Given the present economic challenges, the need to save money for the future is rising, especially when you have a family.

One good way to save for your children’s future is to take advantage of the Registered Education Savings Plan (RESP). In particular, your children will benefit greatly from this savings plan when they move on to higher education.

What is an RESP

Generally, this is similar to Registered Retirement Savings Plan (RSSP). The difference is that in this case, you are creating your tax- sheltered education savings account in order to handle your children’s post- secondary education instead of your own retirement. Also, when compared to RSSP, the RESP contributions are not tax deductible. With this plan, you will have no annual contribution limit.

In addition, with the help of the Canada Learning Bond as well as the Canada Savings Grant provided by the government, which matches up to the first $2500 in contributions, the money invested in RESP naturally grows faster.

How to Save Money with an RESP and Some Considerations

Just like any savings plan, there are also some things to consider on how to save money with an RESP. To enumerate some of these important considerations, read on:

1. Different financial institutions have a wide variety of options or plans offered. That is why you need to ensure that you understand the offered plans. Some of these financial institutions are credit unions, banks, investment dealers and mutual fund companies.

2. By now, you should know that programs where you can use the RESP are offered by universities, colleges, trade schools and more certified establishments.

3. One example of plan variations is the schedule of receiving payments from the plan. For instance, some of these financial institutions may make payments on a set schedule; some, however, will let you to choose the date to receive such payment.

4. Now, if for instance your child may not be able to pursue his post- secondary education, the good thing about the savings program is that the contributions will still be returned. However, any grant money will have to be returned to the government.

5. Another thing to considering before entering into this plan is the mode of payment for the contributions. Some institutions may require you to pay for it following a set schedule. However, some may let you decide as to how much and when will you make payments.