Saving for a better tomorrow

by Geneviève Tallmeister, SmartSAVER 

We know that many parents are going through great lengths to save - whether it be through coupons when grocery shopping, finding the best back-to-school deals, or packing a brown bag lunch for their child. According to recent research by Mintel, 86 per cent of households who make less than $50,000 annually use a rewards or points card.  

An RESP is a savings vehicle which attracts benefits such as the Canada Learning Bond (CLB) and the Canada Education Savings Grant (CESG).
  

• Through the CLB, the Government of Canada will contribute an initial $500 for an eligible child, as well as $100 per year until the child’s 15th birthday. A child can receive a total of $2,000 to help pay for their university or college. 
• Through the CESG, the Government of Canada matches personal RESP contributions by 20 per cent, up to $2500 per eligible child.  

These savings benefits are unique in that they accumulate money which parents may not be able to save otherwise.  

Scenario 1: A Newborn receiving $1 a month into their RESP  

For example, when a parent opens an RESP for their eligible newborn and maintains the account until the age of 15, they will receive $2000 in CLB money. With a personal contribution of $1 per month, they will accumulate an additional $228. Additional monthly CESG money will provide an extra $91.20, resulting in total savings of $2,319.20.  

Scenario 2: A 5-year-old receiving $2 a month into their RESP  

If a parent was to start saving with an RESP when their child was five years old, personally contributing just $2 per month, this would result in a total of $2,470.40. Setting even a little bit aside accumulates into big savings. 

Scenario 3: An 11-year-old receiving $2 per month into their RESP 
 
If a parent was able to start an RESP for their child at age eleven, contributing just $2 per month, this would result in a total of $2,268.80. However, special rules about the CESG apply to beneficiaries between 15 and 17 years old. By the end of the calendar year when a beneficiary turns 15, contributions must either total $2000, or have been a minimum of $100 in any four previous years.  
 
Conclusion  

Families, and modest-income families in particular, continue to use digital coupon apps to save. SmartSAVER recently partnered with reebee to introduce families to the RESP - in a place where families are already saving! SmartSAVER will continue to innovate, by facilitating new partnerships with different companies, community organizations, financial institutions and government branches. Most importantly, it will continue to engage with as many families as possible, to ensure that all children living in Canada have access to post-secondary education.  
 
by Geneviève Tallmeister  
Researcher, SmartSAVER and Masters of Public Policy Candidate at the Munk School of Global Affairs & Public Policy, University of Toronto, Class of 2020  
 
SmartSAVER  

SmartSAVER makes it easier for families to access the money they are eligible to receive, through its MySmartFUTURE application portal. Parents can easily open a no-cost RESP, apply for the CLB and CESG, connect with a financial institution of their choice, and receive their money. This back-to-school season, parents across Canada can ensure a bright future for their children.