6 ways Canadians can invest in an RESP on a tight budget

There are so many competing priorities for our money these days that contributing regularly to a registered education savings plan (RESP)—especially enough to receive the full $7,200 available through the Canada Education Savings Grant (CESG)—is simply not possible for every family. Many families may need more room in their budgets before they can prioritize education savings. 

But investing in an RESP is still worth it, even if you’re unable to reach the lifetime RESP maximum contribution of $50,000 per child. Small amounts can help build and grow your RESP account value over time. Even if cash is tight, here are six suggestions for finding money to invest for your kids while minimizing the financial impacts on your monthly budget. 

1. Reinvest government benefits

Canadian parents receive Canada Child Benefit (CCB) payments every month. If a family’s financial situation allows, the CCB could be redirected into an RESP as a regular monthly contribution (or an occasional one) if those funds aren’t needed to cover essentials. Other government benefits that are less frequent, such as the Canada Carbon Rebate (formerly known as the Climate Action Incentive Payment), Ontario Trillium Benefit (OTB) and GST/HST rebates, can also be considered for this purpose, if you receive them.

2. Bonuses and unexpected money

Have you received a bonus from work? Did a friend repay you the money you assumed you would never see again? Receiving any amount of unexpected cash is an excellent opportunity to contribute to an RESP. If it’s money you didn’t anticipate and you don’t have an immediate need for it, part or all of it could be redirected to the RESP account.

3. Children’s birthday and holiday gifts

Are you surrounded by more toys than your child could ever play with? For their next birthday or holiday gift, consider respectfully asking for an RESP contribution rather than toys or other nice-to-haves. This approach can be handy when children are young and have yet to start articulating their desires for specific toys or gifts. Most family members will appreciate the value of RESP contributions and the long-term benefit they can bring. Having tactful and honest conversations about gift-giving well before holidays or upcoming birthdays can help. 

4. Resell kids’ toys and clothes 

As a parent, I appreciated receiving hand-me-downs for my child and being able to pass along ours to friends and family with babies. However, if you don’t have a family member, friend or colleague who can use second-hand baby items, you can always try to resell them. When our daughter outgrew her toys, high chair and other items, we looked to second-hand children’s stores—both online and in-person—to find them a new home. Reselling baby gear, toys or clothes your kids have outgrown, on websites such as Rebelstork, can help you recoup a small portion of the cost. You can also check out your local second-hand or consignment kids’ shop, as they may buy various items. Just be careful not to pass on or resell potentially hazardous items, such as baby walkers, polycarbonate bottles and any products that have been banned or recalled.

5. Declutter your home

Decluttering your home can reduce stress and help your mental well-being. In addition, all that stuff in your house, at one time, was money in your bank account. Getting rid of things you no longer love or need means those items can once again become money (albeit less than you initially paid). Reselling items online, through platforms like Facebook Marketplace, Karrot and Poshmark, or even through a good old-fashioned garage sale, can clear your house of clutter and put a few bucks back in your pocket (or your child’s RESP account).

6. Reinvest tax refunds

Refunds are another source of unexpected money. If you are eligible for a refund at tax time, this is an opportunity to divert a small portion to an RESP. We may hope for a refund each year, but we can never be sure we will receive one until we file, so this money is often treated like a bonus. Only if you don’t need it to cover your expenses, consider contributing a portion to your child’s RESP. 

Finding extra funds for an RESP—it’s possible

Is an RESP worth it if you cannot invest consistently or up to the RESP maximum contribution limit? It definitely is. Canadians don’t need a high income to invest for their kids’ education, nor do they have to invest consistently if there’s no room in the budget. Your financial situation will change over time, and you may reach a point where making regular RESP contributions is possible. In the meantime, the six ideas above can help Canadians from any income level begin investing to help their kids pursue post-secondary education debt-free. 

Opening an RESP may be especially beneficial for low-income families. Through the Canada Learning Bond (CLB), the government contributes up to $2,000 to an RESP for families that fall below a certain income threshold—no personal contributions required.

So don’t sleep on opening an RESP account, even if you don’t have much to invest. To give yourself the most flexibility, look for a brokerage that offers an RESP with no minimum investment requirement and no required contribution schedule. If you need help with your family’s financial planning, consider talking to a financial professional.

Read more about RESPs:

• How do RESPs work, and what’s the best way to fund them?
• The top 5 questions about RESPs
• Is an RESP worth it? Yes, even if only for the government grants
• What can an RESP be used for?

About Jessica Morgan

Jessica Morgan is a personal finance writer, speaker and the founder of Canadianbudget.ca. With an MBA from Toronto Metropolitan University, she focuses on financial literacy for women and public sector employees.

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