3 ways to give your kids a better start in

3 ways to give your kids a better start in life

As a parent, you want to give your child a better start in life. Whether he’s still in elementary school or a young adult, here’s what you can do.

Here are three ways you can give your child a good financial start in life.

1) OPEN AND CONTRIBUTE TO A

The statistics show it: The more educated and qualified you are, the better your chances of getting a good job and an attractive salary. The Registered Education Savings Plan (RESP) is the best way to set aside money for your child’s education. Unfortunately, according to Émile Khayat, financial planner and regional director of TD Bank Group, their potential is still largely unknown. However, you can get up to 30% in grants, which will help grow your savings faster and tax-free.

In fact, by opening an RESP, you can receive the Canada Education Savings Grant: the federal government pays the equivalent of 20% of the annual contribution amount, up to $500 per year and a cumulative limit of $7,200.

The Quebec Education Savings Incentive, on the other hand, is a grant of up to $300 per year. Children from low-income families also have access to the Canada Learning Bond (CLB), a contribution of up to $2,000 ($500 in the first year and $100 for each year of eligibility). Note that no personal contribution is required to receive the CLB; opening an RESP on behalf of the child is sufficient.

2) Inform him about the financial plan

In the past, schools were partly responsible for the children’s financial education, but today this task lies with the parents. A mission that is all the more important as most of them fear that their youngsters will spend money frivolously because payments will be made electronically and no longer in cash.

“From the age of 5 to 6 it is possible to do fun activities with them, for example teaching them to count money. You can open your first bank account at the age of 6 or 8, and some financial institutions even allow you to visit the vault,” says Émile Khayat.

We then adjust and diversify the information as the child grows. We encourage saving, we explain how we make money and what a budget is for, we help him pay the bill for his first mobile phone, we teach him basic loan concepts, etc. so many ways to build financial literacy, which will be of use to him throughout his life.

3) Help him build up a deposit

With real estate prices soaring, more and more young people will need their parents’ help to become homeowners. To this end, parents can make a living donation to their adult child, which will be used as a deposit or as a contribution to the CELIAPP. This donation has no tax implications for either the parent or the child.

“We’re seeing living donations more often than we used to, not just because homes are more expensive, but also because parents are living longer. They want their children to be able to benefit from this money without having to wait for the inheritance,” emphasizes Émile Khayat.

It is also an interesting tax strategy so that the estate pays less tax on the death of the parents. “If a person has enough RRSPs for retirement, they could donate the investments from their unregistered accounts during their lifetime. This amount is taxable and the donor has to pay tax on the capital gain, but the child receives the donation without tax,” explains the financial planner.

Advice

  • To build credit, the first thing a young person should do is get a credit card. A history is essential to building those famous credit files that lenders use to make or deny a loan (loan, margin, mortgage, etc.).
  • Obtaining a credit card is relatively easy when you are 18 and have a bank account, provided you use it properly.
  • It is best to start with a relatively low credit limit (e.g. $500 or $1,000) and gradually familiarize yourself with this tool in order to use it responsibly.
  • Parents should ensure at all times that the young person has the maturity to handle credit and help them avoid the potential pitfalls of a credit card.

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