Who doesn’t want their child to get the best quality education? Everyone does. High-quality education is an amazing start you can give to your child’s life.
But the rising cost of post-secondary education in Canada is a problem for the middle class, so it’s important to do financial planning. The well-designed educational savings plan can make your future secure, reduce student debt and ensure your goal is only to focus on and achieve academic goals.
However, Canadian parents do have access to tried and tested saving tools such as the Registered Education Savings Plan (RESP), Tax-Free Savings Account (TFSA), and other complementary investment options. If designed and planned properly, then these plans not only increase your savings but also help you gain benefits from the valuable government grants.
Keep reading to know more about going to children’s education plans, how it’s benefiting and how to get it.
Understanding the Cost of Education in Canada
Before opting for the children’s savings plan, it’s important for you to have a clear idea of how much your education costs. Tuition piece is only one part of the maze; it also includes living costs, transport fees and so on.
Estimated Annual Education Costs by Province (2025 Averages)
| Province | Tuition (Undergrad) | Residence & Meals | Books & Supplies | Total Estimated Annual Cost |
| Ontario | $8,200 | $12,500 | $1,000 | $21,700 |
| British Columbia | $7,800 | $11,000 | $1,000 | $19,800 |
| Alberta | $6,500 | $10,000 | $900 | $17,400 |
| Quebec | $4,500 | $9,000 | $800 | $14,300 |
| Saskatchewan | $6,300 | $9,500 | $900 | $16,700 |
| Atlantic Provinces | $7,000 | $10,500 | $900 | $18,400 |
If your child is looking forward to living on campus or going out of province to study, the cost will be around $80,000–$100,000 for a 4-year undergraduate program. It’s better to plan early rather than panic later to make ends meet.
The Cornerstone of Education Savings — RESP
The RESP or Registered Education Savings Plan, as it is formally known, is the foremost program in the country for the purpose of saving for an education. It is aimed at assisting parents (and grandparents or guardians as well) to save as much as possible in a purposeful manner while gaining the available governmental grants as well as tax benefits.
How an RESP Works
- You participate in saving via net income.
- Your investments grow tax-deferred.
- The government contributes in the form of grants (mainly CESG and CLB).
Funds can be used for tuition, books and other educational expenses when the child is in post-secondary education.
Key Advantages
- Tax growth on investments is deferred until the money is drawn out.
- Government grants of up to $7200 for each child are provided free of cost.
- Minimum investments (GICs) to stocks (equity mutual funds or ETFs) can be used to build a diversified portfolio.
Funds can be moved to a sibling or Registered Retirement Savings Plans (RRSP) if certain requirements are met.
Government Incentives: Turning Savings into Growth
No one can deny the power RESP holds. With government contributions, you can see the rise in child savings.
- Canada Education Savings Grant (CESG)
- 20% matching on the first $2,500 contributed annually per child.
- Maximum annual grant: $500.
- Lifetime maximum per child: $7,200.
- If you miss a year, you may “catch up” by contributing extra in a later year.
- Canada Learning Bond (CLB)
Designed for low- to moderate-income families.
At the start, the government will deposit $500 and later on each year there will be an addition of $100, even if you don’t add anything.
RESP Government Grant Breakdown
| Program | Eligibility | Government Contribution | Lifetime Maximum |
| CESG (Basic) | All Canadian children with a RESP | 20% of the first $2,500/year | $7,200 |
| CESG (Additional) | Based on income | +10–20% extra on first $500 | Up to $7,200 total |
| CLB | Low-income families | $500 initial + $100/year | $2,000 |
With constant contributions and government incentives, a family can end up having thousands over time.
Types of RESPs: Choosing the Right Structure
Individual RESP
- For one beneficiary (any child or adult).
- Best for single-child families or those who prefer simplicity.
Family RESP
- Multiple children can share one plan.
- Ideal for families with more than one child (children must be related by blood or adoption).
- Grants and growth can be allocated flexibly among children.
Group or Pooled RESP
- Contributions from multiple families are pooled.
- Operated by scholarship plan dealers.
More structured, but often includes management fees and restrictions on withdrawals.
Comparing RESP Plan Types
| Feature | Individual | Family | Group/Pooled |
| # of Beneficiaries | 1 | Multiple | Multiple families |
| Flexibility | High | High | Low–Moderate |
| Control | Full | Full | Shared (rules set by plan) |
| Fees | Varies | Varies | Often higher |
| Best for | Single child | Families with siblings | Parents prefer a hands-off approach |
TFSA: A Flexible Complement to RESP
A Tax-Free Savings Account (TFSA) might be used as a powerful complement to an RESP. While it doesn’t offer grants, it offers complete flexibility and is tax-free on contributions, growth, and withdrawals.
Why Combine TFSA with RESP?
- SAVINGS FOR EDUCATION – RESP funds are restricted to education, TFSA funds are not.
- Much else – If your child doesn’t pursue post-secondary studies, TFSA savings are untouched.
- Expenses not covered by tuition – TFSAs can also cover travel, funding for gap years, and housing.
RESP vs TFSA for Education Savings
| Feature | RESP | TFSA |
| Government Grants | Yes – CESG & CLB | No |
| Contribution Limit | $50,000 lifetime/child | $7,000 annual (2025), cumulative limit varies |
| Tax Treatment | Tax-deferred growth; withdrawals are taxable to the student | Tax-free growth and withdrawals |
| Flexibility | For educational purposes only | Any purpose |
| Ideal For | Parents prioritising education funding | Parents seeking flexible savings |
Pro Tip:
Once your RESP is maxed out or getting close to its limit, the next logical step is to save using a TFSA. Having the funds easily available is a significant benefit, along with its tax-free status.
Alternative Options for Education Savings
While the primary focus has been on RESPs accompanied by a TFSA, other non-restricted strategies to supplement them include:
- Non-Registered Investment Accounts – Quite flexible; however, they are subject to taxation every fiscal year.
- In-Trust Accounts (ITFs) – These are for parents with minor children, whereby tax is filed on investment income in the child’s name.
- Formal Family Trusts – Most appropriate for ultra-high net worth families requiring multi-generational control with tax efficiency.
Step-By-Step: How to Open and Manage an RESP
- Decide on Primary RESP Financial Institution or Provider
These could include banks, credit unions, and investment firms alongside scholarship plan dealers.
- Attain Necessary Paperwork
Documentation includes the Social Insurance Number (SIN) for the child, along with the subscriber (in this case, a parent).
- Determine Plan Type
Choose between individual or family, depending on the number of children involved.
- Determine Investment Options
These include mutual funds, GICs, bonds, or ETFs, tiered to your risk level and tolerance.
- Determine Contribution Plan
There is an option for automated monthly or yearly contributions, which are preferable.
- Submit Grant Applications
Your provider will be in charge of submitting CESG as well as CLB grant applications on your behalf.
- Review Annually
As your child approaches university age, make adjustments to contributions or to the asset allocation strategies.
Common Mistakes to Avoid
| Mistake | Why It’s a Problem | How to Fix It |
| Starting late | Less compounding time, fewer grants earned | Open an RESP as early as possible, even with small amounts |
| Not contributing enough to get a full CESG | Misses free $500/year | Aim for $2,500 annually per child |
| Choosing high-fee plans | Reduces long-term returns | Compare management fees before committing |
| Ignoring investment mix | Too conservative early = lost growth | Use age-based strategy: risk early, safety later |
| Forgetting to apply for grants | Lose government incentives | Confirm your provider files the CESG/CLB forms |
| Not planning for non-attendance | May lose grant funds | Have a backup plan: transfer to a sibling or RRSP |
Avoiding these sneaky traps keeps your savings strategy productive and adaptive.
Investment Strategies for Education Funds
Your investment strategy should change as your child gets older. There should be an investment account for a child in Canada.
| Age of Child | Recommended Strategy | Sample Asset Mix |
| 0–5 years | Long time horizon; growth-focused | 80% equities, 20% bonds |
| 6–12 years | Balanced growth | 60% equities, 40% fixed income |
| 13–18 years | Capital preservation | 30% equities, 70% fixed income/GICs |
This glide path allocates risk as your child approaches post-secondary studies, ensuring liquidity at the time of need.
Case Study: Power of Starting Early.
Take two families: both contributing 2,500/year, but starting at different times.
| Family | Start Age | Total Contributed | Total Grants | Value @ 5% Return |
| Family A | Birth (Age 0) | $45,000 | $7,200 | ~$71,000 |
| Family B | Age 10 | $20,000 | $4,000 | ~$31,000 |
Lesson: Initiating the process earlier translates to more than $40,000 in educational funds, made possible by time and compounding.
What If the Child Does Not Go to Post-Secondary Education?
You could:
- Shift the RESP to another eligible child.
- Keep it — it can remain active for 35 years.
- Take back your contributions (tax-free).
- Take the investment earnings as an Accumulated Income Payment (AIP) — taxed at your rate with an additional 20% penalty (unless it goes to your RRSP).
Considering these options is good to avoid the waste of funds.
Guidance for Canadian Families from Legacy Wealthbuilder
Saving for a child’s education is more than a financial goal, but a family legacy decision. That is why we at Legacy Wealthbuilder Solutions and our advisors are assisting Canadian families:
- Create tailored RESP and TFSA approaches.
- Optimise the government grant and match offers.
- Identify low-fee/high-quality investment resources.
- Embed education savings into the overall wealth plans (retirement, estate, and tax).
- Conduct reviews and provide performance tracking.
We solve the difficult choices and make sure your child’s dreams can be achieved, all while maintaining your economic well-being.
Future Education Trends
Education is changing due to developments in artificial intelligence, technology, and healthcare. While opportunities in education are changing rapidly, so are the associated costs. Each year, tuition for specialised programs like engineering and medicine exceeds $20,000.
Scholarships and bursaries provide some limited financial assistance, but only in an unpredictable manner. This is why it is important to have a registered education savings plan (RESP) for your child. When RESP is adequately funded, your child will have the financial freedom to choose a Canadian university, a trade school, or even study abroad.
Last Recommendations
- Start Early: Even $50/month builds momentum.
- Automate Contributions: Avoid missed grants.
- Maximise the CESG: Always aim for the $500/year.
- Diversify Investments: Balance growth and stability.
- Plan Withdrawals Smartly: Minimise Taxes when your child begins school.
- Get Advice: A financial advisor can integrate RESP planning with your long-term wealth strategy.
Conclusion
Education opens doors—but it is financial preparedness that unlocks them. By leveraging RESP and TFSA and disciplined investments, you can allow your child every opportunity to thrive. At Legacy Wealthbuilder Solutions, we assist Canadian families in turning their education objectives into attainable and sustainable plans. When you plan smartly today, your child’s future becomes limitless.
FAQs
1. How much should I save monthly for my child’s education?
Saving approximately $200-$250 every month from birth into an RESP can sufficiently cover most expenses incurred during university. Beginning early allows you to reap the benefits of compounding acceleration as well as government grants.
2. What if my child does not pursue further education?
An RESP can be assigned to another child, can be retained for a maximum period of 35 years, or the money within it can be withdrawn. The principal contributions are tax-exempt, and the growth can be transferred to an RRSP within specified limits.
3. May I combine RESP and TFSA for the purpose of education savings?
Certainly, RESP provides grants for tuition and TFSA accounts for funding other expenses, such as living or travelling.