No Kids? RESPs May Still Be Something to Consider

My friend, Sarah, was just finishing university and lining up internship interviews when her younger sister had her second child. Unlike her sister, Sarah scoffed at the idea of having children and they certainly didn't register in her financial plans. At 25, her goals included paying off school debt, and saving for travel and emergencies — maybe even to own a condo.

While Sarah was climbing the career ladder and increasing the number of stamps in her passport, her sister was focused on the day-to-day tasks of raising her family. Future plans like education at that point weren't even on the radar.

The More You Know...

During regular visits, Sarah tried to encourage the importance of education and started to think of ways that she could help her sister's kids afford it. She wanted them to have the same education opportunities she had.

Feeling like she could help, she found herself comparing various savings plans and trusts, and landed on the Registered Education Savings Plan (RESP). The a-ha moment came when she learned that she didn't need to be a parent to open and contribute to an RESP, plus the government would match a percentage of the funds she deposited. For Sarah, it was an easy decision to realign her financial goals to help out. The funds she allocated to the RESP were a small portion of her overall investing budget, but had significant potential for her nephews.

A Jump-Start

With the RESP program focused on funding post-secondary education for children, it often doesn't register with anyone who doesn't have kids of their own. But really it can be considered as a tool to support families, especially if we widen our definition of family. As Sarah discovered, she didn't have to be the one to potty train her nephews or discipline them for staying out past curfew, but she could help give them a jump-start on their futures.

This past September, Sarah's oldest nephew started college. At at just 17, Jonathan has his path to becoming an engineer all mapped out. And it seems “Auntie" Sarah may just have imparted some of her money smarts to him. He spent some of his own savings on a used car so that he can drive himself between school, home, and his part-time job. His financial future is already looking up.

Want to learn more about RESPs? Here are 9 Common RESP-Related Questions & Answers.