Save smart for education

By Christine Davis

According to the Government of Canada, 71 per cent of future jobs in this country will require a post-secondary education – which can be expensive. So as the reality of having to one day pay for your child’s education sets in, it’s important to secure savings.

Yet, for some families Registered Education Savings Plans (RESPs) can seem like an advantage reserved for those with extra money to save. In fact, according to research commissioned by the Omega Foundation, an organization that enhances the savings capacity and financial literacy of low-income families, 68 per cent of parents with annual incomes over $120,000 have an RESP while out of families with incomes less than $32,000, only 37 per cent have an RESP.

The Canada Learning Bond (CLB) was created to provide low-income families with a contribution and ongoing incentives to save for their children’s post-secondary education in 2004. But 14 years later, there are almost two million CLB-eligible youth in Canada who have not yet claimed this benefit by opening an RESP.

Community non-profit website SmartSAVER.org makes it easier for eligible families, like Brittany Dobrin-Fowler’s, to understand and access the CLB.

Dobin-Fowler, a young, single mother when her two sons who are less than a year apart were born, knew first-hand that post-secondary education was expensive. “I always wanted to start an RESP,” she explains, “but I was 23 and didn’t know exactly how to start.”

She turned to the SmartSAVER website where she completed the forms and chose which bank she wanted to work through. The bank, Meridian, called and set up an hour-long appointment during which she was walked through the benefits of the plan and given all the paperwork. “They explained that it’s all about just contributing but that you don’t always have to contribute.”

Dobin-Fowler’s sons were little at the time – just one and not quite two years old – and she figured then was as good a time as any to start. She opted to take just $25 off of her Canada Child Benefit for each child each month. “I wasn’t missing it ‘cause I didn’t know I had it,” she says of the system.

It’s that kind of contribution that Dobin-Fowler recommends to any parent, of any income bracket, to consider. She also “always encourages gifts of money into the RESPs” for birthdays and holidays.

With no fees and no minimum deposit required to maintain the account, it’s a non-intimidating way for people to save. “It’s good to know that you can,” she says. “There’s no minimum. You just put in what you can.”

As of 2018, the bond’s participation rate is at 37.5 per cent – up 16 per cent from 10 years ago.