The government wants to give you money

Can you believe the number of people who aren’t using an RESP to save for their children’s future education?



Online only.


It seems that less than 40% of eligible kids receive the Canada Education Savings Grant. That’s up to $7,200 that the government wants to GIVE you to save for your children’s future education. GIVE you. So why won’t you take it?

Don’t have any money to save, you say? Hmm. The Canada Learning Bond provides $500 for low-income families to establish a RESP account and allows for an annual contribution of $100 but only has an 8% participation rate. More money the government wants to GIVE you.

If you decide to grab the grant money, it’s not too late to catch up. As of 1998, the CESG accumulates every year for a child until she turns 17. However you have to make annual contributions – as opposed to catching up all at once – to get the maximum grant. That’s because the maximum a child can receive in a calendar year is $800 for years prior to 2007 and $1,000 for 2007 and beyond, provided grant room is available. Each year you can catch up for roughly one year of missed contributions.

Let’s say you made no RESP contributions for little Humphrey who was born in 2002. He would have accumulated $4,500 in grant room ($400 for each of the years 2002 to 2006 and $500 a year for 2007 to 2011). If you set up an RESP for him this year, you can contribute up to $5,000 and grab a grant of $1,000. Yup. You put in 5 and the Feds give you 1… that’s an automatic 20% return on your money, before it’s even invested.

So how much should you save for your child’s future educational needs? That depends in large part on how much you can afford. Aim for the maximum amount of CESG for which your kids qualify. If you can afford to put away more, do it. Post-secondary education won’t be getting cheaper any time soon.

19 comments on “The government wants to give you money

  1. The title of this article is not accurate. It should read;

    “The Government wants to give you the hard earned money of your fellow Canadian Taxpayers”

    So many articles, here and elsewhere, say of how the Government is going to give you this and that. Well, it is best to remember that the Government’s money comes from the taxpayer, not the Government.

    How can a Government expect people to save money, when all the Government does is spend money, without the consent of the taxpayer?


  2. There are differences in using the banks or a insurance comany. You state that you have had RESP's for both your kids since birth. If you have started that with IA and made monthly payment and not missed one. The company would have given you a extra 15%. I don't know of any bank that does that.


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