RESPs – A Great Graduation Gift

As I stated in my article, “7 Reasons Why I Graduated With 2 Degrees and No Debt” I am very thankful for the fact that my parents decided to start a family RESP for myself and my brother.  If it wasn’t for the money my parents earmarked for me (about $4,000) per year from the RESP I would have finished school at least 15K in debt.  The interest alone I would have paid on that money will save me a ton, never mind the obvious original gift.

RESPs – The Ultimate Gift

I know a lot of kids in high school whose parents bought them vehicles and then paid the insurance on them.  Many of these kids treated the vehicles like crap and didn’t really respect the value of them.  My parents pointed me in the direction of a part-time job (the classic gas jockey position) and then helped me out with the insurance when I bought a 15 year-old used car for myself.  It wasn’t the nicest car amongst my friends, but it gave me freedom, got me from A to B (most of the time), and I felt the pride that comes with true ownership.  Instead of giving me materialistic gifts like this, my parents were very conscious about putting a little money away for me each year in a RESP account.  They realized the great deal the government gave them and took advantage of their 20% match.  My parents are very conservative financial people and so they didn’t take many investment risks within, the RESP. Nonetheless, it came to a sizeable sum and a graduation gift of $0 in debt that I am very thankful for.

RESPs – You Only Realize How Good They Are Once You Are In School Without Income

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My parents have never just handed me money.  They made sure that I realized the importance of the gift they were giving.  My mom hadn’t had a lot of financial help with her university education, and my dad had never graduated high school.  They made sure to let me know how important it was to them that I received whatever education I wanted without burying myself in debt.  At the same time they always let me know when there was firewood to do, lawn to cut, Christmas lights to put up/take down, or the 101 other little chores that occur in a household.  This was my way of ‘earning’ the money, even though I’m pretty sure my $30+ per hour of chores that it would have equalled out to might have been a shade above what the market demanded.

The benefit of having a family plan is that if I didn’t need the money either because I had some great part-time job, or because I didn’t go to post-secondary education, my brother (3 and half years my younger) could have used it.  In much the same fashion, my brother has chosen to go to university, but if he didn’t, I am planning on starting a masters degree and my parents could have transferred the money back to me again and it would have made a great gift.  It is fairly flexible this way.  If all else failed my parents likely (I have never asked) would have had the RRSP room to transfer the money into their RRSP account.

RESPs Are The Way To Go if You’re Just Starting A Family

If you are the parent of a post-secondary bound student reading this you should definitely consider if you are able to financially help your son/daughter achieve their dream career.  A little money invested in an RESP is definitely a much better plan than giving them some money as a high school grad gift and then a hundred dollars every once in awhile when they come home.  By letting your child know that you are sacrificing a little to give them a shot at what they want you will be showing them just how much value you place on education and just what your expectations are for them.  If this point gets across it will likely be one of the best investments you can make in your lifetime.

ING direct has some pretty good rates, and they are online based so instead of spending money on branches, they can handle better interest rates. Check them out below and use our orange key for an added bonus for your RESPs.

And check out the following book by Mike Holman at Money Smarts Blog

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