My Kids’ RESP or My RRSP – Which to Choose?

September 15, 2011|By David Lester

My kids’ RESP or my RRSP – which to choose?

The kiddies are all back to school again.  We made sure that they all had new outfits for the first day of school, backpacks that fit all their do dads and the coolest cahiers and pens to capture their little genius.  But what about RESPs for college and university?  It’ll be right around the corner soon.  It seems hard to fund our RRSP contributions never mind our kids RESPs!

I get tons of questions about which registered plan to fund first when I do my book signings across the country.  (I’ll be in Vancouver on Sept 21st doing a signing at the Granville Chapters!)  I get … “If there are only so many dollars floating around how do I choose which plan to contribute to?”  “The kids will be off to university before I retire so are RESPs the priority?”  “I also know that I need my money to be in the market for a long time to help it grow?  What’s the answer?”

The answer I always say is BOTH.  You need to FULLY fund your RRSP to make sure you have enough money in retirement and you need to do it now if not sooner!  Think of the financial stresses that our financial system will be under when we retire?  We’ll still be paying back all our government debt then, the boomers will be raiding the pensions, plus the economy looks like it’ll be sluggish for the next few years because of this last HUGE recession.  That will result in a smaller return for your RRSPs.

Ok cool, so now we have committed to pay ourselves first.  Make sure we dump as much into our retirement as we can. In my book I have the scenario where you contribute $800 a month for 30 years at 8% growth to be a millionaire.  But what about Junior’s RESPs you ask?

Take your return each year and use it to contribute to the kids RESPs.  The government will add 20% up to $500 a year for a total of $7,200 over the plan’s lifetime.  When you have birthday parties ask for  ½ toys 1/2 contributions instead of gadzillions of toys. Paper routes, parks and rec. jobs and be forwarded towards the fund as well.  Get Nana and Papa to help as well.  That’s what grandparents are for – spoiling their little monkeys.

Don’t pick RESP over RRSP – contribute to both!  It’ll make you feel secure that you and your KIDS are taken care of in the long run.

Love your money and it’ll love you back with secure education and a secure retirement,




David Lester
About David Lester

David Lester is a best selling author and professional Financial Coach, helping people be better with their money. David has written a personal finance book that breaks with traditional attitudes towards finance and describes his own philosophy to money that he has gained through his personal and professional experiences. His philosophy on money applies to many areas of everyday life, including banking, investing, goal setting, shopping and entertainment.