My Little Baby is a Teenager!

This was a special week in the Brain household. My little girl is now a teenager! Time sure does fly. It wasn’t that long ago I could cradle her in the crook of one arm.    

It makes me think how quickly time is passing. In three short years she will be driving. In four years she will be graduating high school. Then she will be off to university, and my child rearing years will be drawing to a close.

That is still a weird idea for me; the fact that my little baby will one day be a grown woman. As I was thinking about my daughter, and her future life, my thoughts turned to her upcoming university education. Which is now just 58 months away.

That really isn’t much time to get ready, is it? Not just ready to say goodbye to her when she leaves for school, but to get financially ready for the costs of post-secondary education.

Fortunately for my kids, I was super keen to get their education plans started. I set up Registered Education Savings Plans for my kids when my children were only weeks old, and have been faithfully contributing ever since.

When it comes to Registered Education Savings Plans there are two main types. There are the pooled plans. These are the ones that you hear stories about. In my opinion, these are really unattractive.

But there are also the individual and family plans. This is what I have for my kids. I am a big fan of these types of RESPs.

There are a few things about RESPs that I won’t have space to get into in this column, so make sure you talk to a professional financial planner to get all the details. Meanwhile, I’ll just keep it to the main attraction of the Registered Education Savings Plan. Free money.

In a nutshell, the government will match your contributions at a rate of 20%. In other words, you put in $1000, they give you $200. Boom, instant 20% return.

Now, if I was to tell you all about RESPs, I would tell you about the different grant programs, and what would happen if your kid doesn’t go to school, and carry forward contribution room, etc. But that’s not really what this column is about.

What I want to talk about today is to get started as soon as possible. Because your kid’s education is going to be expensive, and the early you start getting ready for it, the better.

I mentioned I got our RESPs started shortly after my kids were born. Here’s why.

Let’s say you set up an RESP when your kid is one year old, put in a hundred bucks a month, and made 5% on your investment. By the time they go to school, the combined value of your savings plus the government grant will be worth about $41,178.

The reality is that many folks don’t get going on saving for their kid’s post-secondary education immediately. If you waited until your kid is a teenager before you start saving, now the $100 per month into the RESP only grows to $9,258. Better than nothing, sure, but a lot less than getting going early.

A person could say, of course you have more if you start early, you have put more in. That’s true. But the additional amount contributed by starting at age 1 rather than age 13 is $14,400. Yet the early starter finishes $31,920 farther ahead. It’s not just the extra contributions, its also the extra government grants and the compounding of your money that means an early start makes a big difference.

Time is a funny thing. All of a sudden your baby girl is a teenager, and then the next thing you know, she is off to school. So start getting ready for that as soon as you can.

Brad Brain. CFP, R.F.P., CIM, TEP is a Certified Financial Planner in Fort St John, BC. This material is prepared for general circulation and may not reflect your individual financial circumstances. Brad can be reached at

This article was posted in All Columns, Education Funding, Smart Money Blog.
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