Saving today will ensure that more educational opportunities are available for Canadian children in the future. The simple fact is that about two out of three new jobs require more than a high school education. People have to know how to work with technology on the shop floor and in the office. They need more skills before they can start to build solid careers.

For most people, those skills and extra education pay off in real benefits. College and university graduates are more likely to be working than people with less education. They are more likely to keep their jobs when times are tough. They earn more. But the costs of getting an education have gone up. A year in a university arts or science program can cost up to $7,000. Students face other costs if they go to school away from home or even in another province/territory. Over the past decade, tuition fees and other student costs have more than doubled and have been rising faster than family income.

Most Canadians understand those facts. They understand the importance of skills. That is why almost a million Canadians are full-time students in universities, colleges, vocational and technical institutes and CEGEPs. Another 430,000 Canadians are part-time students. Canada has the biggest share of its 18-21 year olds in post-secondary education of all industrialized countries.

More and more families are looking ahead. They are already putting money away for tomorrow's investments in education. Even small savings each year will translate into substantial savings later.

How much do I need to save?

Many parents wonder how much to save. They also wonder how soon they should start. The answer is simple. Save as much as you can afford. Start today. By starting early, tax-sheltered earnings in a Registered Education Saving Plan (RESP) can grow surprisingly quickly. You also earn the largest amount available from the Canada Education Savings Grant (CESG) and the Canada Learning Bond (CLB) on top of that money.

A note about RESP limits: When using this calculator, it is important to understand how RESPs are managed by the Canada Revenue Agency. The annual contribution limit for a Registered Education Savings Plan (RESP) is $4,000. The life-time limit is $42,000.

Under the CESG program, you are allowed to contribute a maximum of $4000 a year per child into an RESP. While the RESP annual contribution limit is $4000, for parents with a net income over $71 190, the maximum CESG available to each of their children is 20% of annual contributions up to a maximum of $400 in grant, with a lifetime maximum of $7200. In other words, a $2000 annual contribution to an RESP will be met with the maximum CESG grant amount of $400. For lower income families, the CESG can go up to 40% of your contributions on the first $500 every year, the rest of your contributions will receive a 20% grant, up to the $500 a year maximum. For middle income families, the CESG can go up to 30% of your contributions on the first $500 every year, the rest of your contributions will receive a 20% grant, up to the $450 a year maximum.

The Importance of Starting Early

Here's an example:

Mary and George's overall net income is under $35,595. They have a newborn baby named Hayley. Mary and George have been receiving the National Child Benefit Supplement (NCBS) every month since Hayley was born on January 1, 2005. If they open an RESP for Hayley they will receive a $500 Canada Learning Bond (CLB) plus an additional $100 for each year they continue to receive the NCBS. In addition, if they contribute $20 every month into Hayley's RESP, that adds up to $240 a year. Their investment will also earn $96 of Canada Education Savings Grant each year.

Over 18 years, Mary and George keep contributing at the same rate and continue to receive the CLB. They also keep earning CESG money on top of their own savings. If all of this money grows at 5% per year, then Hayley will have almost $10,000 to help pay for her education. Of course, the amount will be even higher if Hayley's grandparents or relatives also contribute, or if her parents increase their contributions...

And here is another example:

Rick and Diane's overall net income is over $71,190. They have a three-year old named Britney. If they put $50 every month into Britney's RESP, that adds up to $600 a year. Their investment will also earn a $120 Canada Education Savings Grant.

Over 15 years, Rick and Diane keep contributing at the same rate. They keep earning CESG money on top of their own savings. If all this money grows at 5% per year, then Britney will have almost $19,000 to help pay for her education. Of course, the amount will be even higher if Britney's grandparents or relatives also contribute, or if her parents increase their contributions...

Saving for your children's education requires a long-term plan. And, like saving for retirement, the earlier you start your plan the better. Use our calculator to help develop or fine tune your children's education savings plan.