great program though, and taking advantage of it no matter how little or how much is still a good thing.

 

[candizfan]

Have you ever done an actual budget for your family?

You have to list all your take home income. List all of your true expenses (house, car insurance, groceries etc). List all of your other expenses (Tim's habit, gym membership (walking is free-but they don't like to tell you that ), cigarettes etc). One type are actual must haves and the other list is really want items.

Use a weekly, biweekly or monthly amount and compare the income to the real expenses. This is your true disposable income. Now subtract the really want items. This is the amount you have CURRENTLY to contribute. If you are in the negative.....guess what you have to start to cut!

If you want to evaluate how rich you can be, look at how much you spend on really want items. Do the math for each item over a year and you will be amazed at how quickly a small purchase every day adds up. If you cut out some of them, you can see how much extra you can use for more substantial things in life. Coffee everyday for a year is the price of park tickets and air fare for one person!

I have always budgeted and it will get you far if you can do it. It takes practice but don't give up. It is all about living within your means.

So we don't buy Tim's everyday but we visit WDW, drive a nice (not new) car and have money invested for retirement and the kids education and braces!

It is all about balance in your life and balance with your money will lead to a lot of balance in other areas.

Good luck.

 

[CdnMom2]

Another nice thing about having your RESPs set up as a Family Plan if you have more than 1 child is that you can dole out the $$ as you, the parent chooses when the time comes to fund the education. So even if all your kids go to Post-Secondary (& many trade schools qualify too) some may need more or perhaps even, be more deserving, of more $$ than the other child. Your decision as parent.