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Saving for postsecondary education With an early start and discipline, financing your children’s education can be relatively painless. Take a look, as early as possible, at what the RESP offers your children.

their children’s post- secondary education. When I hear the complaints of students bearing heavy loads of stu- dent debt, I feel a bit sorry for them, as I put some of the blame squarely on the shoulders of their parents. These parents could readily have reduced that debt bur- den long ago by starting a Registered Education Sav- ings Plan program for their children early in life. RESP has been around


Dianne Szelag Finance

since the 1970s, and many families still do participate in the program. Monies paid into a RESP are ad- ministered by a promoter (usually a financial institu- tion), who applies for a

Canada Education Savings Grant on behalf of the ben- eficiary. The beneficiary must have a social insurance number to qualify for the grant. So the parents must first apply for a SIN for their child prior to setting up a plan. Bonus for low-to-middling income earners

The grant amounts to 20 per cent per beneficiary per calendar year, up to a maximum of $500 (or $1,000 if there is unused grant room from a previous year). There is a lifetime grant limit of $7,200 (achieved for $36,000 of contributions). There is a lifetime cap of contributions per beneficiary of $50,000. Limitations on the availabil- ity of the CESG occur when the beneficiary is between the ages of 15 to 17. Also, families with net income of $87,907 or less in

2014 may be eligible for an extra 10 per cent or 20 per cent on every dollar of the first $500 they save in their child’s RESP each year. Low income families need not contribute anything to

acquire up to $2,000 from the Canada Learning Bond program. If the parents are eligible for the National Child Benefit supplement (this supplement is in addition to the Canada Child Tax Benefit), they can open an RESP and apply for the Canada Learning Bond. The Canadian gov-

ith the approach of fall and the prospects of sending children off to school, parents’ thoughts often turn to the task of funding

Plan now to get that RESP up and running! It can make a big difference.

ernment will deposit $25 to cover the cost of opening the RESP and deposit $500 immediately. An extra $100 per year will then be added for 15 years. This could make an enormous difference after 15 or

20 years. Many low income families are not taking ad- vantage of this great program because they do not know about it. Here is an example of how powerful an RESP pro-

gram can be for the average family. Suppose you were to start saving in a regular RESP when a child is first born. Assume a seven per cent rate of return on the in- vestments inside the RESP. Contribute $100 per month for 18 years. The fund plus grants will have accumulated about $54,000. This would be sufficient to fund a basic four-year program costing $5,000 per year today. Con- tributing monthly makes the process very painless. These contributions are not mandatory and can be adjusted or stopped anytime. The proceeds of an RESP must be used for education

within 35 years of the plan being established. Some par- ents are concerned that their child may not seek a postsec- ondary education and therefore the funds will be wasted.

Principal can be withdrawn

RESPs offer a great deal of flexibility. With multiple siblings, a family plan is its best option as any benefi- ciary can use the plan’s proceeds. Normally withdrawals from the plan are taken from the grant portion first, so that the principal portion remains intact as the funds are drawn down for education purposes. The principal portion can be withdrawn by the subscriber without penalty, though some capital gains tax may apply, de- pending on the content of the plan. The subscriber can also transfer the proceeds to their RRSP if they have sufficient RRSP contribution room. This is limited to $40,000. So, if you are lucky enough to have grandchildren, encourage their parents to open an RESP if they have not already done so. If you are able, make regular con- tributions of your own as a priceless gift to your grand- children. Or make an annual gift for a special occasion. It is not as much fun as a shiny new toy but it will be a gift that keeps on giving. Dianne J. Szelag is a financial advisor with IPC Securi-


Ask for help as you embark on a fitness project. Enlist a friend Janet Cranston


aintaining a physically active lifestyle is not easy. We all have days where the couch and a good book or television show is much

more appealing than going for a walk or going to the gym. This becomes even more difficult if we have not surrounded ourselves with friends or family that are encouraging and supportive of our goal to main- tain a healthy lifestyle. So how do we go about getting the support we need? Ask for help. Help can come in many different forms. Maybe

you just need someone to listen to you when you are having a hard time getting motivated, or maybe you need someone who will provide you with encour- agement. Sometimes having an active partner who will join you for a morning walk makes the differ- ence. This person can give you that initial push you need to make activity a regular habit. An emotional prop might do the trick

Joining an exercise class or enlisting the help of a health expert works for some. For others find-

ing that someone who provides emotional support and knows how you are feeling is helpful. This sup- port usually comes from a close friend or relative. There may also be times you need practical help. This may be a spouse who takes on a few household chores to give you time for your walk after dinner or a grandparent who can sit with the kids while you go to an ex- ercise class. Many of us are uneasy asking for

help, either because we fear rejec- tion or we see it as a sign of weak- ness. Everyone needs help from time to time and most people are happy to offer it. When you ask for help be open and candid. Explain why you are trying to become more ac- tive and why the support of people around you is important. Be specific about what would help most and tell them exactly what they can do. Beware of those around you that might sabotage your efforts to be physically active. A spouse may

complain about the time you spend exercising or throw roadblocks in your path in hopes of derailing you. Your co-workers may feel threatened by your resolution to increase your activity, espe- cially if they feel guilty about their own inactivity.

Be positive in stating your plans Be open and positive while at the same

time being firm about your determina- tion. Reassure those around you that in- creasing your activity does not threaten your relationship, and try to involve them in your activities. Explain why your decision to become more active is important to you and why you need their help to make it happen. You are on the right track if you are

Janet Cranston Fit for Life

trying to become more physically active or working to maintain your activity lev- el. Maybe your determination will even encourage those around you to join you

on your healthy lifestyle adventure!

Janet Cranston is director of support services, Reh-Fit Centre.

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