Is it possible that summer is over? Unfortunately the answer is yes. The Central Canada Exhibition has come and gone for another year, and it’s “back to school time” for our children.

Much like the summer has come and gone with tremendous speed, the time will soon pass and our children will be entering university or college. It is estimated that by 2019, a four year university program will cost as much as $75,000, and a three year college education could cost as much as $45,000. This includes the cost of tuition, rent, food, books and other fees. It is clear that the cost of your child’s education is enormous.

Are you prepared for the financial impact of such expenses? A well thought financial plan helps alleviate some of the stress that surrounds the uncertainty of post-secondary education. The sooner you begin saving towards your child’s education, the better.

One great way to start, is by contributing to a Registered Education Savings Plan (RESP). This federal government sponsored program has been designed to encourage saving toward the cost of your child’s future education expenses. And there is another benefit. Not only is this a savings vehicle, but it also grows tax free. The RESP therefore provides a beneficial two-step approach in your goal toward positive financial planning.

Quite simply a RESP works like this - you have up to $4,000 dollars per year that can be contributed for each beneficiary (child). The government will contribute a twenty percent CESG (Canadian Education Savings Grant) on the first $2,000 contribution each year. Any unused amounts can be carried forward. In other words, if you contribute $1,000 this year, you will receive $200 CESG. Next year you can contribute $3,000 and receive $600 CESG. Please take note that the maximum allowable contribution is $4,000 for each beneficiary in any given year, regardless of how many plans you open. You are safe as long as the maximum contribution of all plans combined does not exceed this limit.

The RESP is one alternative that you can utilize in saving for your child’s education expenses. There are many different plans available. It is a good idea to review the plan details and government rules before making a commitment toward your savings vehicle. Consult with your trusted financial advisor to get the facts. The sooner you start, the sooner you and your child will enjoy its’ benefits.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.