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“The Canada Education Saving Grant (CESG) is money that the government adds to a Registered Education Saving Plans (RESP). The money helps to pay the cost of child’s full or part time studies after high school.” (Source : https://www.canada.ca)

The Grant
The grant amount can reach a maximum of 7,200$ per child. This amount is dependent upon annual contribution to your child’s RESP and your family income level.
The CESG program provides 20% of your annual RESP contribution up to 2,500$. What this means is that you can get up to 500$ towards your child’s RESP each year.
For example, if you contribute 2,000$ a year to your child’s RESP, the CESG will add 20% of that 2000$ = 400$ to your child’s RESP.
If you contribute 2,500$ a year to your child’s RESP, the CESG will add 20% of that 2500$ = 500$ to your child’s RESP.

Low income?
If the family income is between 48,535$ and 97,069$; additional benefits of 10% of the CESG contribution will be added up to a maximum of 50$.
For families with income equal or less than 48,535$ the additional benefits of 20% of the CESG contribution will be added up to a maximum of 100$.

“The average annual cost for an undergraduate degree in Canada is approximately 10,000$.”

How much do you need to save?
The average annual cost for an undergraduate degree in Canada is approximately 10,000$. For a four-year degree you need 40,000$ in today’s dollars. Factoring inflation and an increase in education costs of 2% annually, the required fund in 18 years is 57,000$. To reach this amount a savings of about $164 a month for 18 years is needed (assuming an average annual return of 5%). Some of this amount can come from the CESG.

Bottom Line
If you already have an RESP account and opt in to the CESG, that is great! You are on the right track. Just make sure you protect your funds from fluctuations.
If you do not have an RESP for your kids, or you did not opt in to the CESG, it is never too late to start.

Ready to save for your kids’ education and need some help? Contact me for free personalized advice.

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