My RRSP or My Kid’s RESP? Which to Choose?

March 2, 2015|By David Lester

RESPs for Your Kids!

Today is the last day for RRSPs for 2015.  Hopefully everyone made a contribution, if it made sense for you.  Now what to do with that tax return?  But what about RESPs for your kid’s college and university?  It’ll be right around the corner soon.  It seems hard to fund our RRSP contributions never mind our kids RESPs!  Using your tax return will be a double whammy!

I get tons of questions about which registered plan to fund first when I do my book signings across the country.  (I’ll be at Scarborough Chapters on March 15th doing a signing from 12-5pm )  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 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 never seems to end.

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 new 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.