Kids Education and Financial Literacy

The Registered Education Savings Plan, or RESP, is a savings plan in Canada that helps parents save for their child's post-secondary education. When you open an RESP, you become the subscriber and you can name one or more beneficiaries, who are the future students. You agree to make contributions to the plan, and in return, the promoter agrees to pay educational assistance payments to the beneficiaries.

You can start contributing to a child's RESP as soon as they are born. The government also contributes to your savings through education grants. The total amount you can contribute to an RESP is up to a lifetime maximum of $50,000 per child. Through the Canada Education Savings Grant (CESG), the federal government provides 20 cents on every dollar you contribute up to a maximum benefit of $500 on an annual contribution of $2500. That's 20% of $2500. You don't have to contribute $2500 per year and can carry forward unused CESG room to future years. The CESG is available until the end of the year when the child turns 17. The lifetime maximum you can receive through the CESG is $7,200.

The money in the RESP grows tax-free until it's withdrawn. When it's time for the beneficiary to go to post-secondary school, they can start withdrawing the money for school expenses. These withdrawals are called educational assistance payments. The types of post-secondary programs that are eligible include apprenticeships, trade schools, colleges, and universities.

In summary, an RESP is a great way for parents to save for their child's education. It offers tax benefits and government grants that can help increase the savings. However, like any financial decision, it's important to understand the terms and conditions before opening an RESP.

Financial literacy is the ability to understand and use various financial skills effectively, including personal financial management, budgeting, and investing. When you're financially literate, you have a basic foundation of knowledge that can help you thrive. If you feel you lack the knowledge you need, you might have to learn it on your own. Familiarizing yourself with some basic personal finance vocabulary can be a good place to start. 

Finance terminology might seem confusing at first glance, but you don’t need to be a CPA or a financial advisor to make sense of it. Getting to know some of the most common personal finance words can help you build a stronger money foundation. 

Being financially literate is important because it can help you to have a positive money mindset, act more responsibly with regard to saving and avoiding debt, build wealth and plan for the future. If there are gaps in your financial education, it’s never too late to fill them. Learning some personal finance basics for beginners, including key financial literacy vocabulary, can help you get on track with your money goals. 

Financial literacy words are simply the various terms you’ll see used again and again when discussing different money topics. For example, there are personal finance words related specifically to banking, others that are focused on insurance, and more that deal with investing. Understanding financial literacy vocabulary can also help you avoid potentially costly money mistakes. If you’re taking out a mortgage, for example, it’s important to understand concepts like amortization and closing costs so you know exactly what you’re paying to buy a home. 

Financial literacy can help protect individuals from becoming victims of financial fraud, a type of crime that is becoming more commonplace. Financial literacy can be obtained through reading books, listening to podcasts, subscribing to financial content, or talking to a financial professional.